Firms encourage non-execs

COMPANIES are increasingly encouraging their executive directors to take on non-executive roles on other organisations' boards, according to research published last week by Monks Partnership, the remuneration advisers.

The firm's "Survey of Non-Executive Director Practice and Fees" shows that just under 60 per cent of industrial companies with turnover greater than pounds 500m encourage the practice, while in smaller companies the proportion is just over 40 per cent. Last year, the figures were 53 per cent and 39 per cent respectively. At the same time, the overall proportion actively discouraging directors from taking up posts on other boards dropped sharply, from 16 per cent to 7 per cent.

Alison Smith, the report's editor, said 17 per cent of companies had looked at the feasibility of paying non-executive directors in shares - a practice that is quite common in the United States and was guardedly supported by the recent report of the Hampel Committee on corporate governance.

"Most companies have rejected this approach, however, on the grounds of technical complications and a lack of enthusiasm from directors," she added.

Non-executive director fees currently range from about pounds 14,000 a year in small companies to more than pounds 120,000 for part-time chairmen in companies with turnover of more than pounds 1bn. Monks claims that half of non-executives did not see an increase in fees last year, but points out that rises tend to take the form of "round sum" increases every two to three years rather than annual percentage increases.