CBI calls for annual review of directors

Link: IoD defends UK corporate controls

Such a move would flush out directors who had too many non-executive positions and were unable to cope with the demands of individual companies.

The proposal was put forward this week by the Confederation of British Industry as part of its submission to the government’s review of non-executive directors, chaired by Derek Higgs.

‘Every single company should have an annual performance review of every single board member,’ Digby Jones, secretary general of the CBI said.

The move would prevent ‘serial directorship’ directors, who over-stretched themselves and failed to spend adequate time with individual companies.

The CBI also called on non-executive directors to give a full explanation if they resigned from a board prematurely.

‘If there is a real problem in a business, it is very easy for a non-executive to say I’m out of here and I’ll claim I need to spend more time with my family,’ said Sir Nigel Rudd, chairman of the CBI’s boardroom issues committee.

But the CBI said making such disclosures public would be ‘divisive’, instead preferring the reasons for resignation to be passed on to all board members via the chairman of the company.

The CBI also called for greater shareholder involvement in setting original contracts with executive directors to avoid the perception of massive pay-offs for ‘failure’ if an executive were forced to resign.

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