You may recall a few weeks ago a
post on the draft EU Directive proposing caps on multiple directorships on
banking boards (see here) for
which I provided some anecdotal evidence from the Royal Bank of Scotland.
Fortunately (or some may
say unfortunately if you have ever had the desire to look at a
bank's annual reports) my random sample contained all five banks
featured in the FTSE 100: Barclays; HSBC; Llyods; RBS; and Standard Chartered.
The graphs below represent total and
mean of multiple directorships held by executives and non-executives in a five
year data period of 2006-2010. The first graph is multiple directorships
at the time the annual report was published whereas the second
and third evidence those held by directors who served throughout the
financial year including the mean.
Although the data is only
descriptive at the moment, one can still make some assumptions. Resource
Dependence Theory claims that we should see a rise in multiple directorships
where there are difficult market conditions as multiple directorships are
characteristics of good managers in a managerial labour market. 2008 onwards we
can take as what one could describe as "difficult market conditions".
For non-executives we however see a
sharp decrease in 2008. This may be down to higher levels of board changes in
that year due to the recession which may have been caused by the company itself
terminating contracts or non-executives perceiving increased liability and
resigning from positions themselves.
However, since 2008 the mean number
of non-executive multiple directorships have been steadily rising again.
This may be consistent with the Resource Dependence Theory that directors
increase their directorships to help in the difficult market conditions they
Executives on the other hand have
seen pretty much the opposite to non-executives. A growth in multiple
directorships towards the recession followed by a steady decline
post-recession. If one trusts managerial labour markets this may have been
caused by the perception of banking boards performing well up until the
recession resulting in more offers for other positions. Once the recession hit
then multiple directorships decreased for executives due to their "poor
performance" in managerial labour markets. Again, board changes may have
also been important for banks in 2008 which may have played a part in the
For bank boards in 2006-2010 the
average board membership for the year were the following
On top of this information data has
also been collected in regards to meeting attendance; independence; equity
ownership; share capital; and remuneration. It will be interesting to see
how these factors correlate with multiple directorships. Remuneration may be
particularly interesting as anecdotal evidence seems to show an increase in
remuneration for non-executives due to their "increased
responsibility" as cited as a reason by numerous annual reports yet
multiple directorships for non-executives has been increasing since 2008 and
fairly unchanged between 2006 and 2010.
Although other studies have documented
attendance of directors at meetings as a variable it is curious whether it is a
reliable variable on how directors spend their time or whether mutliple
directorships can affect attendance at meetings. It is of no surprise that
my data shows high attendance at meetings from directors no matter
how many boards they are on. If a director is on three or four boards it may
not be too burdensome to attend 48 or so meetings a year. Obtaining clearer
data on whether a director's ability to perform his/her duties may
require a qualitative assessment on an individual level.
For more commentary on directors' duties and shareholder litigation,
visit Gibbs: Law
and Life, a blog centering on directors' duties and company law,
particularly on interpretation and practicality of directors' duties in the
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