Life in The Boardroom 2023/24: Are Non-Executives’ Workloads Increasing?

Participants in the latest edition of Life in The Boardroom 2023/24 – our exclusive survey of Chairs and NEDs – say non-executives are being burdened with more and more responsibility. In this article we explore over a decade of Life in The Boardroom data to see how the data bears out their concerns.

In this article, ‘directors’ is used to refer to Chairs and NEDs.

Quotes from our report:

“The complexities/responsibilities of being a NED is becoming onerous. To the point that even though you wish to ‘give back’ it makes you question the position.”

“NEDs need to be paid more for the increased responsibilities and risks and equity incentives should be acceptable as long as not substantial…”

“Generally feel workload of a NED has increased significantly, as has the risk, but pay has not increased proportionately.”

We asked how the number of days directors worked changed since last year, with 37% saying they are working more.

In 2023, we found on median that NEDs worked 15 days, and Chairs worked 24 days for each of their firms over the previous year.

Life in The Boardroom data since 2009 on the median number of days Chairs and NEDs worked at their firms produces the chart below:

These results do not provide evidence that directors are working more. Across the time series excluding 2023, the median for NEDs is 23 days and for Chairs is 30 days. Thus the 2023 result of 15 and 24 days is lower than one would expect based on the data. A statistical analysis of the trends even suggests that the number of days worked is decreasing over time – though not with strong statistical significance.

That weak significance and how the low 2023 result may only be a result of random variation suggests that there likely is no trend. Directors are likely working roughly the same number of days today as they were in 2009, in general.

That said, whilst the number of days worked may remain unchanged (the majority of participants, at 56%, said that days worked were unchanged since last year) the stress during those days may not be, perhaps intensifying this effect. We also asked participants about the demands placed on NEDs personally, and 53% reported an increase since last year:

This is a comment about a subjective experience which is hard to contradict. The same question asked in the past two Life in The Boardroom reports yielded very similar results. Our data shows roughly a fifth of directors have seen their demands “significantly increase” for four straight years.

The last four years have not been ‘typical’. In our latest report, Paul Norris observed a shift in the balance of corporate governance regulations. Changes to the Corporate Governance Code originally proposed by the FRC would have subjected all code firms to reporting standards currently reserved only for the largest firms. In addition, the past four years have also seen interrelated crises in the commodity supply, the labour supply, the collapse of Liz Truss’s premiership, Brexit, COVID, industrial action, inflation, energy and the war in Ukraine. Such sentiments from directors are certainly more believable given such circumstances. Supporting this is the fact that relatively more directors reported an increase in demands during the pandemic in our 2021/22 report. This question was not asked prior to 2019, so a comparison is not possible.

Finally, commenters who say their fees are insufficient relative to the demands have their concerns borne out by the data. Charted below are Chair and NED median fees from the past decade of our reports as well as from the annual reports of FTSE firms. For all groups except AIM100, inflation-adjusted fees have been declining with time. This indication that most directors are being paid less over time makes it hard to dispute claims that they are being underpaid relative to their responsibilities.

Extensive data and analysis on the compensation, time use, opinions and experiences of Chairs and NEDs can be found in our 80+ page report on 788 boardroom positions, click here for a free preview.

Find out more about Life in the Boardroom here.

For citations to the sources cited above, further discussion on this article, or information on MM&K’s products and services, please do not hesitate to contact James Sharp.

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