Peter BöckliThe «Cadbury Report» and the Swiss Board Concept of 1991

Peter Böckli, The «Cadbury Report» and the Swiss Board Concept of 1991, in: In: Swiss review of business law, Zurich 68(1996), no 4, p. 149-163)

Background

The essay “The «Cadbury Report» and the Swiss Board Concept of 1991” of Peter Böckli is a contribution to Journal for Swiss business law (SZW) that was published in 1996.
The paper addresses Swiss public or larger private companies, the authored feels this is justified “through the fact that a considerable number of more important European companies today are operating under Swiss Corporation Law”. It addresses corporate governance and the ‘Cadbury Code of Best Practice’ and the role of non-executive directors (NEDs). The author wrote this article to engage the audience in answering a unanswered question, that question being: how to resolve the information problem that faces NEDs when trying to acquire information potentially detrimental to the inside directors and, more precisely, damaging to the power of the top executive and his inner circle.

Summary

In this article, Prof. Dr. Peter Böckli deals with issues that have arisen and are yet to be resolved concerning corporate governance, while focussing on the Cadbury Report of 1992.

The first part of the article addresses corporate governance and the Cadbury Report; it explains that corporate governance has long been an Anglo-Saxon affair but is increasingly becoming a Swiss issue as well. The role of the Cadbury Report in this sense is that it focusses mainly on the ‘Non-Executive Director’ (NED). According to the author, ‘Cadbury’ calls specifically for three special Board Committees composed of ‘NEDs’, namely an audit committee to form an opinion on the quality of auditing; a nomination committee to carry out the selection of outside directors (composed of a majority of ‘NEDs’) and, finally, a remuneration committee to review compensation of all sorts at the top level of the company.

The author then compares ‘Cadbury’ to the concept of the Swiss Board; according to him, the Swiss rules have a conceptual affinity to the Cadbury concepts. This is most apparent in the article addressing the requirement of financial control and the monitoring of executive directors.

Prof. Böckli stresses the importance of an unresolved problem: “Although Swiss company law has greatly improved the access of each board member to company information, shortcomings abound in this area”. It is one person at the centre and no one else who decides on the time, scope and depth of information given to NEDs to exercise their monitoring and control. Although several publications on this topic have recently been made, the “information problem” remains unresolved.

At the close of his article, Prof. Böckli looks towards the future and addresses current and future trends in corporate governance. The main future trends include the phasing out of the Swiss Board of Directors and the call for a “strong commitment to maintain an autonomous area of executive responsibility”.

Text

You can find a scan (PDF) of the original text here: Peter Böckli – Corporate Governance The Cadbury Report and the Swiss Board Concept of 1991