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Look At A Typical European NED /Think About Cyber Risk

Posted on January 16, 2014 at 1:00 PM

Let's take a look at the typical European non-executive director.

A 60 year old man, he is from the same country where the company he serves is listed and/or headquartered, and has spent the majority of his career in that country. Last year his fees were €86,000 but if he were a chairman, he made almost three times that amount. Of his eight colleagues, only two are women.

Shocked and depressed ? Start thinking about cyber risk and you might even be scared.

The Cisco 2014 security report out today highlights the increased sophistication and proliferation of threats. It is every plc board's responsibility to include them in its assessment of risk - and to develop a plan of action.The report also indicates a shortage of about a million security professionals across the globe.

But let's get back to our NED senior citizen, the person responsible for supporting management but asking the difficult questions to enable the best strategic decisions. Non-executive directors in Europe 2013, a report by global management consultancy Hay Group paints an interesting picture which for my money shows considerable resistance to change in Europe's boardrooms. You could even say they demonstrate a certain stubborn imperative, a disinclination to change - and this is in a world moving very very fast on technology.

Ah, but the gender mix continues to improve. The pace however, is "glacial" in the words of Carl Sjostrom, regional director, Reward Services Europe at Hay Group. 

And while women are getting more NED roles, guess what ? The study shows that the pay differential with men has actually grown - three years ago the average pay gap was 7%, in 2012 it was 9% and by 2013 it had risen to 10%.

The reason given by Hays is that more men than women secure positions on board committees, which carry extra fees. I'm willing to bet it's also because male power is being encroached and this is one way of making sure there are two tiers to NEDs - male and female. And Mr Sjostrom says: "If we look at the data from a country perspective we see large variations; in Germany and Italy, for example, men are paid 22% more than women." (my emphasis)

Anyone interested in the differences across Europe on pay should look closely at this report, for it points out that they "are stark."

At best, one could get excited about two developments on European boards. One is that board committees have become more diverse - in 2011 65% of audit committees had no women, whereas by 2013 it was 43%. With remuneration committees, increasingly on a par with audit in attracting highest fees, in 2011 69% had no women - and by 2013 the numbers had dropped to 48%.

The second point is that, according to Hay Group, European boards are becoming more culturally diverse, reflected in their internationality. Between countries however, there remain marked differences.

I encourage you to read both the reports - from Hay Group and from Cisco - at the same time. A 'glacial' pace of change in Europe's boardrooms in a world getting hotter by the minute ? What could possibly go wrong?

Categories: Accountability, Leadership, Technology