two-tier board

(redirected from Two-Tier Boards)

Two-Tier Board

A corporate structure with two boards of directors. A management board oversees the company and provides general direction, while a supervisory board must approve of major business decisions. Half the supervisory board is elected by shareholders while the other half represents employee interests. It appoints the management board. A two-tier board is seen in German companies with the Aktiengesellschaft corporate structure.

two-tier board

a structure of the BOARD OF DIRECTORS of a company used in certain European countries, such as Germany and Norway, that comprises two tiers:
  1. a supervisory board, on which representatives of workers and management board are represented;
  2. a management board that is concerned with the day-to-day running of the business.

The supervisory board is responsible for formulating general policy and the management board with implementing policy. Two-tier boards have gained in popularity in Europe over the past two decades, compared with the UK and US style of unitary boards, and their development has been encouraged by the EUROPEAN UNION. See also WORKER PARTICIPATION.

References in periodicals archive ?
We observe that firms in Swiss-French areas and firms in Roman Catholic cantons are more likely to have one-tier boards, whereas two-tier boards are more prevalent in Swiss-German areas and Protestant cantons.
Firstly, in Switzerland, corporations can choose between two forms of board structure: one-tier and two-tier boards. The more hierarchical one-tier board consists of executives (insiders and, most frequently, the chief executive officer, CEO) and non-executive directors (outsiders) who, together, within one centralized corporate body conduct daily business and monitor the management.
Hypothesis 1: One-tier boards (in contrast to two-tier boards) are more prevalent in Swiss-French areas relative to Swiss-German areas and in Roman Catholic cantons relative to Protestant cantons.
Banks are obligated to have two-tier boards, and financial firms in general exhibit non-comparable corporate structures (e.g., grade of diversification, debt-to-assets ratio).
(8) In contrast, in Germany (and Austria), supervisory and executive tasks are separated by law and are allocated, respectively, to a supervisory board and a management board, which establishes a clear division of responsibilities (two-tier board structure).
Swiss law gives all corporate fiduciary duties to one board of directors (one-tier), however, the board is free to delegate (transferable) duties relating to daily business to one or more board members (a delegate or an executive committee) or a separate management team (in the sense of a two-tier board structure).
Board structure has two characteristics: one-tier board equals 1 if the board consists of at least one executive director, and 0 otherwise (two-tier board).
In Table 4, we estimate a Logit model of board structure (1 = one-tier board, 0 = two-tier board) using both Swiss-French area and Roman Catholic canton as explanatory variables and employ five control variables in addition to industry effects that are likely to influence board structure and may differ across our cultural proxies.
Mr Higgs did not actually call for two-tier boards. But his proposal for formally independent non-executives headed by a senior non-executive to provide a contact point between the company and its shareholders - presumably chairing the annual meeting - could have a similar effect.
Whilst not wanting two-tier boards to develop, a workable solution needs to be found that protects non-execs without reducing their accountability.
In real life, the best we can hope from Mr Higgs is any structure that prevents us creeping towards continental-style two-tier boards.