When Robert Ayling was fired as chief executive of British Airways in March this year, into the breach stepped the man who sacked him. As chairman of BA, it was Lord Marshall's task to tell Ayling his services were no longer required. As a former BA chief executive himself, Marshall seemed an ideal temporary replacement. But although investors may have rejoiced at the departure of the increasingly maligned Ayling, elsewhere there was little euphoria at the choice of stand-in.
Shareholders in Inchcape, British Telecom, Invensys and HSBC were entitled to ask just what value they would be getting from BA's new day-to-day boss. For Marshall does not sit on just the board of BA, he sits on theirs as well. Since stepping down as CEO of the World's Favourite Airline in 1996, Marshall has added directorship after directorship - prompting one wag to quip that the only board he would not join was a skateboard.
As well as being a director of five of Britain's biggest companies, he runs Britain in Europe, the pro-European campaign, chairs the troubled foreign affairs institute Chatham House, and is on the board of the New York Stock Exchange and the London Development Partnership.
Marshall's corporate collecting is a sensitive subject. Asked about it, his spokesman is quick to point out that he has now decided to relinquish the NYSE and London Development jobs. As far as the others are concerned, there is method in his approach: 'Each of his companies has an important relationship with BA, therefore there are benefits all round,' explains Marshall's man. 'He is an executive only temporarily and that is understood and supported by his other companies. Plus, he is very prolific. He is not a nine-to-five person, he starts at seven and finishes late at night - it is not as if he is trying to divide a nine-to-five day.' Certainly, one boardroom witness to Lord Marshall's work describes him as always being on time, fully briefed and ready with the right questions.
Although it is hard to discern the advantage to BA of its chairman and chief executive (temporary) sitting on the boards of BT, Inchcape and the rest, there is a clear benefit to Marshall in putting himself about: money. Like many senior businessmen (and the occasional woman) he has built a second, lucrative career from being a serial director.
Non-executive directors stand accused of a shameful failure to exercise effective corporate governance. It's an old boys' club, the critics say, a self-reinforcing conspiracy against the shareholders and the long-term interests of the company. But the spotlight falls on the non-executive director only in times of crisis, as at BA. If they help avoid crises, they are doing their job and the outside world never gets to hear about it. If the boardrooms you inhabit remain calm, why not hold down several posts?
A study of the FTSE 100 by Pensions Investment Research Consultants (PIRC) reveals that a small group of people account for a large number of directorships.
And, if you sit on several boards, nice work it can be, too. According to Julia Budd, non-executive director specialist at Egon Zehnder, Europe's biggest executive search firm, the going rate for a non-executive directorship of a FTSE 100 firm is pounds 35,000 to pounds 40,000, with a chairman able to command four times that amount. Smaller companies pay less, typically around pounds 15,000.
Executives may not like it, but they must have non-executives. Long gone are the days when Tiny Rowland of Lonrho could famously dismiss independent directors as 'baubles on a Christmas tree'. Today, they are a standard ingredient of good company practice, recommended by the Combined Code, issued by the Hampel Committee on corporate governance.
A board of a large company will have at least three non-executive members plus an external chairman. The board's audit and remuneration committees will usually comprise independent directors and they will also hold the majority on the appointments committee. Their job is to represent the shareholders' interests, to put them first.
In reality, the executive directors are often their friends, prompting John Monks, General Secretary of the TUC, to describe the way non-executives sit on remuneration committees and assess the pay of their pals as 'the last closed shop'.
Since, in theory, non-executives are there to look after the shareholders' needs, some institutions like the non-executive directors to buy shares, to join with them in the company. Options, though, are frowned on by the City, because they do not put the director in the same position as an ordinary shareholder.
The non-exec earns his (it usually is his) money by speaking up in time when a company is floundering. Hard to do when it's an old university friend or colleague sitting across the boardroom table whose failings have to be exposed. And if it comes to a boardroom battle over strategic direction or succession, lifelong friendships may be tested.
