Research

Executive opportunities declining

The number of executive directors at the UK’s top companies has been declining for five years in a row, with a report from Deloitte showing the number of such positions has fallen by 20% over this period.

The report found almost 360 executive roles at FTSE 350 companies have disappeared in the last five years.

Carol Arrowsmith, head of Deloitte’s remuneration team, commented: “The decline of the executive director is quite extraordinary and is primarily a result of corporate governance guidelines which require half the board to be independent. This changing shape of the board can be a positive thing, leading to more focused and high quality debate”.

However, she warned that there is also a danger that a decline in the executive element of a board could result in strategy development being pushed out of the boardroom and into executive committee meetings. This, said Arrowsmith, would leave non-executive directors with a lack of involvement in key decisions.

Arrowsmith added that recent developments have shown even large companies are not immune to being taken over and, in combination with the decline of executive positions, this could lead to senior managers looking to private equity as an attractive alternative to listed companies in the next stage of their careers.

October 2007