Importance of independent, non-executive directors

The importance of independent, non-executive directors is highlighted:

"...1. Brings a depth of experience to the board with some knowledge of the industry involved

2. Is a team player who leaves their ego at the door

3. Is an industry advisor, able to challenge as well as support

4. Is articulate in communication and a good listener

5. Is committed and prepared

6. Has a sharp mind and good judgment

7. Is visionary, creative and passionate about business

8. Can build strong relationships and act as ambassador

9. Is self-confident without being dogmatic

10. Is prepared to enrich their contributions through feedback..."

Don Argus as quoted by Patrick Durkin, 2010

There is a point of view that non-executives directors should also be shareholders, ie have "some skin in the game". Yet the Australian Council of Superannuation Investors found that nearly 11% of ASX non-executive directors are in no shares in the company they oversee (Patrick Durkin 2016d)

Share ownership

By owning shares, a director is demonstrating a real commitment and belief in the business plus encourage them to think like an owner.
"...as a director, if you own shares and have a long-term perspective, you will experience greater reward from the company's long-term success and conversely, greater pain from the company's failures.....that is a a great motivator to work tirelessly to build world-class businesses..."
Hamish Corlett as quoted by Jamima Whyte 2018

However, others think holding shares can be a conflict of interest.

History of success

Furthermore, an ideal director is one who has been involved in growing a successful business and is independently wealthy, as opposed to someone looking to collect fees to sustain an income.

 

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