Structural positioning of nomination committees: Evidence from Iceland

Abstract

Nomination committees (NCs) are the subject of ongoing scholarly and professional debates regarding their purpose, practices, and organizational structure. Existing research suggests that NCs can enhance corporate governance by improving the process through which directors are appointed (Al Absy & AlMahari, 2023; Grove et al., 2020). In Nordic corporate governance, these committees are integrated in various ways, either as shareholders committees or subcommittees of the board. Iceland, a Nordic country, serves as a critical case study for investigating perspectives among stakeholders on the structural positioning of NCs — whether they should operate as subcommittees of corporate boards or shareholders committees. This unique context of Iceland adds a layer of intrigue and curiosity to our research. Interviews were conducted with thirteen individuals comprising shareholders, board members of publicly listed companies, and nomination committee members. Additionally, surveys were distributed among shareholders, board members, and nomination committee members of Iceland’s 300 largest corporations in 2020 and then again in 2023. The findings suggest that NCs should be shareholders’ committees voted by the shareholders instead of board committees. Such an arrangement is proposed to optimize the benefits for shareholders and boards in forming and operating NCs.