Small firms call for long-term non-exec plans

Michael Bow
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SMALL and mid-cap listed businesses are urging non-executive directors to put more focus on long term planning amid strong overall support for directors’ cut-price pay packages, company polling data shows.

More than a third of listed small companies and around six in 10 company advisers believe non-executives can add more value to their companies by having more “long term vision” for the companies that they represent.

Providing valuable contacts for the company was the most frequent recommendation from companies, with a further third wishing their non-execs would put them in touch with investors more often.

“More companies fail coming out of recession than going into it, so we see a clear need for an non-executive director-led strategy to manage the risks from a post-recession economy,” Tim Ward, chief executive of the Quoted Companies Alliance (QCA) said.

Non-executive directors – who are part-time professionals appointed to company boardrooms to give advice on a myriad of non-decision making issues – often influence and determine things like executive pay packets and corporate governance issues.

They have taken on greater importance in the post-recession landscape as investors take them to task for overall company performance.

The poll, conducted by professional services firm BDO and QCA, found most small and mid-cap firms thought the average part-time salary of £31,185 a year was cheap, with about 70 per cent of respondents saying it was good value for money.

Strong support was also found for the pivotal role non-execs play, with 83 per cent backing them as independent and a further 90 per cent saying they were knowledgeable about the business they represented.

“I was surprised,” BDO partner Scott Knight said. “There are some great non-executive directors who invest a huge amount of time but still a minority who continue to have a much lighter touch. Our research helps to dispel the myth management can keep non-executive directors at an arm’s length.”