UK - UK pension funds are aiming to put a brake on non-executive directorships following the collapse of US energy giant Enron.
The failure of the Enron board to spot a black-hole in the company’s accounts has highlighted fears that non-execs are spreading themselves too thinly.
The National Association of Pension Funds (NAPF) is now looking at ways of producing more informed and better-skilled non-executives.
The NAPF’s voting issues service director John Rogers said he wanted to see non-executives able to challenge executive directors on issues such as the effective operation of company boards, remuneration and issues of corporate social responsibility.
He said: Shareholders look to the people who are responsible for putting a check on the executives and to impress on those individuals that they have got to act as representative of shareholders and they have got to challenge executive management.
The NAPF said it has registered growing concerns from its members that certain non-executives were spreading themselves too thinly. Rogers said that current feelings were that executives should take on a maximum of four company posts.
A report published by remuneration consultant Top Pay highlighted the concern. The report said shareholders want directors to spend more time on fewer companies. The report highlighted Allan Leighton – who is chairman of Consignia, BHS, Lastminute.com and Wilson Connolly. He also holds directorships at ScottishPower, Leeds Sporting, BSkyB and Dyson.
Morley Fund Management head of corporate governance Anita Skipper said the Enron saga had opened up the issue of the lack of information non-executives were getting from chief executives.
In the UK she said the potential dangers were that company chairmen set out what will be discussed at board meetings, making the chances of information not getting through to non-executives even greater.
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