Home Directory The Institute of Directors in Ireland Increasing complexity and time commitment of Non-Executive Directors’ roles - Institute of Directors in Ireland (IoD) research

Increasing complexity and time commitment of Non-Executive Directors’ roles - Institute of Directors in Ireland (IoD) research

The roles of Non-Executive Directors (NEDs) in Ireland have become more complex and onerous over the past three years, according to research published today by the Institute of Directors in Ireland (IoD),

with more time being spent preparing for, travelling to and attending board and committee meetings in order to fulfil their roles.

The research* was gathered from an online survey of 385 IoD members.  The respondents serve as NEDS on the boards of a variety and number of company types.  Most serve with private (58.38%) or not-for-profit (54.71%) companies, followed by State / semi-state (26.18%) and plcs (17.54%).

Directors’ roles are increasingly complex and time-consuming

The vast majority of respondents say the time needed to fulfil their role has increased over the past three years.  Most spend up to 40 hours per year preparing for board meetings and almost half spend a further 30 hours a year travelling to them.  A majority also spend more than 30 hours a year serving on board committees.  84% of non-executive directors conduct their work from a home office or shared office, despite the fact that Revenue officially regards their place of work as being the boardroom.

Key findings:

  • Time Commitment:  A majority say the time involved in their role has increased in the last 3 years – 72% plc, 71% private, 65% Not-for-profit, and 54% for State/semi-state. 
  • Duties:  In addition to attending board meetings, almost 60% spend more than 30 hours a year carrying out a range of work associated with their role, mainly in the following areas;
  1. Preparation work ahead of meetings
  2. Keeping abreast of relevant business developments and legislation
  3. Contributing to the strategic development of the business
  4. Providing counsel and guidance to the chairperson / management team
  5. Meeting with financial and professional advisers
  6. Over 65% also sit on board committees, with more than half (52%) spending 10 to 40 hours a year working on them. One in five (20.11%) spend more than 50 hours a year.
  • Travel:  40% spend more than 30 hours a year travelling to board or board committee meetings.
  • Number of board places:  69% of the respondents hold 3 board positions or fewer, and almost one third (28.8%) serve on just one board.
  • Workplace:  Although Revenue considers the Boardroom as “the place of work” for tax purposes, 84% of NEDs consider their place of work to be either a home office or shared office space.
  • Company type:  Most NEDs serve on the boards of private companies (58.38%) or not-for-profit boards (54.71%) followed by State / semi-State (26.18%) and plc companies (17.54%).

Maura Quinn, Chief Executive of the Institute of Directors in Ireland (IoD) commented; “Unsurprisingly, today’s research shows that, with more stringent regulation, increased complexity, heightened scrutiny and a focus on risk across the sectors, the time given to attending and preparing for board duties has increased substantially in recent years.”

Unequal Tax treatment of non-resident NEDs

The research confirms that on the boards on which they sit, there is an almost 50/50 split between resident and non- resident directors in private companies, and that a further 28% of NEDS travel to board meetings outside ROI.

Key Findings:

  • Board make-up:  Just over half of all private company boards (50.22%) contain a non-resident NED.  77% of plcs have a non-resident NED.
  • Travel abroad:  28% of all respondents travel to board meetings outside the Republic of Ireland.

The legal and fiduciary duties of resident and non -resident directors are the same.  We currently have non -resident directors in Ireland being treated in a different way, in terms of the tax treatment of expenses, which is wholly inequitable. Non- resident directors can reclaim vouched travel expenses at cost, whereas resident directors must pay tax on these. This makes no sense and is unfair. Those resident directors who travel to board meeting abroad are also penalised in the same way,” said Maura Quinn.

We need to rectify this anomaly and treat all directors equally.  In our view, the current situation is restrictive.  It places an undue burden on small, Irish-based companies who want to attract NEDS from within the Republic of Ireland. This situation can be easily rectified and we have asked the Minister to address it in the forthcoming Finance Bill 2016.

* The research was conducted online in July 2016 with a sample of 385 members of the Institute of Directors in Ireland.

04/10/2016