Regular readers of this column may be familiar with my Boards of the Future report – a manifesto which argues that we should think differently about the non-executive Board. The report was published back in 2021, the product of years of reflection and more than a hundred conversations with Chairs and non-executive directors.
Sitting down with those non-executives was one of the highlights of my career. At that time, in 2020 and 2021, Board meetings were happening virtually. It was fascinating to hear from NEDs the difference that made – both personally and to the structure and content of Board meetings.
Fast forward to (nearly) the end of 2022, and most Boards have resumed their usual – in person – meetings. Some who took up new roles over the pandemic are only now meeting their fellow Board members face-to-face, and many non-executives I speak with these days comment on the increased travel commitments since Covid-19.
This return to business as usual has inspired conversations with NEDs about the structural differences between their various Board roles, in particular what it’s like to sit on a Board on the UK versus the US.
Indeed, it has become common knowledge among the executive search community that non-executive directors from the US can be difficult to place on public Boards in the UK. Requiring a greater time commitment and offering lower compensation, UK Board roles are sometimes deemed unattractive by those in the US. So, for this column, I sat down with NEDs who sit on Boards on both sides of the Atlantic, to hear their insight on how the role of the Board differs between each market. Do UK Boards deserve their reputation?
Unsurprisingly, the biggest contrast is compensation. According to research from KPMG, the median salary for a non-executive director in the FTSE 100 was £74,000 in 2021. In the US, however, the average remuneration for an S&P 500 non-executive director surpassed $300,000 in 2021 – up 43% from a decade ago. US Boards are also more likely to offer stock allocation, compared to in the UK, where directors are expected to purchase shares themselves.
The difference in salary is exacerbated by the varying time commitments required by US and UK Boards. “I have four physical meetings a year for my US Board,” said one portfolio non-executive, “and eight for my UK Boards, plus ad-hoc calls, updates and training sessions. It would be unusual not to have at least one commitment a month.”
“I have four physical meetings a year for my US Board,” said one portfolio non-executive, “and eight for my UK Boards, plus ad-hoc calls, updates and training sessions. It would be unusual not to have at least one commitment a month.”
One NED and former Chair of a FTSE 250 business offered another perspective. “In my experience, there are fewer Board meetings in the US but they’re longer – usually around two days,” they reflected. “This leaves more time for conversation around long-term strategy.”
Indeed, many of the non-executives I spoke with pointed out that, beyond governance and oversight, US Boards spend more time reflecting on long-term strategy, while UK Boards are more likely to provide guidance on immediate operational issues. “There’s a different level of expectation,” one NED told me. “In the US, directors aren’t expected to help with day-to-day decision making in the same way.” Another NED echoed this sentiment, telling me that “NEDs in the US act as supporters of the executives, not teammates.”
“NEDs in the US act as supporters of the executives, not teammates.”
I wondered what impact this had during Covid-19, when businesses around the world required increased support and participation from their Boards? “There was definitely a bit of hesitancy about putting in some more calls,” one non-executive director on a US-based board told me. “But once we had established the need to discuss what was clearly a pressing issue, everyone jumped into action pretty quickly.”
Broadly speaking, most NEDs confirmed that Boards in the US are structured more formally, and with greater focus on governance than their UK counterparts.
American Boards work within a more legalistic framework, requiring a process of approving, seconding and voting on every resolution. Committees operate differently, too. One non-executive director told me that “in my experience, you can approach a chair of a committee in the UK and say, ‘do you mind if I just sit and listen?’ But in the US, that’s frowned upon – people don’t go to committees that they’re not members of.”
Linked to this is the role of the Chair. “I’d say that the Chair in the US isn’t nearly as involved in the running of the business as they are in the UK,” one former FTSE Chair told me. “They’re involved in CEO succession, but really their role is to manage the board, run the meeting, and provide governance.”
“I’d say that the Chair in the US isn’t nearly as involved in the running of the business as they are in the UK,” one former FTSE Chair told me. “They’re involved in CEO succession, but really their role is to manage the board, run the meeting, and provide governance.”
Beyond structure and framework, I was interested to hear from non-executives how they felt the role of the Board varied on each side of the Atlantic. Those familiar with Boards of the Future will know that I believe the remit of the Board should extend well beyond governance. Non-executive directors should be asking important questions about a company’s responsibility to its communities and society, and discussing their organisation’s role as a driver of social good.
Interestingly, the responses from NEDs in this area painted a mixed picture. On diversity, most agreed that US Boards are more advanced. The topic has been baked into the national consciousness for longer than it has in the UK, and especially since the Black Lives Matter protests in the summer of 2020, Boards in the US are particularly committed to driving up representation and opportunities for Black people. In the US, institutional investors are explicitly concerned with diversity – both in the makeup of the Board itself and in steps the Board is taking to increase representation in the business.
However, beyond diversity, my conversations showed that UK Boards are more likely to be driven by the values of wider stakeholder capitalism. “In the US, your duty is to the shareholder,” one NED reflected. “But in the UK, there’s a duty of care to your wider stakeholder group – to your supply chain, your customers, your employees and the surrounding communities. It’s a different balance.”
As I write this on Friday morning, I’m thinking about an event I’m attending this evening. I’m heading to the US Embassy for a round table discussion entitled Accelerating Business Growth as a tool for financial inclusion in Black communities. While there are marked differences between US and UK Boards, I know that the best Boards on both sides of the Atlantic – the ones that are looking to the future – share the same goals, and are grappling with the same global issues.
Moira.benigson@thembsgroup.co.uk | @MoiraBenigson | @TheMBSGroup