4.4.1 Introduction

The UK and the US have only a one governance system, i.e. the one-tier board system. The compositions of UK and US average boards were alike up to the 1980s. They had a CEO, who was also chairman, about 3 other executive directors and 4 or 5 outside directors. Since 1993 the UK made changes to separate the functions of CEO and chairman, maintaining the 3 other executive directors and the 4 or 5 outside or non-executive directors in order to have a balanced board. In the US changes were different. There was a focus in the 1990s, and certainly from 2002, on a strong majority of independent directors. The typical board is composed of a CEO, who in most cases is also chairman and about 7 to 8 independent directors, who are typically led by a lead director to create counterbalance. The other executives, officers apart from the CEO, are not on the board, but do attend meetings. Since 2002 many US companies have instituted executive sessions of independent directors meeting alone and are gradually going over to appointing a separate non-CEO chairman.

We see that the UK and the US have one and the same basic system with large flexibility and that the composition has changed in the last 20 years in different directions.

The law in the Netherlands specifies two possible systems: a simple management board or a two-tier board. The institution of a supervisory board is optional in the Netherlands, but for larger companies it is the norm. Most larger companies have a management board of about 3 or 4 and a supervisory board of about 6 members. Furthermore there are special large companies, the Structure Regime companies, that must have a supervisory board with specific powers. Then the Act of 6 June 2011, which is expected to be effective on 1 July 2012, makes the one-tier board a possible alternative for all companies, next to the two-tier system, whether in a Structure Regime company or not. This means that from the date that the Act has become effective, there will be five alternative compositions of boards: first, the simple monistic management board system, used for many small companies and a few larger ones, second, the two-tier board system used in most large companies, third, the two-tier board Structure Regime companies for even larger companies, fourth, the onetier board companies and, fifth, the one-tier board Structure Regime companies. These compositions will be discussed hereafter in section 4.4.