I'm just noticing more and more the amount of them in various companies, after the revelation about directors’ pay at Qantas for example. Made me look at other companies boards and I spotted several of the same faces on other boards.

My own personal feeling on this is that it appears to be a "jobs for the boys" mentality. One that perhaps should face more scrutiny.

Was wondering what people's opinions are about N.E.D.s?

Jobs for the boys maybe, but the role of an NED is to represent the shareholders' interests and ensure that the Exec Directors are running the company for the benefit of said shareholders.

Think of it as a the shareholders' equivalent of a union rep for the workers.

If they are a private company (ie not funded by public money but by private shareholders) then as long as they are making a profit to the satisfaction of those shareholders then what's the problem ?

Many non-executive shareholders are there for their specialist knowledge or specialist contacts and there aren't too many private companies who will throw away overheads un-necessarily - as for further scrutiny you already have that, its called the annual shareholders meeting.

Someone mention neds?

I know what you're saying, but what if...

- the company is making a profit, but the profits would be higher if the company was run more efficiently, OR in the case of some, the exec directors are taking stupid bonuses. Who polices it? Yes, you have AGMs and the like, but who's going to be the shareholders' "voice" in the meantime?

- the company isn't making a profit. The shareholders might demand removal of the board, and in order to do that they have to have someone ON the board to fight their corner (or if shareholders aren't being reasonable, somoene to effectively rein them in)

You're certainly right in that a lot of NEDs work on an effective 'consultancy' basis, with no day-to-day responsibilities. These may be semi retired people who are there only to provide advice or, as you say, specialist knowledge.

with regards to Qantas, which is one of many companies over here where the following has happened. The shareholders have had dividends suspended for quite some time. The share price plummeted. The airline was grounded by the CEO. But recently, The non execs, got between 30,000 to over 100,000 shares recently, and the CEO was given millions of dollars as a bonus. Of course the people that decided he was worth it, were the non-executive directors, you know the ones that people like him got on board. I feel that for people who are purely figure heads, things should be reassessed on who and how they get on boards. Let's face it how has a person that was the former head of the military here contributed to the airline. www.qantas.com.au/travel/airline ... /global/en As you can see, divs have been poor, yet these people still get paid their bonuses. The same non execs, also issued Alan Joyce a bonus incentive of a million odd shares. At the recent shareholders meeting, some of the owners ie. shareholders, gave it to the board. What happened? Nothing. And all the mates still stay on the boards raking it in for performing poorly. This has come up again today with the energy industry sector.

with regards to Qantas, which is one of many companies over here where the following has happened. The shareholders have had dividends suspended for quite some time. The share price plummeted. The airline was grounded by the CEO. But recently, The non execs, got between 30,000 to over 100,000 shares recently, and the CEO was given millions of dollars as a bonus. Of course the people that decided he was worth it, were the non-executive directors, you know the ones that people like him got on board. I feel that for people who are purely figure heads, things should be reassessed on who and how they get on boards. Let's face it how has a person that was the former head of the military here contributed to the airline. www.qantas.com.au/travel/airline ... /global/en As you can see, divs have been poor, yet these people still get paid their bonuses. The same non execs, also issued Alan Joyce a bonus incentive of a million odd shares. At the recent shareholders meeting, some of the owners ie. shareholders, gave it to the board. What happened? Nothing. And all the mates still stay on the boards raking it in for performing poorly. This has come up again today with the energy industry sector.

It is?

All the NEDs I've ever been involved with have had some form of specialist skill or contcts that are of value to the company. They're not involved in the running of the organisation, apart from ensuring that the inside directors are not beating the baby too hard.

Hello, read the rest of my post.

I also never said that the ONLY role of an NED was as I described.

Actually never mind. I'm wasting my breath with you, aren't I?

I did read the rest of your post, I quoted it verbatim. I took issue with the highlighted part, what's the problem with that?

Or are you trying to say we should all second guess what you actually meant to write but for some reason didn't?

A company who doesn't declare dividends to shareholders is starting into a tailspin from which they may not recover, once shareholders start to shift their options to alternative businesses (which they can do almost immediately these days) then it won't take more than half an hour for the markets to react, at that point you'll need a bloody good CEO to convince everyone that they are still a viable quoted business.

If that CEO and his directors are creaming the company and awarding outrageous bonuses and/or share deals then it won't be a tail spin it'll be a nose dive and they'll be gone - its the one good thing about capitalism, publicly owned companies have to be absolutely transparent and any whiff of wrong-doing can be spotted very quickly.

