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Number of job hunting non-executive directors trebles over the last three years

Number of job hunting non-executive directors trebles over the last three years

Fall in number of available roles

There is a growing number of career Non-Executive Directors (“NEDs”) who specialise in working for unlisted companies seeking assignments, says Otravida, a leading executive search firm.

According to Otravida, there are now approximately three times more NEDs applying for each available NED role within an unlisted company than in 2009.

Otravida says a reduction in available NED roles has contributed to an increase in job-hunting NEDs, adding that companies have reduced their use of NEDS to cut costs. However, Otravida warns that research shows that unlisted companies that performed best in the last recession were those that used NEDs (“How Companies Succeeded in the Recession”, Prof Roger Hussey, Bristol Business School).

Otravida says that unlisted companies are also making far less use of “rainmaker” NEDs to help raise equity funding from private equity or other investors.

Michael Aitchison, Principal Consultant, at Otravida, says: “The recession means that many unlisted companies have scaled back their ambitious growth plans, with fewer looking to raise large amounts of equity. That means less demand for NEDs to guide them through that growth trajectory and less demand for the NEDs needed to explicitly attract investors or to help get the business investment ready.”

Michael Aitchison says the reduction in the use of NEDs by private equity backed companies is far lower than amongst other unlisted companies.

Explains Aitchinson: “The use of NEDs is central to way that PE houses work, so they are far less likely to reduce their use of NEDs to cut costs.”

“Whilst demand from PE houses is lower because they are making fewer new investments they still appreciate the need for proper corporate governance and want specialist support for the management in their current investee companies. NEDs are often the best way of providing that. PE houses are far less likely to scrimp on NEDs than other privately owned businesses.”

Unlike NEDs at large listed companies NEDs at unlisted companies spend far less time on dealing with compliance and executive remuneration issues and much more time on helping executives deliver operational improvements or executing strategy.

Says Aitchinson: “The line between NEDs and executive directors is much more blurred within an unlisted company than within a listed company. Typically unlisted companies are looking for NEDs to deliver value rather than just protect shareholder value – which has become the role of NEDs at listed companies.”

“At unlisted companies NEDs are expected to play a major part in delivering the kind of rapid growth that will either help attract the first tranche of outside investors or allow for a private equity investor to make their exit.”

Otravida explains that despite an increase in the number of qualified NEDs with gaps in their schedules, pay remains stable.

Michael Aitchison explains: “Several years of pay growth are now starting to settle down, but pay for these specialists remains high. Salaries for NEDs at unlisted companies average between &pound15,000 and &pound30,000 per year for just 2-4 days input per month.”

Otravida says that NEDs of unlisted companies will typically look to build a portfolio of four to five different NED roles plus four to five days a month of other advisory or consultancy roles.


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