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| British Boards, Directors and their reliability |
denberg |
12/07/05 |
I recently read this:
“Rules for assesing the reliability of British companies through their boards:
The shareholders, employees and other stakeholders were conspicuously absent from the network. In theory it was the outside directors or “non-execs” who brought a wider view and expertise to boardrooms, and counterbalance a self-perpetuating hegemony. In practice, few of these cared to challenge their full-time colleagues.
In the 1960s most boards recruited directors from right outside the business world, whether to provide repectability or political contacts or influence with governments at home or abroad, or to reassure the chairman. Retired generals, ambassadors or Conservative ministers or members of the House of Lords, could move from board to board. But they were increasingly discredited, since they had little financial expertise and some investors associated “lords on boards” with failure. Jim Slater, the short-term wonder banker of the 60s, liked to explain his own rule for assesing boards:
He gave one mark for each executive director,
Two for a non- executive
Three for a director with a title
Four for a party grandee
If the total reaches twelve, you sell your shares!”
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This "rule" was written in the 60s. My question is: is it still true for assessing the reliability of British companies?
Many thanks.
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Clarification/Follow-up by denberg on 12/07/05 11:14 pm:
He was a financial journalist. However, I think the point he was trying to make was: beware of companies that are packed full of "non-execs". Isn't that a fair comment?
It comes from a book entitled "The Anatomy of Britain" by Anthony Sampson, originally written in 1962 and revised many times, latest edition this year.
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