I like my aviation analogy there - see what I did then ?

I'm sure the shareholders of Enron, RBS, Lehman Brothers and many others will be pleased with that...

...and their tail-spins were noteworthy too.

Thing is, it's all done properly. Announcements ARE made to the ASX, they make a small profit, get all their target bonuses and general share options as they've all decided amongst themselves to get and the shareholders get NOTHING and a share price that's worth less. It's not right. I know life isn't fair, but things should be done about jobs for the boys. Will never happen, but in the days after the GFC, might be worth considering removing some NEDs who scrape money off the top whilst the general public get nothing but an ulcer. I really do have to question why you have some NEDs in the first place. At Qantas Peter Cosgrove was a highly regarded military man. A soldier who was a fantastic servant to the country and helped in East Timor. Seriously. What can he add to a board of an airline, apart from being someone famous?

Here is what Peter John Cosgrove got as shares in 2011 alone:
Indirect interest when mentioned: • personal superannuation fund (Super Fund)
• Qantas Deferred Shares held by the Qantas
Deferred Share Plan Trust (DSP Trust) through
participation in the Non-Executive Director
Share Plan (NED Plan), of which Pacific
Custodians Pty Limited is the trustee

17 March 2011 – 2,279 Ordinary Shares
Totals: Indirect Interests held to that point:
• 2,314 Ordinary Shares - Super Fund
• 18,451 Ordinary Shares - NED Plan


15 June 2011 - 2,588 Ordinary Shares
• 2,314 Ordinary Shares - Super Fund
• 20,730 Ordinary Shares - NED Plan

3 Nov 2011 - 3,043 Ordinary Shares
• 2,314 Ordinary Shares - Super Fund
• 23,318 Ordinary Shares - NED Plan

15 Dec 2011 - 3,152 Ordinary Shares
• 2,314 Ordinary Shares - Super Fund
• 26,361 Ordinary Shares - NED Plan

Automatic allocation of 3,152 Ordinary Shares
under the NED Plan. Peter Cosgrove acquired
these Shares by salary sacrificing part of his
Director fees. These Shares were purchased onmarket
and are held by Pacific Custodians Pty
Limited as trustee of the DSP Trust.

So you see, he could get more shares as part of an arrangement with the other members to get part paid in shares, whilst shareholders got nothing. Cosgrove got probably the least allocated shares. But what does he do? He's famous (in Australia).

Yes I did get your analogy. Very good. How can they pull up? Though I am in "yaw" of your answer. Maybe you can pitch it to them? Maybe you can be a star on their board?

Should also mention he got $181,000 Cash FAR, $41,000 non cash benefits as well as $12,000 worth of travel.

Not bad for attending 8 board meetings is it.

So basically an ordinary shareholder in Qantas has received no dividend income on their shares but has seen a majority vote through substantial benefits to the board of directors despite their admitted difficulties ?

If I were an ordinary shareholder in such a situation I'd be looking for an exit, however its likely that most of the shares are held by pension funds and the like and its as much in their interests to keep the company and its share value alive than to condemn the few directors who are legally scamming.

You might also like to read up on the breaking news on the Japanese firm Olympus who's directors have been slightly less than honest to its shareholders for decades...

Given that many shareholders (pension funds, fund managers etc) are very transient, are merely betting on the price of the shares and don't actually give a hoot about the long-term prospects of the company or how much the board are paid, there isn't much opportunity for restraint and boards can more or less pay themselves what they like.
Once one of them increases board remuneration, the rest have the "justification" to do the same.

Indeed, the fund managers themselves are probably way overpaid and aren't going to rock the boat.

Which, of course, is why the PM's comments on executive pay were merely an attempt to placate the slightly-stroppier-than-usual plebs.

Yes, once he spotted the [iDaily Wail[/i having a rant about it, he realised that middle England would be interested.
A few tough words about "looking at the problem" and it's all sorted, so that's OK.

A bit like his dealing with banking regulation, he's all mouth and trousers.

Did you know that was all Labour's fault for not regulating tight enough?
Yeah, I know the Tories were forever whinging about regulation being too tight whilst pointing at Ireland as a model economy but let's not let an opportunity to blame Labour go unused, eh?

In the meantime, it seems that we're all helping to pay for two epitomes of [url=http://www.independent.co.uk/news/uk/politics/taxpayers-foot-the-bill-for-lossmaking-banks-lobbying-6287846.htmlbanking probity to work against regulation[/url.