Investor informs – position on number of board assignments

02/21/2017 20:06

Introduction

Investor AB (“Investor”) is a Nordic-based industrial holding company founded almost one hundred years ago by the Wallenberg family, with portfolio companies including ABB, Atlas Copco, Electrolux, Ericsson, Nasdaq, SEB and Wärtsilä.

 

Investor's business concept is to generate long-term attractive returns for shareholders by owning and developing companies with the ultimate target to create sustainable value. We apply an active ownership model to create long term value in our investments.

 

The cornerstone of our model is the Board of Directors. Based on our significant ownership in companies we use our industrial network to actively recruit the most suited board for each company. We support the board and management in our companies in creating and driving value creation plans focusing on operational excellence, growth, acquisitions as well as capital and industrial structure.

 

As a large owner in many listed global companies, in most of which where we are also actively taking part in the nomination of board members, we are aware of the increasing focus and demand on a limitation of the number of board assignments a member of the board of a listed company should be permitted to have.

 

We fully support the importance of board members having sufficient time to perform their tasks as members of the board and that this has to be evaluated for each proposed member of the board. This is key to us as an owner and a prerequisite for getting the expected traction and value from each member of the board. Therefore, this is one of the key aspects we always evaluate in the nomination process for our portfolio companies.

 

However, the determination must be made on an individual basis and depend on individual circumstances such as an evaluation of other assignments and undertakings, previous experience, future plans etc. Therefore, any fixed rules on e.g. how many assignments a specific board member may have (whether or not such rules take into account the difference between a “professional board member” and a person with an executive position) will not serve the purpose of improving such evaluation. Rather, such a fixed and inflexible regulation will preclude an initiated evaluation which takes into account the individual circumstances in a way we deem necessary.

 

Moreover, the business model for us as a long term industrial holding company entails the management of investments through representatives from our management and board in the boards of the portfolio companies. It is therefore a natural part of the job for the CEO and other members of the management (as well as members of the board) of an industrial holding company like Investor to also be members of the boards of the portfolio companies. As an active and professional long term owner, Investor can support such board members in the portfolio companies by business teams following the relevant markets, competitors, trends etc.

Therefore, Investor does not support the concept of a fixed number of permitted board assignments and would welcome a more flexible approach by proxy advisors as well as institutional shareholders to leave room for a more qualified evaluation of time commitment and to take more consideration to the business model of long term industrial holding companies which we believe contributes to long term value creation in many listed companies.

investor pattern