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Non-execs under fire

1 Dec 08

Non-executive directors contributed to the financial crisis by failing to challenge the management of many top banks, according to Lord Paul Myners, the UK’s City minister

He has urged institutional investors to take a bigger role in training and empowering corporate board members

“We believe those boards need to be strengthened. Those boards were part of the problem,” said Lord Myners, who has served on the boards of nine FTSE 100 companies. He urged investor groups to improve director training and provide guidance on how to best represent shareholder interests.

“I put out a challenge to the ABI [Association of British Insurers] and the NAPF [National Association of Pension Funds]: get serious about this. Endow a professorship. Run serious programmes with serious speakers,” Lord Myners said.

Peter Montagnon, the ABI director of investment affairs, said the group would consider the proposal seriously.

Douglas Ferrans, chairman of Insight Investment Management, was sceptical that institutional investors would ever pay extra.

“Our clients, the owners of these assets, aren’t that interested. Quite frankly, they don’t get this governance gig at all and they aren’t willing to pay for it,” he said.

But Daniel Summerfield, co-head of responsible investment at the Universities Superannuation Scheme, said investment managers should act on their own. “If you believe as a fund manager that these things add value to the companies you invest in on our behalf, surely you should be doing it,” he said.

The training debate comes at a time when boards, particularly in financial services, are coming under fire for failing to curb risky practices and high pay.

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