Sitting in too many boardrooms upsets the corporate governance police nowadays, but limiting directorships not only narrows the range of outside experience these people bring to decision-making, it makes them more reliant on one company for their remuneration and thus, less likely to stand up to dominant chairmen or chief executives.
This is especially true of directors who go plural -â€" assembling a portfolio of part-time board positions without having any full-time job. The broad spread of positions means directors can lose one seat -â€" voluntarily or otherwise -â€" without worrying unduly about their total pay.
The portfolio of directorships also means the non-executives bring wide experience from outside the company. If they are restricted to just one other board seat they have much less to bring and risk citing experiences gained many years ago in past part-time roles or from when they held executive positions.
Yet the current thinking on governance is to make non-execs work more days at their company. That leaves fewer days to work elsewhere anyway, but the codes spell out that directors should limit the number of boards they join. For chairmen, that can mean no other directorships at all. The current reviews of boardroom practice by both the Financial Reporting Council, guardian of the combined code on corporate governance, and Sir David Walker's banking report argue for non-execs devoting more time to fewer jobs.
The higher reward for non-executives reflects both the extra time involved and the reduced supply of part-time directors resulting from that policy. The research by Paris-based equity analysts AlphaValue may be reflecting those effects. Its analysis of 3,300 non-executive directors across Europe found that UK FTSE board members' pay rose 10 per cent over the past year to an average of Â£122,000.
That contrasts with a 3 per cent fall for Continental directors, though the survey's translation of UK pay into euros might have distorted the apparent positioning. Only Swiss, Italian and Spanish non-execs beat British board pay, but while comparisons of international rates are important when companies increasingly look across borders to widen their breadth of talent, there should also be concern at the independence of independent directors.
Anyone earning half their income from a single company is surely no longer able to make decisions that are seen to be free of financial dependence on that business. Even receiving a third of income from one source is potentially compromising.
Professional firms are limited in the proportion of fees they can earn from one client. A good governance code would say the same for non-execs. However, such a rule would run counter to the trend to turn part-time directors into full-timers.