Governing the Global Company

The report set out to answer a core question: Does a global company need a global board? The answer, based on the feedback and insights of directors interviewed for this report, is an unequivocal “yes.” Yet that answer served to raise further questions: What is a global company, and how should a global board be defined?

There is no single definition that sets a truly global company apart from those that are “multi-national”—that is, domestic companies with international operations. Directors shared their views on the characteristics of a global company and the top governance challenges. Governance of the global company can be summed up in one word: complexity.

As globalization continues, the geographic diversity of boards will also increase, as companies seek more directors with international experience. For example, 35 percent of the 339 new board seats of Fortune 500 companies in 2014 were filled with directors with international experience.1 This will have implications for board practices, director skill sets and more. Our research tapped insights of directors around the world—whose companies are headquartered in Asia, Europe, and North America—to capture their experiences and perspectives on the characteristics that distinguish a truly global company, and, in turn, what makes a “global board.” Based on interviews with close to 30 directors, representing 16 Global Fortune 500 companies and 25 Global Financial Times 500 companies, this report sets out peer perspectives on the challenges and opportunities of participating on a global board and the critical skill sets for a global director. Finally, we captured advice for directors who may be joining the board of a global company for the first time. A full list of research participants is on page 32.