CGF ARTICLES, OPINIONS & EDITORIALS

Those were the days . . . of directorships (2011-01-31)

February 19, 2015  3803  3803   

Article issued by CGF Research Institute and Goldman Judin Inc.

Somehow it now seems in vogue to simply appoint an individual as a ‘director’; or people may indeed assign this status to themselves in order to self elevate their importance, without realising the potential devasting implications and personal liabilities attached to the title.  This is especially true for individuals who don’t have the credentials to fulfil the position and the fiduciary duties it entails.  In what seems to be a ‘prehistoric’ era -- and prior to the King Reports on Corporate Governance in South Africa -- one has the sense that only a few were eligible for directorship positions and that to acquire these elite positions took much time, training, business skill and acumen.  Of course, there were also those individuals who were fortunate enough to belong to family-run businesses and de facto became directors as the ‘baton was passed down’.  And whilst many of us were perhaps a little too young to understand the implications attached to the by-gone days of these more traditional styled directors, it is a well-known fact that times have changed and the ‘game’ with its rules of directorship have most certainly been seriously altered since the demise of Enron, Worldcom and so many others.

What of course is now crystal clear to directors and their fellow company officers (well for most anyway) is the fact that personal liability is totally unparralled to years gone by.  Being a director is serious business; there is most often big money attached to this post and many have described it as a “contact sport and not meant for sissies.”  Yet somehow, increasingly there are more individuals being appointed to directorship and other executive related positions, many of whom may not have the necessary skills to fufill their duties.  Moreover -- and particularly in an inter connected e-business economy -- the levels of individual performance and experience expected by company stakeholders of directors has notably increased, not least to mention the massive surge of business laws, recommendations, business charters and legislation.  One wonders just how directors cope with such complexities, increasing business competition, pressurised profits, integrated reporting and indeed, greater protection of civil and environmental rights.

Of course this leads to a few questions?  Are directors of today really coping and are they better qualified than their predesecors?  Perhaps these are questions to which answers may not be entirely understood, or even forth-coming? Yet we do know that many directors have become quite brazen, even to the draconian regime where new legislation appears to have overtaken the production cookie machine as they continue in their abusive, self indulgent ways.  Contrary to this argument, many would believe that the recent formalisation and role of the Non-Executive Director (NED), as set out in the King Report on Governance for South Africa 2009 (King III) for example, would assist companies and their board of directors to behave in a fashion which is becoming of a more upright, moral society.