“Gold-plated governance” as opposed to a focus on strategic outcomes is dictating boardroom decisions at small to medium-sized companies, according to the latest research.
A survey by finnCap, in conjunction with Quoted Companies Alliance (QCA), found that board selection and remuneration decisions are driven by top-down policy as opposed to strategic outcomes.
The QCA represents over 1000 small and mid-sized publicly traded firms.
“Companies are hesitant to deviate from best practice, for fear of backlash from proxy agencies and in some cases, shareholders,” the report said.
Surveying over 100 non-executive directors (NED), strategic advisory firm finnCap and QCA found the role of the NED in a smaller company is very different to that of one at an established firm, the main difference a smaller NED is expected to assist in strategy setting and delivery.
Three out of five NEDs said they actively turned down roles, with 98% of those claiming the work required and risk profile had changed significantly in recent years as a reason by refusing a position.
Over 80% said that the average remuneration did not represent the work and risk profile while 95% said the pay was not aligned with other markets.
Investor perception, it said, was the main barrier to remuneration.