UK finance directors are still willing to step into the lion’s den of non-executive directorships, despite the battering many face in the wake of the Enron collapse.
In recent weeks, non-execs have been in the firing line like never before. Many City watchers have called for tighter controls on them in the wake of recent corporate governance failures, while Institute of Directors chairman Lord Young has said that they should be scrapped completely.
But 51% of the FDs responding to this week’s Accountancy Age/Reed Accountancy Personnel Big Question said that, despite the current hostile climate, they would still consider taking on a non-executive directorship.
‘Despite the recent publicity, I still believe that they play a vital role in monitoring board strategy and vision,’ said one FD who wished to remain anonymous.
International Baccalaureate Organisation finance director Stuart Chapman said NEDs were now needed more than ever, but needed to be genuinely independent and under the most ‘rigorous scrutiny’.
But he added: ‘There should be a limit, legally enforceable, on the number of non-executive directorships that any one person can hold. Last but not least, remuneration needs to be increased generally and bear some relationship to the time spent on the company’s affairs.’
CCMR FD Paul Chapman said: ‘Unless the circumstances were extreme, a decision based on the benefits and costs of taking on a non-exec would be independent of the general economic position.’
Only 35% said they would not consider the role. One FD said: ‘It is unfair to expect them to be able to perform the critical role of protecting shareholder’s interests by attending a few meetings.’
Another said: ‘Nice for the money, not for the risk.’
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