Premature to draw busy-director conclusion


Published December 02, 2014

The letter below published in the Business Times on November 25 is my latest response to the reply from SID and ISCA (“Several factors shape the performance of directors,” Business Times, November 18) to my original letter (“Are busy directors cutting corners or really supermen in suits?,” Business Times, November 7). In my original letter, I had challenged the findings and conclusion that busy directors have better board meeting attendance and qualifications. In order to keep the letter to a manageable length, I did not point out another problem with the comparison between single-seat directors and those holding 6 or more directorships mentioned in their reply.

Their study includes all directors, including executive, non-executive and independent directors. In addition to the single-seat directors including independent directors appointed to family companies who are not sought for other boards (as mentioned in my original reply), many of the single-seat directors are likely to be executive directors – most of whom would not hold directorships in other companies outside of the group. Executive directors may well be excluded from attending certain board meetings or parts of board meetings because they discuss issues that executive directors are conflicted on (such as their pay and performance). Executive directors are also running the business of the company on a day-to-day  basis, so it would not be surprising if they are more likely to miss board meetings, including those that are planned well ahead of time.  It is also not surprising that executive directors who are essentially senior employees of companies do not have similar qualifications to those who are “professional” directors. My point is that the sub-samples of single-seat directors and those who hold 6 or more directorships are simply not comparable.

In my study mentioned in my response, we excluded those directors who hold only executive directorships – focusing only on those who hold at least one independent director appointment. We did that to make the sample as clean as possible. If SID and ISCA want to have a better basis for their conclusion, they should likewise exclude all those who only hold executive director appointments as a first step.

A/P Mak Yuen Teen

 

 

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