From out of the shadows of the hotly discussed topic of executive remuneration, and a shareholder spring that has stormed AGMs around the UK, Chartered Secretary and CSS thought it timely to consider the role of the non-executive director (NED) as it is increasingly thrown in the spotlight.

1. » Quick question
All eyes on the NED
a fundamental requirement of the NED.
To what extent do you think increased regulation and compliance in While some pushed for NEDs to be more
corporate governance has made the role of the NED more appealing? collaborative, in addition to having the
ability to ask the board ‘awkward’ and
8%: A lot ‘challenging’ questions over strategies and
risk management; others prefer the idea of
7%: No change
the NED solely as an advisor, showing that the
76%: Made it less appealing role could perhaps do with further definition
in certain areas.
NEDs. We put this notion to the test in front There was also additional hesitation
of the Chartered Secretary/CSS panel. surrounding a NED’s ability to challenge
Questions surrounding the role of the strategies. Although 58% agreed that NEDs
NED have certainly piqued the interest of our are well informed enough in the companies
panel as the responses came in thick and fast. they work for to challenge management on
Perhaps the most important point to establish is risk strategies, one member of the corporate
that 76% agreed that increased regulation and governance community said, ‘I doubt that in
compliance in corporate governance has made any company a NED would have sufficient
the role less appealing, instantly contrasting knowledge of the intricacies or the nitty
with the findings in the PwC report. gritty of day-to-day operations to challenge
From out of the shadows of the hotly However, despite this, 82% agreed that the executive team in detail on risk strategies
discussed topic of executive remuneration, NEDs add more value by helping businesses that may be proposed or employed by the
and a shareholder spring that has stormed work towards their goals, thereby asserting company. To believe that this is possible when
AGMs around the UK, Chartered Secretary the role as a valuable asset to one’s company. they are only engaged with the business two
and CSS thought it timely to consider the role The additional comments we received from or three days a month is delusional.’ Several
of the non-executive director (NED) as it is our corporate governance community others expressed similar sentiments.
increasingly thrown into the spotlight. demonstrated that some NEDs feel driven Following the financial crisis, the role of the
While the principle duties of NEDs have by the complexity of the business and the NED was bound to change as it faced criticism
remained broadly unchanged since they were demands associated with the increased for not being challenging enough in the
first formally addressed in the Cadbury Report responsibilities of the role. It seems then run up to a series of events that were set to
in 1992, the role is now more complex, that, although regulation has become more change the corporate governance landscape.
bringing with it greater reputational risk. Yet, prescriptive, the fact that the NED is regarded It is unsurprising that NEDs are now expected
according to a recent PwC report called, The as an increasingly important position, can be to engage more in this area.
challenging role of the NED, the role remains seen as a positive incentive. A NED’s influence remains a vital aspect of
‘attractive and fulfilling’ for a large number of While the gender diversity debate murmurs a company’s foundations as they continue to
on in the background, we wanted to gauge be regarded as effective mentors. 60% of our
our panel’s opinions on whether more women panel agreed that we are increasingly seeing
should hold the role of NEDs in companies: NEDs play a more important role for SMEs and
58% believe that they should, with only 7% entrepreneurial ventures as they guide them
disagreeing. However, it seems that the through the world of business.
gender debate should not be used as Looking forward, it seems that the ability
a diversion when it comes to hiring a to add value to business and its subsequent
NED, according to our panel, as ‘the success is where a NED’s incentive lies, but
best person for the job should always the hardening of regulation and compliance,
be appointed. Any board that passes and the subsequent challenges NEDs will face,
over a good woman for a lesser man is should not be overlooked.
not acting in the best interests of the Find out more about the role of the NED
company,’ commented one in next month’s Chartered Secretary with
respondent. Jo Haigh and Charlotte Mason from Cracking
In terms of skill set, Boards.
those from our panel
who made additional
comments on the role
of the NED concurred
that knowledge
and understanding
of the underlying Conducted in association
business should be with Company Secretarial Services
If you’re a company secretary of a leading UK business, and you’d like to take part in or comment on future surveys, e-mail Caroline Evans
at CSS on cje@blt.co.uk.
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