Why Directors Are Accountable To Their Shareholders.Independent directors need to be protected from being terminated or voted out and personally sued, due to their whistleblowing function on behalf of existing shareholders and public investors, generally. Independent directors usually have only a small financial stake in the companies in which they are involved and are generally not required to make significant investments in order to become or remain as directors. Directors
Independent directors endowed with expertise and an independent disposition can bring about the much-needed transformation in boardrooms and board meetings can become effective strategy sessions rather than remain as occsions where form supersedes substance. That is where the independent directors come in. This will change if companies seek out the best of independent directors as a business need. Independent directors on audit committees provide one of the best ways of reinforcing both internal audit and annual statutory audit. This brings up the next question of appropriate remuneration for competent independent directors. '' This is also true when it comes to independent directors. Without attractive remuneration, the best persons will not offer themselves as independent directors. It is erroneous to say that attractive remuneration will erode the independence of independent directors. But if large corporations start offering attractive remuneration as a norm, competent independent directors, who are not many in number, will have a choice and will not compromise their independence. Independent Independent directors should be independent of their companies, shareholders and associated parties and must be accountable to public shareholders," explains Ramesh. Independent directors should seize the opportunity to "police" their board's balance. Independent Directors) must make maximum contribution to the deliberation of the board and helping the board. Independent directors should have appropriate skills, experiences and other characteristics to provide qualified persons to fill all Board Committee positions required to be filled by independent directors. Independent directors generally lack access to information about what is really going on in a company, while non-independent directors--and especially insiders--generally have access to this information. Independent directors should hold regular meetings where management is not in attendance, and the board should have a written mandate with certain specified features. Independent directors are performing a public gatekeeping function on behalf of existing shareowners and public investors, generally. The result of these stipulations is that there is now a scramble for independent directors. This is a very real problem for independent directors. However, what seems to have been missed in this debate is the importance of independent directors. Independent directors are therefore also seen as a check on the management of companies, as an oversight mechanism, apart from the value addition that they bring to board deliberations. |