The Centre for Enterprise, Markets and Ethics (CEME) is pleased to announce the publication of a report on the topic of non-executive directors.

Is the Non-Executive Director Worth Saving?

Richard Turnbull

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Summary

Is the non-executive director (NED) an endangered species?

Does it matter?

This publication argues that the continued role of the NED matters not only to the individual director, to business and companies but also to society as a whole. The contention is that without effective NEDs, corporate governance will be weaker, companies more exposed and society less well served. If that is the case, then education is as important as law in enabling NEDs themselves, policymakers, media and wider society to understand and appreciate both the responsibilities and the limits of the NED role.

It is axiomatic that NEDs should discharge their duties competently in accordance with the law and with moral intent in the service of society. However, any lack of clarity over those duties, particularly in law, or potential exposure to regulatory action as a consequence of confusion over roles or responsibilities, will not only reinforce unrealistic expectations but also discourage NEDs from taking on this important corporate and social duty.

Non-executive directors should be reminded of their duties and responsibilities and given clarity as to society’s expectations. The answer is not further liabilities. Knee-jerk reactions to scandal are unhelpful – not all failures involve scandal and some, in the normal course of business, afford opportunity to learn lessons. We should clarify and celebrate. The NED is a bridge between business and society – ensuring proper corporate governance while playing a wider role in societal leadership. We need people of character and experience to discharge this role.