Improve Board Effectiveness: The Need for Incentives
University of Florida - Warrington College of Business Administration
British Journal of Management, Vol. 16, No. S1, pp. S81-S89, March 2005
Roberts, McNulty and Stiles (2005) focus on the attitudes and behaviours of non-executive directors in their recommendations for improving board effectiveness. This paper addresses the importance of providing incentives for non-executives in order to improve board effectiveness. It first points out that the current norms and practices in corporate governance suggest that, without strong incentives, non-executive directors are unlikely to become engaged in corporate governance, to challenge executive decision, and to remain independent of executive influences. It then proposes that, for non-executive directors to develop the attitudes and behaviors recommended by Roberts, McNulty and Stiles, it is important to require them own a significant amount of company stocks over a long period of time. It also addresses some concerns regarding the use of stock ownership to improve the effectiveness of non-executive directors in corporate governance.
Number of Pages in PDF File: 9Accepted Paper Series
Date posted: March 13, 2005
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