It won’t be long into your first non-executive job when you start to feel as if the executives resent you. It’s okay. You haven’t become paranoid. They really do resent you. Why? Being an executive director is a tough job. You work all the hours that the Working Time directive allows, then you opt out and work some more. The market is very tough and competitive, and you end up making numerous difficult decisions. You do this for a couple of...
I’m going to take a wild guess here, that the least favourite part of a typical NED role is setting executive remuneration. To the media, and now even the government, it appears that NEDs love nothing more than awarding large pay increases, bonuses and pay-offs to executives. It often seems that investors share this perception, and believe that it is only institutional shareholder intervention that can restrain the irrational generosity...
Companies differ very much in their attitude to the importance of cash. If a business is private equity owned, highly geared (ie has a lot of debt) or has not a lot of headroom against its overdraft or debt covenants, it is likely to be very focussed on cash. Others, especially subsidiary boards, may look almost exclusively at profit. All boards should take cash very seriously. This is because profit is a theoretical concept, whereas you can...
One mistake that non-financial people often make is to assume that financial people both know what they are talking about and understand all the financial issues. Once you realise that neither of these may be true, you will feel less cowed by financial jargon and able to participate more freely. I have twice in my career come across toxic derivatives held by companies that the financial team believed to be sensible and prudent. The other board...
Induction Programme You should have some form of induction programme. However, rather than leave it to the Company Secretary, it will be a better and more comprehensive one if you take control of it. Unless you’ve already met them in your induction programme, you should meet the following; The executive/operating board members. The chances are that they will all be very upbeat and positive to you (whatever their private views), but you should...
Corporate Governance
Economics
Notes From A NED