Overboarding in the UK: How many seats is too many

4 min read

In recent years "overboarding" has become an important issue for many UK companies and investors alike. Several large asset managers as well as proxy advisors, including Vanguard, BlackRock, and LGIM, have tightened their voting guidelines to apply stricter criteria beyond the UK Corporate Governance Code, and certain directors serving on multiple public company boards have faced significant opposition to their elections.

What is overboarding?

Overboarding refers to a director who is perceived to be sitting on an excessive number of boards which can result in an under-commitment of time and attention.

The idea that directors should not serve on too many boards has been a key consideration for investors for many years. The main concern for investors and companies focuses on the ability of directors to fulfill their responsibilities given the time commitment associated with each directorship; and as corporate governance and investment stewardship standards evolve, so does the definition of an overextended director.

UK Corporate Governance

The current guideline for director roles in UK listed companies is set in the UK Corporate Governance Code  ("UKGC") which states that if you are a top executive at a company, you should only take on one FTSE 100 non-executive directorship. For chairs or other non-executive directors, there is no limit but the individual must "allocate sufficient time to the company to discharge their responsibilities".

Investor Approach

In recent years investors and proxy voting advisers have taken a harder approach to director overboarding. With recent media coverage and investor pressure (media coverage and investor pressure) we believe this trend will continue as boards continue to face uncertainty and increasingly complex risks.

Ahead of the 2023 AGM season, we have summarised director overboarding policies of key proxy advisory firms, asset managers and institutional investors in the chart below.

Director overboarding summary

The chart below summarises the director over-boarding policies of key proxy advisory firms, large institutional investors and asset managers for UK and European portfolio companies. We note that some policies are specifically UK and European focussed whereas others are global policies.

  Maximum number of other Public Company Boards before a person is considered overboarded  
Institution Name  If a Public Company CEO If a Public Company Executive If a Non-Executive Director Notable Features
Alliance Bernstein (2022) 1 N/A 3  
BlackRock (2023) 1 1 3

If a public company executive (including CEO) then the limit is one other non-executive role (and cannot be board chair).

If non-executive board chair, limit of only two other public boards.

If non-executive board chair on two public companies then no other public company boards.

CalPERS (2022) 2 2 4  
CalSTRS (2021) 2 N/A 4 Lower limit applies only to public company CEOs; silent on other public company executives
Fidelity (2022) 2 N/A N/A Limit applies only to public company CEOs; silent on other public company executives and non-executive directors
Glass Lewis* (2023) 1 1 4

GL generally count non-executive board chair positions at UK and European companies as two board seats given the increased time commitment associated with these roles. 

Accordingly, we would generally consider an executive officer of a public company that also serves as a non-executive chair of another UK or European company to have a potentially excessive level of commitments.

Goldman Sachs (2022) 2 N/A 4 Lower limit applies only to public company CEOs; silent on other public company executives or blend of NED and executive roles.
ISS (2023) 2 N/A 4

Any person who holds more than five mandates at listed companies will be classified as over-boarded. 

For the purposes of calculating this limit, non-executive directorship counts as one mandate, a non-executive chair counts as two mandates, and a position as executive director (or a comparable role) is counted as three mandates.

Also, any person who holds the position of executive director (or a comparable role) at one company and a non-executive chair at a different company will be classified as overboarded.

JP Morgan (2022) 2 N/A 3 Lower limit applies only to public company CEOs; silent on other public company executives
Legal & General (2022) 1 1 4 Board chair roles count as two roles and a practising executive director should not hold more than one non-executive director role with an unrelated listed company.
Morgan Stanley (2023) 2 N/A 4

While this is Morgan Stanley's general policy, we note that market expectations are incorporated into their analysis or whether to withhold support or vote against overboarding.

Numbers included in this row are U.S. board focussed and we note that MS may adopt a position closer to Legal & General or ISS/Glass Lewis.

Norges Bank (2022) N/A N/A 4

Catch-all for directors who "[have] too many board or management roles to fulfil effectively his or her responsibilities at the company".

Voting policy also includes a limit of two board chair roles.

Northern Trust (2023) 1 N/A 3 Lower limit applies only to CEOs; silent on other public company executives.
NYC Comptroller (2019) 2 N/A 3 Lower limit applies only to CEOs; silent on other public company executives.
State Street (2023) 1 1 4 SS may withhold votes from board chairs and lead independent directors who sit on more than three public company boards, and from non-executive directors who hold more than four public company board mandates. 
Vanguard (2022) 1 1 4  

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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

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