If you want something done, ask a busy person. But with board members at large quoted companies facing more demands on their time, the chances of following this maxim are reducing sharply.
With non-execs spending 20 per cent more time on average fulfilling their boardroom duties, a report by PwC, the professional services firm, has called into question how readily the role can fit in alongside a full-time day job.
Committee work takes more time, as does engaging with institutional investors, but routine board meetings can take longer too, especially if the group has international operations. “Out of eight board meetings, one might be in Brazil and another in India,” says one FTSE 250 non-executive.
Sean O’Hare, remuneration partner at PwC, says: “Most chairmen still encourage executives to take up a non-exec position because it’s good for their development but the increased time commitment definitely makes it harder.”
Tensions in seeking to combine executive and non-exec positions have been most apparent in the financial sector, after the Walker report on corporate governance recommended that non-execs devote 30-36 days a year to the work.
In September 2009, Carolyn McCall, then chief executive of Guardian Media Group, and Philip Green, chief executive of United Utilities, resigned from the board of Lloyds Banking Group having decided the time commitment made their roles untenable.
The pressure is spreading. PwC found non-execs at FTSE 100 companies spent an average of 24 days on boardroom duties last year, against 20 in 2009. Most expect to devote far more time again this year.
Michael Reyner, partner at MWM Consulting, says: “There have always been some executives who have been reluctant to do external board work because of the time involved, and this number will probably increase.”
Non-execs agree. “After all, executive jobs are becoming more time-consuming too,” says one. “No senior executive has five or six spare weeks.”
“As the time required increases, there does come a point when it’s pretty hard to justify the commitment, especially when you’re being well paid to do the executive job,” says another.
Opinions vary as to where that point lies. Last March, Tidjane Thiam, Prudential chief executive, turned down an offer to join the Société Générale board after shareholders in the life assurer expressed surprise he could consider the role while trying to seal an ambitious takeover. In 2007, Cynthia Carroll, Anglo American chief executive, faced some criticism from investors in the mining group for accepting a non-exec role at BP.
In October, Reckitt Benckiser said it was parting company with Colin Day, its chief financial officer, on the basis that his non-exec commitments left him too little time to focus on his executive role.
Directors and their advisers generally agree that the absence of direct and current executive experience from non-exec discussions would be a significant loss. At present, 81 of the 775 non-exec directorships in FTSE 100 companies are held by those with executive positions as well.
“If you have a serving chief executive, it does help the non-executives understand the pressures that apply from the executive point of view,” says one non-exec. It can also help non-execs apply pressure. “I can see our executives wincing sometimes at questions from my executive colleague,” says another.
One possibility, suggests Mr O’Hare, is that two informal classes: portfolio non-execs with the time to go to every meeting, and full-time executives who do not necessarily attend each time but talk to the chairman in advance when they will be absent.
This approach does not get universal approval. “Simply to give your thoughts to the chairman does not discharge your responsibilities,” says one portfolio non-exec. “In normal conditions, everyone ought to attend because you need to be able to report as a board,” says another.
Pirc, the corporate governance advisory group, suggests shareholders abstain when asked to re-elect a non-exec who misses, say, two out of six meetings.
Accepting different levels of engagement is tricky but may be the least worst course, says Mr Reyner.