Table of Contents

Corporate Governance in Modern Financial Capitalism

Corporate Governance in Modern Financial Capitalism

Old Mutual’s Hostile Takeover of Skandia

Markus Kallifatides, Sophie Nachemson-Ekwall and Sven-Erik Sjöstrand

This insightful book focuses upon corporate governance processes, and explores the conditions required for effective corporate governance and control in 21st century globalized and financialized economies. In presenting a comprehensive study of a cross-border hostile corporate take-over process, describing the actors, institutions and events involved, this book examines and questions the current forms of corporate governance and control – both from a national and a global perspective. Using Old Mutual’s takeover of Skandia as a case study, the authors address corporate governance theory, and highlight its two fundamental dimensions: financial and operational flows.

Chapter 3: A Success – and a Crash

Markus Kallifatides, Sophie Nachemson-Ekwall and Sven-Erik Sjöstrand

Subjects: business and management, corporate governance, strategic management, economics and finance, corporate governance, financial economics and regulation, law - academic, corporate law and governance


SKANDIA 2003 – A TROUBLED COMPANY At the time when Skandia became a target for takeover proposals in 2004, the company was still shaken by its series of recent scandals. The company had been heavily criticized by the Swedish public for handing out 4 billion SEK in bonuses to 100 senior staff during the years 1997–2002. The depth of the bonus scandal had been revealed on 2 December 2003 after seven months of gruesome internal investigations. The greater part of these bonuses was calculated on the basis of expected future profits. These profits had, therefore, not materialized when the bonuses were paid out, and it was uncertain whether there would be any expected profits at all and, if there were, if they would reach the shareholders’ pockets. The shareholders’ upheaval concerning these bonuses was just the tip of the iceberg. Within a period of a few years around the turn of the millennium, Skandia – the oldest listed company on the Stockholm Stock Exchange (SSE) – had been transformed from a success story of international expansion in the life insurance industry to one of collapse and near bankruptcy. In 2002, Skandia lost billions of SEK through the sale of its former ‘golden egg’: its US subsidiary, American Skandia. The following year, the CEO of Skandia and several members of his top management team had to leave the company along with some of its board members, including chair Lars Ramqvist. However, before this deplorable situation emerged and reached its height in the early...

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