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Financial directions – Company chairmen go non-exec.

Of FTSE-100 companies 64% now have a non-executive chairman compares to 48% in 2000. In FTSE-250 companies 65% have a non-executive chairman (61% in 2000).

Overall the number of executive directors in the FTSE-350 remained at a similar level to 2001 at 1,475 compared to 1,480 last year. Numbers of non-execs rose by 2% over the same period, with the FTSE-350 boards comprising 204 non-executive chairmen, 102 non-executive deputy chairmen and 1,389 non-executive directors.

One-in-ten executive directors hold at least one non-executive position at another FTSE-350 company while 12% of non-execs hold more than one non-executive position in the FTSE-350.

On average FTSE-350 boards are made up of five executive and five non-executive directors. But, the numbers of non-executive directors increases to ten compared to seven executive directors in companies with a market capitalisation of over #16bn. Financial services and property companies tend to have more executive directors than non-executives.

The Combined Code states that there should be a strong and independent non-executive element on company boards and that boards should include a balance of executive and non-executive directors. And only 5% of FTSE-350 companies have non-executives that make up less than one-third of the board, and these companies all have a market capitalisation less than £4bn.

The number of executive chairmen has also decreased, but 7% of FTSE-100 and 6% of FTSE-250 still retain a joint chairman/chief executive role.

The Combined Code also states that a senior independent director should be appointed and identified in the annual report. In 2000 only a third of FTSE-350 companies had complied with this provision. In 2001 this had increased to 77% of companies and in 2002 it had risen again to 82%.

The median length of service for a non-executive director is four years, although 30% of non-execs in FTSE-350 companies have been appointed since 2000.

Average pay for non-executive directors rose 4% over the past year. Median pay for non-execs was £26,500 for companies with market caps between £200m and £500m, and £45,600 for companies with market cap greater than £16bn.

Fee levels for non-executive chairmen tended to be influenced by two factors: company size and the number of days service required. Median fees for non-exec chairmen ranged from £78,400 for companies with market caps between £200m and £500m to £337,350 for companies with market cap greater than £16bn. In addition to these fees 23% of chairman also received additional benefits ranging from £6,500 to £18,000.

The Deloitte & Touche Board structure and non-executive directors’ fees survey is available at

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