UK - Non-executive directors are not "up to the job" of policing company boards on the behalf of schemes.
Speaking at the recent Local Authority Pension Fund Forum in Bournemouth, Active Value Advisors director Brian Myerson said non-executive directors were “at the mercy” of management because they relied on information the company provided and for that information to be accurate.
South Yorkshire Pensions Authority investment manager John Hattersley agreed that non-executive directors were failing in their job.
He added that because technology had made information more rapidly available, most non-executive directors only took “quick glances” at the companies of which they were a part.
He also condemned schemes and fund managers for giving “sound bites on corporate governance issues” and claimed their “half-hearted approach” was potentially more dangerous than doing nothing.
Myerson said that despite their limitations, non-executives were a necessity and that having some form of supervision was better than having none at all.
But he stressed that the quality of non-executives must be raised and said that to accomplish this, companies must increase their salaries.
Myerson said by paying them in shares, it would align their interests with other shareholders.
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