Last week, Applegate held one of our regular Board meetings, on this occasion at our office in Plymouth. In addition to our executive directors and management team, we were joined by our independent directors: Lawrence Churchill our chair, and Professor Jim Norton.
Applegate is unusual amongst privately owned businesses in having independent directors and in complying with the UK Corporate Governance Code requirement that they hold (with the chair’s casting vote) a majority on the Board. By comparison, a study by Spencer Stuart showed that independents make up 72% of directors of FTSE150 firms – looking internationally the proportion varies from only 35% of the directors of major Russian businesses to 80% in Norway.
Independent directors are non-executives: they don’t work full time in the business, and typically they may sit on the Boards of several companies, charities, and public bodies. Crucially, to be independent they must also be free of any major ties to the business: they can’t be major shareholders, former employees, or related to staff. Their role is to look out for the interests of the business and all its stakeholders, impartially and without bias to any group.
Personally, I believe more private, entrepreneurial companies should consider appointing independent directors. Building a business, one is inevitably caught in a maelstrom of day to day activities – client service, hiring, product development, reporting, operations, sales, snow disruption and an endless list of other competing priorities. Independent directors bring a broader perspective, a different way of thinking and invariably their experience enables them to see parallels and contrasts with the development of other firms. Beyond this, preparing to discuss the business with independent directors is a great forcing mechanism to make the management stand back from the routine and consider the broader outlook.
So, today and every day, we celebrate our Independents Day.