GLOBAL - A global pressure group has called for non-executive directors to be denied access to retirement benefits usually granted to members of the board.

The UK-based International Corporate Governance Network (ICGN) published proposed global guidelines suggesting a new approach to the pay structure of non-executive directors, which they hope would result in more transparency and accountability.

The guidelines, drawn up in consultation with a nine member committee, including Hans-Christoph Hirt of Hermes Fund Management, argue that as the non-executive directors are elected to represent the interests of shareowners, rather than those of company employees, they should not be offered membership in defined benefit (DB) plans or deferred stock awards.

"Non-executive directors should not receive 'sweeteners' for deferring cash payments into company stock," the new guidelines further stated. ICGN added that non-executive directors should still be allowed to defer cash pay with the help of a deferred remuneration scheme, but that these "should mirror those offered to employees in broad-based deferral plans".
The proposals hope to increase accountability and argue that non-executive pay should only consist of a cash retainer and equity-based remuneration, although all equity should be subject to a holding period.

"While practices differ from country to country, continent to continent, we all agreed that this was an important policy and that the principles of accountability, transparency and alignment of interest were agreed upon principles that should exist in the setting of all non-executive director remuneration programmes," said Ted White, chairman of the ICGN Remuneration Committee.

Christianna Wood, chairman of ICGN agreed, arguing that a "conflict of interest" existed when directors set their own pay and that they therefore "need to provide the utmost transparency and clearly state the board's philosophy behind the director remuneration programme".

Other proposals outlined in the guidelines include abandoning meeting attendance fees, calling this "the most basic" duty of a non-executive director, as well as opposing performance-based remuneration. Additionally, the group said there should be no severance pay "of any kind" for the directors.