The document compares three models of corporate governance: Anglo-US, German, and Japanese. The Anglo-US model separates ownership and control with outsider shareholders and boards including insider and outsider directors. The German model uses a two-tier board structure with a supervisory board of outsiders. The Japanese model involves ownership by affiliated banks and companies with little outside shareholder influence and insider-only boards dependent on maintaining profits.

11. People
Purpose
Process
Performanc
e

51. o The Anglo-US model is based on a system of individual or
institutional shareholders that are outsiders of the
corporation.
o The other key players that make up the three sides of the
corporate governance triangle in the Anglo-US model are
management and the board of directors.
o This model is designed to separate the control and
ownership of any corporation.
o Therefore the board of most companies contains both
insiders (executive directors) and outsiders (non-executive
or independent directors).
o Traditionally, though, one person holds the position of CEO
and chairman of the board of directors.
o This concentration of power has led many companies to
include more outside directors now.
o The Anglo-US system relies on effective communication
between shareholders, management and the board with
important decisions being put to the vote of the shareholders.

52. o In the German model, there is a two-tiered board
system consisting of a management board and a
supervisory board.
o The management board is made up of inside
executives of the company and the supervisory board
is made up of outsiders such as labor representatives
and shareholder representatives.
o The two boards are completely separate, and the size
of the supervisory board is set by law and cannot be
changed by the shareholders.
o Also in the German model, there are voting right
restrictions on the shareholders.
o They can only vote a certain share percentage
regardless of their share ownership.

53. o The Japanese model involves a high level of
ownership by banks and other affiliated companies and
"keiretsu," industrial groups linked by trading
relationships and cross-shareholding.
o The key players in the Japanese system are the bank,
the keiretsu (both major inside shareholders),
management and the government.
o Outside shareholders have little or no voice and there
are few truly independent or outside directors.
o The board of directors is usually made up entirely of
insiders, often the heads of the different divisions of
the company.
o However, remaining on the board of directors is
conditional on the company's continuing profits,
therefore the bank or keiretsu may remove directors
and appoint its own candidates if a company's profits
continue to fall.
o Government is also traditionally influential in the
management of corporations through policy and
regulations.