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Responding to reports directors in the Cayman Islands are sitting on multiple boards, Professor Meziane Lasfer of Cass Business School, said:
“Reports that some non-executive hedge fund directors in the Cayman Islands are sitting on more than 100 boards each is a concerning revelation for investors. By holding so many jobs, it is a fantasy for any director to think they can perform their fundamental duty of protecting investor interests.
“Firstly, the directors are unable to accomplish the crucial monitoring role they should play in ensuring funds are performing well and generating good returns for investors. Secondly, the directors cannot properly fulfil the duty they have to advise managers on the fund’s investment decisions.
“These activities can only be accomplished by being present and active at the board meetings. Empirical evidence shows that companies hold, on average, 11 meetings per year. If each of the meetings lasts one day, non-executive directors can attend only about 33 meetings a year, assuming that these board meetings do not clash. If they sit on 100 boards, they will have to miss 67 meetings, begging the question why these directors are being paid for doing nothing.
“All of this results in a weak and inefficient board, in which managers have a free-ride in decision-making and risk-taking, and investors are left worryingly exposed.”
