UK company directors are facing growing restrictions on the number of non-executive directorships they can hold as corporate governance pressures mount on British business.
Non-executive directors are being urged to limit their work commitments and concentrate on fewer directorships due to increasing corporate governance requirements and mounting shareholder pressure for improved accountability.
British Telecom, whose management is under pressure from shareholders over its debts, this week said it did not rule out the possibility of imposing restrictions in a year’s time, although a spokeswoman said there were no current plans to do so.
Its chairman, Sir Iain Vallance, and chief executive Sir Peter Bonfield, both sit on other company boards. Both are facing pressure from some quarters to resign over their management of BT, and this week cancelled a meeting with leading investors.
Daniel Somerfield, corporate governance executive of the Institute of Directors, said: ‘On the strategic side, non-executive directors are now being valued more. They are not just strictly policemen. People are realising their value, wider knowledge, detachment and independence.’
Peter Waine, director of Hanson Green, a British search firm that recruits NEDs for boards of about a third of FTSE-250 companies, said: ‘Previously people took them (NEDs) for status and money, but it’s changed now. You have to be a great strategist and confidant. The greater demands on the role also mean board colleagues don’t want you away (from the board) so much.’
US companies have taken the lead in realising the value, in economic terms, of independent NEDs dedicated to one or two company boards, instead of the traditional six or seven.
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