UK - Pensions Investment Research Consultants (PIRC) is urging the government to strengthen the influence of non-executives on corporate boards.
PIRC suggests there should be a legal definition of the role and responsibilities. It also believes there should be a requirement for the majority of boards to be non-executive to counteract any conflicts of interest.
PIRC’s views come in a submission to former Prudential head Derek Higgs, who is writing a report for the Department of Trade & Industry on the effectiveness of non-executive directors. The report will suggest far-reaching reforms in the way non-executive directors are selected.
PIRC’s submission said there should be requirements for board committees to be made up only of non-executive directors and for chairmen not to have executive responsibilities.
PIRC research director Stuart Bell said: “We have no doubt that some of the excesses of the past few years, which have destroyed shareholder value, are the result of failures on the part of some non-executives to perform their functions adequately.”
Meanwhile, the Society of Pension Consultants believed non-execs should be a conduit for raising shareholders’ concerns on the high-level operation of the company.
SPC secretary John Mortimer said: “In particular, if there is a special role for a ‘senior independent’ non-executive director, this might be it.”
The Confederation of British Industry also encouraged senior managers to take non-executive directorships at smaller groups to broaden the pool of talent available to sit on corporate boards.
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