I REFER to last Thursday's report, 'Wang Kai Yuen named as director of CAO'. Dr Wang is a respected and competent person who holds 14 directorships in listed firms. It is natural that public-listed companies would want him on their boards.
There are many good senior corporate executives who hold numerous directorships in Singapore. The critical traits of a director who is worth his salt should satisfy the three dimensions of effective leadership: competence, character and commitment. It is a given that any corporate board, to meet regulatory requirements, will have reasons to justify its directors' competence and character. However, not every company can vouch for the third trait - commitment (of time). This is especially true of directors who hold many directorships.
The annual survey, What Directors Think 2007, conducted by PricewaterhouseCoopers with US corporate boards, revealed that from its database of 48,950 directors from 5,772 public traded companies, 'the highest number of directorships held by one individual is 10. The vast majority of directors hold only one board seat'.
It is debatable whether the quality of human capital and talent in the US is superior or inferior to that in Singapore.
Market efficiencies there allow companies to cherrypick choice directors and even close their doors on busy ones who serve on multiple boards.
Stakeholders who ultimately gain from the fiduciary duties of a committed director are the investors. Singapore is a small city-state with limited human capital and resources. The brain drain of some of our top talent to First World economies only exacerbates the problem of retaining committed senior executives to lead listed companies in Singapore.
I suggest the authorities:
Safeguard shareholders' interest by limiting the number of directorships any director can hold in a public-listed company; and
Require corporate boards to seek and increase the ratio of foreign directors versus local talent to enhance the quality of leadership and corporate performance. In genetics, this is known as 'hybrid vigour'.
