8 DESCRIPTIVE STATISTICS
8.3 Individual variables
The individual variables are described in the order they are hypothesized upon.
8.3.1 Independence
Hypothesis 1 summarizes the thesis’ predictions on the impact of directors being independent:
Table 8.2 Independence
Source: the information is derived from the data collection see appendix 3 for a complete overview
In the data set, no employee-elected representatives are independent, while 496 out of 524 outside directors are labeled independent. The dependent, outside directors amount to almost only one-in-twenty.
Six banks have boards which are completely independent in the entire period: Møns Bank, Sammenslutningen Danske Andelskasser, Kreditbanken, Sparekassen Limfjorden, Vordingborg Bank, Brørup Sparekasse, which indicates that no employee-elected board members served on these boards throughout the period.
Two banks boards have only dependent directors; Nordea Danmark and Nykredit Bank. Both are subsidiaries to larger financial holding corporations. Aside from these two, the bank with the lowest average number of independent directors in the period 2003-2008 is Nørresundby Bank, whose board is deemed 50 % independent. For a complete list please see appendix 5.
8.3.2 Board experience
In hypothesis 2, the predicting value of having board experience prior to entry on the board is examined:
Table 8.3 Board Experience
Source: the information is derived from the data collection see appendix 3 for a complete overview Including employees
Excluding employees
496 496
66,22 94,66 INDEPENDENCE
Independent % of directors Type of director
52,06 68,89 390
361
BOARD EXPERIENCE
Type of director Experienced (> 5 Years) % of directors Including Employees
Excluding Employees
In total, a little more than half of the board directors enter the board with more than five years of board experience. When excluding the employee-elected board members this number covers increases to almost seven-in-ten of outside directors are experienced above the threshold level of this study, while barely one-in-eight of the employee-elected representatives are.
The bank with the most ‘experienced’ board is Basisbanken, whose directors in the period all had at least five years’ board experience prior to entering the board. The least experienced boards are those of (in ascending order): Sparekassen i Skals (15.6 % experienced directors), Andelskassen Merkur (19 %), Frøs Herreds Sparekasse (20 %), Sparekassen Faaborg (21,4
%) and Dronninglund Sparekasse (24 %).
In 45 banks, more than half the board members could be deemed experienced upon entering the bank’s board. See Appendix 6 for a full list.
8.3.3 Gender
Hypothesis 3 uses gender as a proxy for diversity on the board. The boards’ gender composition is as follows:
Table 8.4 Gender
Source: the information is derived from the data collection see appendix 3 for a complete overview
In total, 16.29 % of the directors on the boards of Danish banks in the sample are female. Of the outside directors, only half of that are female; 8.78%. Of the employee-elected representatives, almost exactly one-in-three is female, indicating a higher concentration in woman amongst the employee-elected.
The banks with the highest proportion of female representation are Møns Bank (40 % women), Lån & Spar Bank (38,6 %), Danske Bank (35,7 %). 16 banks of 67 do not have any women on their board at any point in the period – among these EIK Bank, Aarhus Lokalbank and Nykredit Bank. See Appendix 7 for full list.
8.3.4 Multiple directorships
Hypothesis 4 is concerned with the number of seats an individual director holds simultaneously:
Including employees Excluding employees
122 46
16,29 8,78 GENDER
Type of director Women % of directors
Table 8.5 multiple directorship
Source: the information is derived from the data collection see appendix 3 for a complete overview.
The mean including employee representatives is holding 4.46 board seats in total, while the median is lower, at 2 when excluding the employee-elected representatives, the mean is 5.80 and the median increases to 3.
Both sets of data indicate that relatively many directors hold few seats, while a group of directors hold many board seats. To shed further light on this, the number of directors holding just the one seat they have on the board has been examined. It turns out that of the 225 employee representatives, a mere 8 hold board seats other than the one in their bank. In total, 370 directors hold just one seat (of 749), while just 175 of the 524 directors have only the board position in the bank.
The range of board seats held goes from 1 (a large group of directors) to 81, held by Michael Kaa Andersen from Basisbank.
On the aggregate board level, Basisbank tops the list with an average of 53.08 directorships per board member (Michael Kaa Andersen may increase the average, but the rest of the board is not shy of directorships either). Tallying an average of 17.32 directorships, Amagerbanken’s board is a distant second and in EBH Bank, the average number of simultaneously held directorship is 11.29.
At the other end of the spectrum, the directors in Sparekassen i Skals on average have 1.09 directorships which covers the fact that of the 15 directors who have served on the bank’s board in the period from 2003-2008, only one director (Leif Gade) has other directorships, and that is merely one additional directorship.
In total, only 25 banks on board level average comply with the Danish Corporate Governance Recommendations’ advice that board members should hold three seats or less. Those that fall into the recommended category of three board seats or less amount to 531, of which 220 are
310 59,16
Including employees Excluding employees
MULTIPLE DIRECTORSHIP
Type of director 3 seats or less % of directors
531 70,89
3
Excluding employees 175 81
Mean Median
MULTIPLE DIRECTORSHIP
4,46 5,8
2 Type of director 1 Seat Highest # of seats
Including employees 370 81
employee representatives. Only 5 employee representatives hold more than 3 simultaneous board seats. See appendix 8 for a full list.
8.3.5 Tenure
Hypothesis 5 concerns the level of tenure among Danish bank board directors:
Table 8.6 Tenure
Source: the information is derived from the data collection see appendix 3 for a complete overview
The mean of average time served on the board increases, when employee-elected directors are excluded. This indicates that employee-elected board member serve shorter periods of time on the board. The array of tenure in the Danish boardrooms range from 1 to 28 years on a specific board, held by Leif Bertnsen in Morsø Sparekasse.
In Kreditbanken, board members have served (at the end of 2008) on average 16.92 years on the board, making it the board with the highest average tenure. Following in the second place is Østjydsk Bank, whose board members on average hold their directorship 14.77 years.
At the other end of the list, Basisbanken’s directors have held on for 5.00 years on average and in Ringkjøbing Landbobank, board members have had their seats for 6.56 years. In Vestjysk Bank, board members have held their seats for an average of 6.70 years, but this number covers three newly elected board members who joined the board following the merger with Ringkøbing Bank.
See Appendix 9 for full list.
8.3.6 Financial education
In hypothesis 6, the relation between financial education of the individual board member and risk is predicted:
Table 8.7 Financial education
Source: the information is derived from the data collection see appendix 3 for a complete overview
Excluding employees 1 28 7,57 7
Including employees 1 28 6,75 6
TENURE
Type of director Lowest Highest Mean Median
FINANCIAL EDUCATION
Type of director Educatated % of directors
Including employees 115 15,36
Excluding employees 84 16,03
Of the total sample, 115 hold a financial education; of these 31 are employee-elected representatives. While 16.03 % of outside directors are financially educated, slightly fewer employee-elected representatives are, tallying in at 13.78 %. While this might seem contradictory – the employees are employed at a bank – the relatively high barriers to achieve the label “financially educated” (see section 6.5.6) exclude some diploma-educated bank employees.
On the bank level, EIK Bank only has financially educated directors serving on their board.
The second-‘most’ educated bank is Nordea, in which 87.5 % are financially educated as measured in this thesis. Nykredit Bank has 67.9 % financially educated board members.
These three are the only banks which on average have more than 50 % financially educated board members.
In twenty banks, no director at any point in the six-year research period has been able to claim a longer financial educational background. Included in this group is Amagerbanken, Lokalbanken i Nordsjælland and several smaller regional/local banks. See appendix 10 for a complete list.