UK - The National Association of Pension Fund's corporate governance service RREV is considering changing its stance on company directors' length of service and independence.
Corporate governance watchdogs such as RREV, which stands for Research, Recommendation and Electronic Voting, currently view non-executive directors who have served extended terms on company boards as being “institutionalised” and not sufficiently independent.
As an example, former BSkyB non-executive director Lord St John of Fawsley was heavily criticised by institutional investors for not being sufficiently independent as he had spent over nine years at the firm.
Fawsley was part of the committee that recommended James Murdoch – son of the firm’s chief, Rupert Murdoch – should take over as chief executive of the broadcaster.
But NAPF chairman Terry Faulkner said RREV – a joint venture with Institutional Shareholder Services – was reviewing its policies and could become more flexible when dealing with non-executive directors and their length of service.
Faulkner said: “RREV may become more proactive. It may talk to directors that are deemed to not be sufficiently independent about their views on that; consult with them, instead of just saying they are not independent because they’ve been there for a long time.”
Hermes Pensions Management director of institutional relations Michelle Edkins says most corporate governance activists are flexible in their approach to long serving non-executive directors.
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