Monday, May 24, 2010
Corporate Governance in Greece
With discussions of the bailout package for Greece dominating much of the financial news for the past few weeks, I decided to take a quick look at the status of corporate governance in Greece. Wrapped up in a grape leaf, here's what I found:
1. Most Greek companies are controlled by families or groups of shareholders.
2. As you would expect in a case like this where the public float is small, ownership and control are inextricably linked, with boards of directors having a single tier and few distinctions between the managers and owners (e.g., the CEO is usually also the chairman).
3. Boards tend to be rubber-stamp boards in companies controlled by a strong family or group and, although there are rules on the books about director independence, reality is very different from the requirements of the rules. One third of directors are supposed to be outside directors and at least 2 must be independent.
4. New governance rules have been put in place over the last 10-15 years to help protect minority shareholders and enhance public confidence in the Athens Stock Exchange. In addition, like many countries, Greece and the stock exchange allow certain types of actions in the corporate governance arena to be taken on a voluntary basis.
There are a couple of articles that give more information on corporate governance in Greece. For more information, look at Corporate Governance in Greece: Developments and Policy Implications by Loukas Spanos, and Power Concentration and Corporate Governance in Greece by Themistokles Lazarides.