Shareholders are considering cracking down on directors who hold multiple roles by warning them they could be voted off boards if they hold more than four positions.
Pension funds have issued the warning in an update on the guidelines they will use to decide how to vote at next year’s annual general meetings of major companies.
In the guidelines, published by the newly created Pensions and Lifetime Savings Association, companies are also urged to disclose their plans to tackle risks such as cybercrime, tax and climate change, and how these plans change from year to year.
PLSA, born out of the National Association of Pension Funds, counts 1,300 pension schemes in its membership, which manage around £1tn of funds.
Luke Hildyard, policy lead of stewardship and corporate governance at the PLSA, said: “Pension funds, our members, are long-term investors and have a clear interest in promoting the long-term interests of the companies in which they invest. It is an essential part of our role to represent these interests to maximise the long-term returns of our members’ assets, irrespective of the potential for short-term discomfort.”
It is the first time that the organisation - or its predecessor bodies - has spelled out how many directorships board members can hold before being regarded as overworked, particularly if they hold seats on committees such as remuneration or audit.
“The issue of time commitment is especially pertinent to the role of chair, particularly where a company is both complex and global in scale and furthermore if it operates within a highly regulated sector such as financial services. A chair’s time commitment may be questioned where they are a director of more than four companies and/or a chair of two or more global and highly complex companies,” the guidelines said.
“In extreme circumstances, shareholders may wish to consider voting against the re-election of an over-committed chair, or submitting a shareholder resolution,” they add.
Directors who are not chairing companies will also be monitored.
