The issues facing NEDs - a view from the FT

In an article in the FT Michael Kavanagh discusses the current challenges facing non-executive directors (with a few quotes from yours truly).

Click here to read the article.

Shareholders get their man in the end

A rare example of shareholders anger over excessive remuneration bearing fruit has been seen with the giant oil company Shell.

Bonuses awarded to Shell executives this year were widely considered to be excessive and the remuneration committee came in for intense criticism.  The committee felt it proper to award significant bonuses even though performance targets had not been met.

The usual symbolic exercise of shareholder rights took place (see previous posts on this subject) and the pay settlement was voted down at general meeting.  Now it is reported in The Times that two members of the remuneration committee, including the chairman Sir Peter Job, will step down.  It looks like the shareholders did get their scalps after all.

One other interesting thing about the reporting of this event is that Shell itself seems to have come to the view that after 9 years as a non-executive director (NED) Sir Peter could no longer be considered to be truly independent.  This reflects other discussions currently being had about the role of NEDs and suggests that the days of a NED having a long term sinecure are now well and truly gone.

Fred the Shred and the NEDs

Sir Fred Goodwin is currently a one man article generator.   He has become a touchstone for all that went wrong with British banking.  As a spotlight is shone on his role in the failure of RBS it starts to show the likely shape of the next big boardroom disputes and shareholders disputes.

What is Sir Fred’s culpability in relation to what went wrong and what should his fellow directors have done?  As people look for who to blame and who to sue there is now a real focus on the duties of the directors on the Board of RBS (and other failed companies).   In particular, questions are being asked about the role of non-executive directors (NEDs) who appear to have failed to curb the excesses of the executive directors. Read more »