View from City Road: Hot seats in the boardroom

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The Independent Online
BOARDROOMS have suddenly become uncomfortable places. No longer are they the havens they once were, full of quiet corners in which non-executive directors could go to sleep.

Each day there is news of the departure of yet another chief executive or chairman. In the past four days alone there have been announcements about Sandy Saunders of Sunleigh, Lord Stevens of Invesco MIM, Brian Disbury of Mosaic Investments and Tony Millar of Albert Fisher.

Recession is partly to blame for the stream of departures. In most cases their companies have run into trouble and the boss is carrying the can.

In some cases non-executive directors have stepped in to speed up the process. They are intervening more often, safe in the knowledge that this is what a growing number of institutional investors expect of them.

It is no surprise that the Confederation of British Industry is ambivalent about the role of non-executives. The CBI represents industrialists whose periods of office are being brought to a sudden end by those same non-executives. They have every reason to be worried by the trend.

Chief executives should have an uncomfortable time if they underperform. This is the risk they take when they accept the job and the pay that goes with it.

The CBI should be more concerned that all too often chief executives who underperform are cushioned by generous pay-offs that look like rewards for failure. This does the industrial community no good at all.

The CBI should encourage more of its own members to become non-executives of other companies and see what the job looks like from the other side of the boardroom.