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60 N. Ir. Legal Q. 51 (2009)
Non-Executive Directors and Corporate Governance

handle is hein.journals/nilq60 and id is 53 raw text is: NILQ 60(1): 51-62

Non-executive directors and corporate
governance
SALLY WHEELER
Queen's University Belfast
he focus of this contribution is on corporate governance and corporate boards in the
public, for profit, sector, in particular the role of non-executive or outsider directors,
and the ideas of accountability under which it is presumed they operate. However, the
message of the paper is wider than this. Given the nature of corporate power in the global
context, ensuring accurate and trustworthy corporate governance is a broader issue than
simply one that concerns individual shareholders or nation-state-level economic policy.1
The world's largest corporations have turnovers in excess of the GDP of many individual
states and have a transworld presence in the sense that their market listing is not confined
to one nationally based exchange. At the domestic level, there is an argument to be made
that corporations are not any longer private actors. They are public actors in terms of power
and influence in areas such as environmental impact, location and relocation decisions, and
corporate social responsibility
The most popular and pervasive model of corporate regulation sees the shareholders of
the corporation as those most in need of the protection of good governance. This model
naturally emphasises the private nature of the corporation and its governance structure. Its
dominance means that it makes sense to accept this model for the purposes of this paper,
although it is possible to find vigorous condemnation of it among UK and US
commentators2 for its concentration on financial performance, short-term profits and its
neglect of wider interests. Taking just two points of qualification should make it clear that
governance failure has consequences wider than the official model would lead us to believe.
The first is that the rise of defined contribution pension plans in the UK and the US makes
many employees interested parties in corporate governance through the medium of
institutional investment. They are literally arms-length investors, for their financial wellbeing
post-retirement depends on favourable market returns on their personal retirement
investment plan. The second is that a key function of boards of directors is the monitoring
of the strategic direction of the corporation's business model and its risk management
contingency. Should these functions and the monitoring of them not be exercised properh;
it is likely that the pool of those looking for accountability will be wider than simply
shareholders. Fannie Mae and Freddie Mac in a US context and Northern Rock in a UK
I  MI HuLc Rccwing management and governance: new paradigms of govcrnancc?' (2003) 7 J of .\ik. and
Gov 211-21.
2   1. Mitchell, Progressive Corporate Lan (Boulder, Colorado: \Vcsrview Prc.s 1995).

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