Should Euro CEOs sign on the bottom line?

The U.S. decided to force CEOs to stand by their companies’ financial statements -- demanding, in essence, that they sign them. Europe appears likely to put the onus for honest accounts on boards rather than on chief executives.

The U.S. decided to force CEOs to stand by their companies’ financial statements -- demanding, in essence, that they sign them. Europe appears likely to put the onus for honest accounts on boards rather than on chief executives.

A European Union panel last month rejected the idea that CEOs should personally sign off on the books. The High Level Group of Company Law Experts -- seven prominent lawyers from various EU countries -- also advised against a Europe-wide corporate governance code.

“The great fault of the Sarbanes-Oxley reform in the U.S. is that it tries to impose the same corporate governance standards on everyone, including companies elsewhere,” contends Jaap Winter, 39, chairman of the committee and a professor of international company law at Erasmus University in Rotterdam. “Rules have to be flexible to take into account differences in business culture.”

The panel accordingly stops short of urging uniform financial disclosure, a single board structure or a standard one-share-one-vote rule. “We should work toward convergence, but evolution requires variation -- that’s the general rule for finding best practice,” reasons Winter.

Europe’s industry associations applaud the legal experts’ rejection of uniform corporate governance codes, but they are not nearly so keen on having to get shareholders’ approval for executive option schemes. “In Germany compensation is the domain of the supervisory board, not the shareholders,” observes Peter Wiesner, legal counsel for Bundesverband der Deutschen Industrie.

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