Non-executive board members are being attacked from two sides. From one side, shareholders and legislators have been criticising non-executives for failing to effectively monitor their companies. Corporate governance scandals such as Marconi, Vivendi, Ahold and Enron are used as evidence that non-executives are not keeping a close enough watch on executives.
From the other side, managers have been criticising non-executives for failing to add value to the company. Traditionally, managers have been less noisy than shareholders because, after all, the board is the centre of power in a hierarchy. But the concerns are just as deeply felt. Non-executives, it is claimed, challenge strategies and probe performance results. But because they do not put in enough time to be able to understand the specific issues the company is facing, they frequently distract managers or interfere in a way that delays decisions, creates extra costs and sets inappropriate priorities.
In this article, I will use the term non-executive to cover both the Anglo-Saxon version of an independent director, who is a member of a unitary board including executive and non-executive directors, and the European version of a supervisory board member, who sits apart from the executive board.
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