Corporate Governance – NED selection falls into line

Selection of non-executive directors is finally falling into line with the Cadbury committee?s code on corporate governance, according to English ICA research out today.

But an institute survey – ?Non-executive directors: Fees, facts and attitudes? – conducted jointly with management consultancy Egon Zehnder International, indicates demnds on NEDs are continuing to grow. It adds selection has become increasingly competitive, with non-executive directors commanding fees around 15% higher than two years ago.

Sir Adrian Cadbury and Woolwich chairman Sir Brian Jenkins, who chairs the institute?s corporate governance group, said: ?More is now expected of non-executive directors and by the same token this enables them to contribute more to the work of their boards.

?All the more important, therefore, that appropriate care should be taken over their selection and induction.?

A previous survey, carried out last year by Company Reporting, warned that NEDs were ignoring a number of key Cadbury committee guidelines.

But the new research shows companies are taking a more disciplined approach to NED selection – a key concern of the Cadbury committee – with a quarter of companies now undertaking formal appraisals of NEDs. Additionally, 50% of boards are made up of NEDs.

Related reading