Fund chiefs to focus more on views of non-executive directors
FUND managers will be scrutinizing non-executive directors sitting on the boards of publicly quoted companies in future, the chairman of the Irish Association of Investment Managers said yesterday.
Fund managers have focused too much on the views of company executives during the boom and failed to listen to the views of non-executive directors, the IAIM's Gerry Keenan said yesterday.
"We certainly failed to hold boards to account," said Mr Keenan who is also chief executive of Irish Life Investment Managers.
"Institutional directors took too much for granted in terms of the quality of directors."
The position of non-executive director is often seen as a well-paid reward for members of the business establishment, with many directors picked from a small coterie of figures who have served as executives in other listed companies.
Fund managers have not paid enough attention to why people are appointed to boards and what contribution they will make, Mr Keenan added.
"I believe we will have to change that. Institutional investors will have to become much, much more engaged with boards."
Admitting that fund managers had lost "a huge amount of money," Mr Keenan called for systemic reforms of his industry and a relaxation of the strict rules, which he said makes it difficult for analysts to get too close to companies.
Saying analysts are too desk-bound, Mr Keenan said they needed to regain the ability "to dig beyond the highly sanitised information" given by companies.