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Evaluation of Board Work in Fifteen Companies Belonging to the City of Stockholm

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*Board Dynamics, Box 412, s-19124 Sollentuna, Sweden. Tel: +468 623 19 00; Fax: +468 623 19 93; E-mail: ps@board-dynamics.com

Abstract

The article outlines characteristics of governance of companies owned by municipalities in Sweden and reports on the results of board evaluation of fifteen companies belonging to the city of Stockholm using gap analysis as a method. The contribution of the boards to a corporate governance model proposed in this article and to compliance with a Swedish code of best practice were analysed. Respondents were asked to answer questions about the importance of an issue and to what extent it had been carried out. Separate assessments of the role of the chairs and that of board members were made. Each of them evaluated the contribution of the other. An appraisal of the chair by the CEO was also included. The results show that board members had a good understanding of their duties, but there was a considerable gap with respect to their performance. Functions that are vital to corporate governance – strategy and control – gave low values. Only some board members took an active part in decisions. The boards’ task to follow up on terms of references also gave a low rating. The practice of committee work was not established, except for an executive committee. There was a lack of follow up on internal control. The performance of the chairs was evaluated to find clues to low ratings. Self assessment of the chair gave the largest gaps between importance and actual performance on answers regarding board leadership. Board members and CEOs gave the chairs constantly lower values than the chairs gave themselves. The results however indicate differences between boards with regard to their performance. The results can serve as a basis for discussions between chairs and board members about board performance. Implications for boards and for owners of companies are highlighted.

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