UK - Pension funds are urging the government to take a more proactive approach in educating FTSE companies on the importance of recruiting good independent directors.
The move is part of the National Association of Pension Funds’ (NAPF) response to the Higgs Review - the Department of Trade and Industry - backed consultation paper on the role of non-executive directors (NEDs).
The NAPF has suggested that a “national register” should be formed to improve the availability of high-calibre individuals for the non-executive role – these would include trade unionists, academics and senior civil servants.
The NAPF also said the government should strongly encourage companies to advertise board vacancies, something which is common place in the public sector.
NAPF investment manager Tony Price said the major constraint on getting a wider coverage of NEDs acting in companies is the introspective nature of many boards.
He added: “But there are also practical difficulties in finding people with the right kind and level of experience and expertise with sufficient time to devote to their NED duties.”
Price pointed out that remuneration for NEDs has not kept pace with the increasing expectations and risks placed on them.
“NEDs should be properly rewarded to reflect their contribution, relevant experience, industry knowledge and the time spent on behalf of the companies concerned.”
But Price warned that the government should be wary of adopting a “one size fits all” approach.
“It is for each company to determine what is the appropriate level of pay given the complexities and demands of the company.”
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