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ResearchNon-executive directors increase their authority
Non-executive directors (NEDs) feel they hold more influence than ever before, with 90% believing they have the collective power to change under-performing directors, according to Independent Remuneration Solutions’ and Hanson Green’s annual independent chairman and NED survey.
This increased authority coincided with an expansion in NED fees, largely as a result of committee work: the survey found membership of a board committee to add about 20% to base NED and 30% to chairman fees.
The highest rise in basic fees was 18% for senior NEDs at AIM-listed companies. Average NED fees were found to be £60,000 at FTSE 100 companies and £36,000 in the FTSE 250. For chairmen average fees stand at £250,000 for the FTSE 100 and £105,000 for the FTSE 250.
However, NEDs in all types of companies expressed concerns about boards dominated by chairmen or chief executives with large shareholdings. Furthermore, while the increase in companies complying with corporate governance codes appears to have boosted NED influence, the survey reported that the regulatory burden is also prompting some companies to consider going private.
The Daily Telegraph’s Jeff Randall (10 January) warned that although NEDs are the eyes and ears of shareholders, there is no evidence to show a large number of them increases a board’s power of scrutiny. Indeed, Randall argued that the role of NEDs is overrated, as they time and again fail to prevent emerging disasters.
LinksIndependent Remuneration Solutions
February, 2007 |
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