Page 23 - The Corporate Report Pack

How many is too much?
Parmi Natesan
How many boards can one individual serve properly?
e issue of serial directorships comes back into focus with the publication of a recent study by PricewaterhouseCoopers (PwC) It’s something that is particularly relevant to corporate South Africa, given our urgent need to make boards more diverse
e serial non-executive director has long held a place in the public imagination He’s usually portrayed as a former executive, well connected and a pillar of the establishment Such a grandee usually lls spaces at many a board table, and can be counted on for lunch at the club most days
A caricature, to be sure, but it captures the old boys’ network that characterised many of yesterday’s boards Now, of course, it’s well recognised that non-executives ful l a critical governance role (as outlined in King III) In line with this growing recognition of the importance of independent, informed and experienced voices at the highest levels of a company, the workload of non-executive directors has increased commensurately As, indeed, has the risk to which they are exposed – they can be held personally liable for decisions that were poorly thought through or that did not put the company’s wellbeing rst
e critical role that non-executives are expected to play raises the old question: How many boards can one individual serve properly? It’s a question that comes up o en because the perception remains that too many boards rely on the same group of people to ll their seats e question is worth posing, both from the company and individual viewpoints Companies need to be sure their directors have enough time
and capacity to do their job properly, and individual directors need to be sure they are not overloading themselves, and ultimately putting themselves at nancial and reputational risk, should they fail in their duty
What do the gures say?
Research recently published by PwC, Non-executive directors: practices and fees trends report,1 suggests a somewhat more nuanced reality – but also some causes for concern According to the research, the majority of South African non-executive directors sit on one or two boards only (750 and 1 213 respectively); while fewer sit on three boards (105), four boards (47) and ve boards (six) ree individuals sit on seven boards
So far so good, but I was struck by the nding that the overall pool of non-executives serving on JSE-listed company boards had declined from 2 217 in 2015 to 2 137 this year As the number of listed companies has not declined, either we could be seeing an incipient trend towards a concentration of board seats in fewer hands, or a reduction in the average number of directors on boards e latter may well be the case because large boards can be unwieldy to manage, and directors’ fees have increased in line with their increased responsibilities and risk
Following the gures, then, there does not seem to be an immediate cause for worry, at least when it comes to workload Sitting on one or two boards seems absolutely reasonable, and falls well within international norms, which seem to be emerging at around four boards
1 PricewaterhouseCoopers ‘Non-executive directors: practices and fees trends report’ (January 2016, South Africa, 9th edition), available at
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