Any more directors still in there?
Non-exec directors stay too long
Published: 27 May, 2010
DUBLIN: Long-staying non-executive directors have come under criticism in Ireland. The annual general meeting in Dublin of listed builders' supplier company Grafton Group saw Irish Life & Permanent chairman Gillian Bowler re-elected. She has sat on the Grafton board since 1995.
Unusually, 23% of shareholders voted were against her re-election. Normally, non-contentious NEDs can expect over 90% of votes in favour. Richard Jewson, also on the board since 1995, received a similar vote to Bowler's.
Michael Chadwick, executive chairman, Grafton, replying to questions from the Irish Independent newspaper about the vote said he was unconcerned. The pair have been on the board so long that some institutional shareholders automatically vote against their re-election, he said.
"A number of institutional shareholders just have their own rules. They vote accordingly," said Mr Chadwick, whose family owns about 10% of the group. "Gillian Bowler and Richard Jewson have served on the board more than the recommended nine years."
"I think they are both very valuable directors who've made a valuable contribution to the group," said Mr Chadwick.
The nine-year period is one of the criteria that the Combined Code on Corporate Governance, drawn up by the UK's Financial Reporting Council, and used by Irish-listed companies, sets as a potential determinant of NED independence.
There is no suggestion that either Ms Bowler or Mr Jewson do anything other than act independently, but the nine-year criteria as a part determination for the independence of directors does come under pressure at some listed Irish companies, and some industry insiders want to ensure boardroom change is made more regularly.
"We've been pushing for change on this for quite some time," stated Frank O'Dwyer, chief executive of the Irish Association of Investment Managers. He said that the IAIM's "number-one agenda" for 2010 is board renewal, not just for its own sake, but because it should be part and parcel of good corporate governance."
The challenges facing companies have changed radically over the past couple of years he said. "Independent non-executive directors have a critical function to play and need to have very particular skills they can bring to the board," Mr O'Dwyer said.