The Senior Independent Director (SID) is now firmly established as an essential feature in the UK corporate governance landscape.

The revised UK Corporate Governance Code, published in May 2010, extends and clarifies the SID’s role, and includes new language about its scope and purpose.

The code revisions were based on a year-long consultation process which established broad support among investors and directors for the position.

It was not ever thus. When Sir Derek Higgs proposed in his 2003 report that boards formally name a senior independent director, his recommendation attracted intense criticism.

To many business commentators, the move threatened to create an unnecessary centre of power on the board, challenge the legitimacy of the chairman, and confuse relationships with institutional investors.

Since then, however, the role has made a highly successful evolution and has also been widely adopted across a range of other organisations in the public and not-for-profit arenas.

This paper, informed by our daily conversations with chairmen, SIDs and other directors of companies of all sizes and operating across all sectors, examines the challenges of the SID position.

Its looks at the formal aspects of the role, now more clearly defined, but also some of the informal responsibilities. It asks whether the SID should be a natural successor to the chairman, and what the requisite qualities of a strong SID are.

It concludes that at a time when boards are coming under ever more scrutiny, SIDs play a vital part in enhancing board effectiveness.

Truly the senior independent director has come of age.

 

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Kit Bingham

Kit Bingham is a Partner in the Board Practice at Odgers Berndtson, and Head of the Chair & Non-Executive Director Practice. Kit joined after a career in financial journalism and financial public r...

Susanne Thorning-Lund

Susanne advises on Board composition and succession of Chairmen, independent Directors and CEOs. Her international client base encompasses Fortune500 and CAC40, to start-ups, multi-generational fam...

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