We asked GuerdonData™ to provide the total fees earned across all ASX 300 boards by NEDs in the database for 2005. The data is shown below.
Only a few directors sit on multiple ASX 300 boards. Hence, ASX 300 directorships tend to be occupied by part time directors. Is this a good thing?
There is an argument that boards should be comprised of directors who are not dependent on fees as a major source of income. This, it is argued, would compromise their ability and inclination to effectively carry out their duties. Examples could include acquisitions and mergers, or tendering resignations if conflicts with other board members on board decisions became intractable. Another argument is that directors need to have a full time “executive” role elsewhere in order to keep current operationally, and thereby be able to add value to board deliberations.
The argument against part timers is one of “professionalism”. That is, being an effective board director requires mastery of multiple skills and situational judgement , so that only a professional board director would have the required experience to handle diverse situations.
Unfortunately, based on the data, there are few full time professional directors on which to evaluate each of these arguments.