Chapter 5: Bounding The Role of the Director

Despite the rising importance of boards of directors to corporate life, there remains a dearth of advice on how, practically, directors can manage the multiple roles they generally take on. This is leading to a growing groundswell of support for limiting the number of directorships directors can hold. In the United States, for example, the Council of Institutional Investors (2004) suggested that directors with a full-time job should not sit on more than two other boards and current CEOs (chief executive officers) should only serve on one other board. In the United Kingdom, the Combined Code (Financial Reporting Council, 2003) recommends that full-time executive directors should not take on more than one non-executive directorship in a FTSE 100 company, while in Australia the Australian Shareholders’ Association has issued a policy limiting the number of directorships to five (Galacho, 2004; Moullakis, 2004).