The LEGO Group has been privately owned by the Kirk Kristiansen family since the establishment in 1932 and the approach to good corporate governance is focused on combining the strengths and benefits of being privately owned with the applicable elements from good corporate governance for listed companies. The LEGO Group and the owners are interested in managing the company in line with globally leading management practices, also with regard to corporate governance.
Benefits associated with being privately owned and having few owners include to have owners close to the business with strong industry knowledge, strong values, which can be inspiring and supporting for the development of the company and the employees, and the ability for long term focus, to move fast and be agile with regards to changes in the business environment.
The Recommendations on Corporate Governance from the Danish Stock Exchange (NASDAQ OMX Copenhagen) are primarily aimed at companies with many shareholders who are not related to each other. Therefore, certain requirements for listed companies are not applicable for a family-owned company while others such as governance structure and board composition apply equally.
As a family owned business it is important to maintain a professional management of the company, including a strong and competent board of directors. One of the ways to support that, is the practice the company has had for many years, to have the Chairman elected among the independent board members, and in general to ensure a professional board management, including a.o. definition of required board competencies to ensure a diverse and complementary composition of the board, regular board self assessments, competitive compensation to the board of directors and clear and specific rules on mandate for each of the management bodies in the LEGO Group. Furthermore, as a family owned company, the LEGO Group becomes more exposed to risk in connection with handover from one generation to another generation of owners. To mediate this risk, a plan is prepared and implemented that results in high involvement of the next generation of the family owners in company matters related to the ownership.
As a family owned business it should also be emphasized that strong focus is turned on ensuring the balance between the value created to the owners, compared to the value creation to the remaining stakeholders of the company such as consumers, employees, customers and other partners. There is a sincere belief in the owner family that creating value to the company’s stakeholders will also result in long term value creation for the owners. The LEGO Brand Framework, including its four promises to various stakeholder groups is supporting this thinking, and therefore is an important part of how we do business.