LONDON (Reuters) - State Street Global Advisors, the fund arm of State Street Corporation (STT.N), on Thursday called for a review of the way European company directors are elected, with many staying on boards for too long.
SSGA said in a statement that the annual election of corporate directors was “key to effective governance”, as it gave investors the ability to hold directors to account for poor performance.
German companies had the weakest accountability, it said, with directors standing for election every five years. France, Spain, Netherlands and Belgium were only slightly better, with board terms of four years.
Britain, Ireland, Switzerland and the Nordics all had strong accountability, with one-year terms for directors, it said.
“Well-governed companies are better positioned to navigate challenging economic conditions while protecting shareholder interests,” said Rob Walker, head of Asset Stewardship, EMEA, at State Street Global Advisors.
“Without an annual director election process, shareholders are limited in their ability to hold directors accountable and improve board quality.”
Reporting by Simon Jessop; editing by Emma Rumney