M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Empowering Boards in State Owned Enterprises

Elisabet Johansson

Ministry of Industry, Employment and Communications

Sweden

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Overview

• Ownership Administration• Framework• Board member – structure• Rules of Procedure for the Boards• Board Composition• Board nomination – four steps• Success factors• Conclusions

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Ownership Administration

• Sector policy separated from ownership issues

• Professional boards and managements

• Value creation

• Companies operating under market conditions are to operate under the same conditions and have the same demands made on their activities as other players

• Some state-owned companies are primarily intended to fulfil special societal interests

• and…

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Professional Boards

”with the necessary authority, competencies and objectivity to carry out their function of strategic guidance and monitoring management”

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Framework – Board composition

• Swedish Companies Act • OECD guidelines• Swedish Code for Corporate Governance• Ownership policy SOE’s

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Swedish SOEs - Board member structure

• Total number approx. 400 appointed by AGM

• 140 employee representatives (64 deputies)

• 7-9 members and 2+2 employee representatives

• 42 per cent women• Recommended Rules of Procedure in the

Board

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Rules of Procedure for the Boards

• Division of responsibility• Information• Board meetings• Evaluation• Board committees

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Board composition – principles• The Chairman

– has a key function – independent from civil service – separated from the CEO

• Members of the Board– relevant competence to fulfill the strategy of the

company– independent from the management – the person responsible at the Ministry is on the Board

• Employee representation – following the same law as private companies

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Board nomination - process in four steps

• Annual evaluation of the Board• Identification of competence required• Search and interviews• Appointment and disclosure

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Success factors

• Board nominations is the most important tool in combination with transparence and clear financial goals

• Structured process• Evaluation and dialogue with the chairman• Competence - key factor• Responsibility – no interference from the owner in

day to day business• Reasonable remuneration • The board members have to be comfortable with

state ownership

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

Conclusions

• Good profitability• Openness to restructurings• Devoted board members including

employee representatives

M i n i s t r y o f I n d u s t r y , E m p l o y m e n t a n d C o m m u n i c a t i o n s

More information:

www.regeringen.se