Printer Friendly

The business leaders with 'pockets full of pixie dust'.

Byline: BETHAN DARWIN LAW & MORE

The WRU recently announced its appointment of Aileen Richards and Tim Griffin as its first non-executive directors.

Maybe this has made you think about becoming a non-executive director at some point or perhaps you feel your company might benefit from a non-executive director. What exactly is a non-executive director? As the title suggests, non-executive directors do not run the company. The executive directors do that. The role of non-executive directors is to help the executive directors do their job better by constructive criticism and challenge.

They are required to be impartial and independent and to bring a different perspective to the issues the executive directors are facing.

They will have broad business experience, which the executive directors call upon to assist them on issues of strategic direction, risk management and corporate governance. When it is time to remove underperforming executive directors, this job often falls to the nonexecutive directors.

Both executive and non-executives have exactly the same duties to the company. There are statutory duties under the Companies Act 2006 and common law fiduciary duties.

Directors must: Act within the powers conferred by the company's constitution; promote the success of the com-pany; exercise independent judgment; exercise reasonable care, skill and diligence. avoid conflicts of interest.

If the company is listed on the stock exchange with a premium listing, the UK Code of Corporate Governance also applies. The Code consolidates the work of previous codes including the Cadbury report and the Higgs report. It sets out principles of good corporate governance including leadership and the role of the board and its non-executive directors, effectiveness and accountability. The risks under insolvency legislation and health, safety and environmental law are also the same for non-executive directors as they are for executive directors.

How much does a non-executive director earn? The WRU's non-executive directorships are unremunerated, as are many not for profit and public sector appointments.

However, I act for a number of individuals who have portfolio or plural careers as non-executive directors. They have had successful executive careers and have often led their former companies to the point of a sale, merger or listing. They no longer wish to work full time for anyone else but nor do they wish to retire. They've been there, done that and have acquired a thick skin and a wide network of contacts. They have pockets full of what I describe as "pixie dust" that they can sprinkle on the companies they work with to make them fly.

They are usually paid a nominal fee for their non-executive role because payments made to directors must be paid via payroll and subjected to tax and NI. They may also have a wider role as adviser to the company under a separate self-employed consultancy agreement for which they are paid an additional fee and account for their own tax.

These fees are not where they make money. Significant gains come from share options in the company, granted at a low price, netting capital gains when the company sells or lists. The capital gain on the share option may qualify for entrepreneurs' relief.

Additional gains can be made if the individual has also invested in the company, particularly if the investment was via the Enterprise Investment Scheme and/or Seed Enterprise Investment Scheme.

Some years ago I asked Dame Marjorie Scardino, then CEO of Pearson PLC, how to get on a board. Her response was that "you have to have been there to get there."

I don't think this is entirely true but it is mostly true. Pixie dust generally comes from coalface experience.

On May 14 Bethan Darwin will be joining speakers from Finance Wales, Chwarae Teg and industry at an event called Make Yourself Boardroom Ready. For details see www.superwoman.org.uk

CAPTION(S):

Tim Griffin and Aileen Richards are the first non-executive directors <B appointed to the WRU

Non-executive directors play a vital role in overseeing the actions of the executive directors <B
COPYRIGHT 2015 MGN Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2015 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:May 6, 2015
Words:662
Previous Article:25 jobs created at Swansea firm.
Next Article:Sir Terry to speak at innovation summit.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters