Non-executive directors : Sun Jan 08, 2012 11:54 pm  

I'm just noticing more and more the amount of them in various companies, after the revelation about directors’ pay at Qantas for example. Made me look at other companies boards and I spotted several of the same faces on other boards.

My own personal feeling on this is that it appears to be a "jobs for the boys" mentality. One that perhaps should face more scrutiny.

Was wondering what people's opinions are about N.E.D.s?

Re: Non-executive directors : Mon Jan 09, 2012 9:32 am  

Jobs for the boys maybe, but the role of an NED is to represent the shareholders' interests and ensure that the Exec Directors are running the company for the benefit of said shareholders.

Think of it as a the shareholders' equivalent of a union rep for the workers.

Re: Non-executive directors : Mon Jan 09, 2012 9:36 am  

If they are a private company (ie not funded by public money but by private shareholders) then as long as they are making a profit to the satisfaction of those shareholders then what's the problem ?

Many non-executive shareholders are there for their specialist knowledge or specialist contacts and there aren't too many private companies who will throw away overheads un-necessarily - as for further scrutiny you already have that, its called the annual shareholders meeting.

Re: Non-executive directors : Mon Jan 09, 2012 9:42 am  

Someone mention neds?

Re: Non-executive directors : Mon Jan 09, 2012 10:45 am  

McLaren_Field wrote:

If they are a private company (ie not funded by public money but by private shareholders) then as long as they are making a profit to the satisfaction of those shareholders then what's the problem ?

Many non-executive shareholders are there for their specialist knowledge or specialist contacts and there aren't too many private companies who will throw away overheads un-necessarily - as for further scrutiny you already have that, its called the annual shareholders meeting.

I know what you're saying, but what if...

- the company is making a profit, but the profits would be higher if the company was run more efficiently, OR in the case of some, the exec directors are taking stupid bonuses. Who polices it? Yes, you have AGMs and the like, but who's going to be the shareholders' "voice" in the meantime?

- the company isn't making a profit. The shareholders might demand removal of the board, and in order to do that they have to have someone ON the board to fight their corner (or if shareholders aren't being reasonable, somoene to effectively rein them in)

You're certainly right in that a lot of NEDs work on an effective 'consultancy' basis, with no day-to-day responsibilities. These may be semi retired people who are there only to provide advice or, as you say, specialist knowledge.

Re: Non-executive directors : Mon Jan 09, 2012 10:50 am  

with regards to Qantas, which is one of many companies over here where the following has happened. The shareholders have had dividends suspended for quite some time. The share price plummeted. The airline was grounded by the CEO. But recently, The non execs, got between 30,000 to over 100,000 shares recently, and the CEO was given millions of dollars as a bonus. Of course the people that decided he was worth it, were the non-executive directors, you know the ones that people like him got on board. I feel that for people who are purely figure heads, things should be reassessed on who and how they get on boards. Let's face it how has a person that was the former head of the military here contributed to the airline. http://www.qantas.com.au/travel/airline ... /global/en As you can see, divs have been poor, yet these people still get paid their bonuses. The same non execs, also issued Alan Joyce a bonus incentive of a million odd shares. At the recent shareholders meeting, some of the owners ie. shareholders, gave it to the board. What happened? Nothing. And all the mates still stay on the boards raking it in for performing poorly. This has come up again today with the energy industry sector.

with regards to Qantas, which is one of many companies over here where the following has happened. The shareholders have had dividends suspended for quite some time. The share price plummeted. The airline was grounded by the CEO. But recently, The non execs, got between 30,000 to over 100,000 shares recently, and the CEO was given millions of dollars as a bonus. Of course the people that decided he was worth it, were the non-executive directors, you know the ones that people like him got on board. I feel that for people who are purely figure heads, things should be reassessed on who and how they get on boards. Let's face it how has a person that was the former head of the military here contributed to the airline. http://www.qantas.com.au/travel/airline ... /global/en As you can see, divs have been poor, yet these people still get paid their bonuses. The same non execs, also issued Alan Joyce a bonus incentive of a million odd shares. At the recent shareholders meeting, some of the owners ie. shareholders, gave it to the board. What happened? Nothing. And all the mates still stay on the boards raking it in for performing poorly. This has come up again today with the energy industry sector.

Re: Non-executive directors : Mon Jan 09, 2012 11:10 am  

ROBINSON wrote:

Jobs for the boys maybe, but the role of an NED is to represent the shareholders' interests and ensure that the Exec Directors are running the company for the benefit of said shareholders.

Think of it as a the shareholders' equivalent of a union rep for the workers.

It is?

All the NEDs I've ever been involved with have had some form of specialist skill or contcts that are of value to the company. They're not involved in the running of the organisation, apart from ensuring that the inside directors are not beating the baby too hard.

Re: Non-executive directors : Mon Jan 09, 2012 11:18 am  

cod'ead wrote:

It is?

All the NEDs I've ever been involved with have had some form of specialist skill or contcts that are of value to the company. They're not involved in the running of the organisation, apart from ensuring that the inside directors are not beating the baby too hard.

Hello, read the rest of my post.

I also never said that the ONLY role of an NED was as I described.

Actually never mind. I'm wasting my breath with you, aren't I?

Re: Non-executive directors : Mon Jan 09, 2012 11:33 am  

ROBINSON wrote:

Hello, read the rest of my post.

I also never said that the ONLY role of an NED was as I described.

Actually never mind. I'm wasting my breath with you, aren't I?

I did read the rest of your post, I quoted it verbatim. I took issue with the highlighted part, what's the problem with that?

Or are you trying to say we should all second guess what you actually meant to write but for some reason didn't?

Re: Non-executive directors : Mon Jan 09, 2012 12:40 pm  

Rooster Booster wrote:

with regards to Qantas, which is one of many companies over here where the following has happened. The shareholders have had dividends suspended for quite some time. The share price plummeted. The airline was grounded by the CEO. But recently, The non execs, got between 30,000 to over 100,000 shares recently, and the CEO was given millions of dollars as a bonus. Of course the people that decided he was worth it, were the non-executive directors, you know the ones that people like him got on board.

A company who doesn't declare dividends to shareholders is starting into a tailspin from which they may not recover, once shareholders start to shift their options to alternative businesses (which they can do almost immediately these days) then it won't take more than half an hour for the markets to react, at that point you'll need a bloody good CEO to convince everyone that they are still a viable quoted business.

If that CEO and his directors are creaming the company and awarding outrageous bonuses and/or share deals then it won't be a tail spin it'll be a nose dive and they'll be gone - its the one good thing about capitalism, publicly owned companies have to be absolutely transparent and any whiff of wrong-doing can be spotted very quickly.

I like my aviation analogy there - see what I did then ?