Category: Governance
Share ownership or retention requirements for NXDs are almost universal in the US, but there is another way. Share ownership or retention requirements for NXDs are almost universal in the US, but there is another way. Share ownership or retention requirements for NXDs are almost universal in the US, but there is another way.
Feb 24th, 2020
According to a Willis Towers Watson governance survey, non-executive director stock ownership guidelines and retention requirements are nearly universal in the S&P 500 in the US, with 95% of companies having one or both.
Such findings clearly show a ‘nearly universal’ acceptance of the theory that it is good for non-executive directors (NXDs) to own stock in the company on whose board they sit.
But what about outside the US?
According to compensation consultants, Meridian Partners, a substantial majority of companies in Canada also have ownership requirements for NXDs. And outside the North American continent, for example, in Australia, market commentators have been encouraging NXDs to own shares in order to align their interests with those of other shareholders. The Australian corporate governance code notes it is “generally acceptable” for NEDs to be paid in shares, to “align their interests with the interests of other security holders”