Battles haven't come any bloodier than that at Saatchi & Saatchi in 1994-95. American-inspired non-executives waged war on chairman Maurice Saatchi and his more (personally) loyal non-executives. Shareholder power won the day and Saatchi walked out of his own firm. Good corporate governance, or a destructive mess? Peter White, the former chief executive of the Alliance & Leicester, was stunned to be confronted by his board, which had tired of his abrasive style; the same was true for Sir Richard Greenbury at Marks & Spencer, where non-executives again played a crucial role in bringing about change. Sometimes the boss is the last person to find out what's really happening in the company; the deliverer of bad news is often the non-executive team.
No wonder institutional shareholders give a lot of thought to their relationships with key non-executives. Institutional toughness extends to the length of time a non-executive serves. Hermes, the large fund-holder, for instance, strongly disapproves of non-executives in companies in which it invests being in office for more than 10 years. 'After that, they are deemed to have gone native and to be no longer independent,' says Egon Zehnder's Budd.
Women and people from the ethnic minorities are not represented in Britain's boardrooms, although companies with a high female workforce, such as supermarkets, make strenuous efforts to recruit at least one woman director. But that is exceptional; most boards select non-executives from a narrow and shallow pool, claiming it is hard to find people of the right calibre and experience.
But it could also be that too many companies are uneasy about having genuinely independent and questioning voices in the boardroom.
If they do their job conscientiously, non-executives should not have an easy time. Their role is to be the shareholder, to question, harry, examine, analyse - and to approve or object. They need to know when the executives are trying to pull the wool over their eyes, when things are not quite as they seem. The toughest decisions they must make are anything that involves a short-term fall in the share price: the removal of an executive director, a profits warning, an agreed merger. This burden has led to some claims by non-executives that they are underpaid and that the pay does not reflect the responsibility they carry.
But lack of pay is not a deterrent for the serial directors, who sit on seven, eight, nine or even 10 boards. Such numbers are too much, according to David Ellis of PIRC. He is PIRC's corporate governance expert. He specialises in telling institutional shareholders whether the companies in which they invest their millions are properly structured. In his view, four is the maximum number of major corporate directorships anybody can hold at one time - and make an effective contribution.
Ellis's calculation goes like this: boards of large companies normally meet once a month for a full day, so that is one day per month; then non-executive directors sit on at least one board committee, which meets on a different day from the main board, so that is another day; and each meeting is preceded by numerous papers, requiring the best part of a day's preparation and study, so that is another two days. So, each directorship takes four working days a month, minimum. Then there are other duties that may be imposed from time to time, and social functions.
Multiply that by four and you have someone who does nothing other than be a full-time company director, albeit of different companies.
After four, says Ellis, the director is spread too thin. The Association of British Insurers, which advises many of the funds investing in the biggest companies, agrees. Richard Regan, the ABI's head of investments, could see 'no problem in someone holding more than one directorship. There may be an advantage - it can add to an executive's breadth of experience, for example. But beyond three or four posts, people may start to ask if that is too many.'
Budd disputes Ellis's figure of four but does not put the desirable total of directorships held by one person much higher. 'If someone is on more than six or seven boards, that is hard to imagine. That many may be do-able if all the companies are in a steady state, but most companies are not blessed with a steady state.'
Whether four is the limit, or five, or six, many directors in many of the country's best-known companies comfortably exceed what is now widely regarded as the bounds of acceptability. As the PIRC research shows, Marshall is far from alone, and many directors are casting themselves far and wide.
(Not for them the model of Niall FitzGerald or Sir John Browne, who limit themselves to only a very small number of strictly relevant non-executive posts.)
So keen are companies to acquire non-executives with technology and new economy know-how, they are lowering their age limits. 'The youngest I've appointed is 35,' Budd says. 'That is a radically different attitude from the norm, where most non-execs have been in their mid-fifties.'
Ages may be falling but, for the time being, the old brigade is still hogging most of the prizes. This is partly because younger executives are devoted to their main employer (many companies now encourage their high-fliers to take one non-executive directorship to broaden their experience, but they are strictly limited to just one external post).
One impression, looking at many of the serial directors, is that appointments are made on the basis of who you know or what you did, rather than how good you are now. Consider the case of Sir Clive Thompson, the head of Rentokil (and president of the CBI - Marshall was his predecessor in the post). Thompson has seen his star collapse with a shock profits warning, despite his earlier claim that the company would hit 20% growth, earning him the City title of 'Mr 20 Per Cent'. He has recently been accused of increasing Rentokil profits at the expense of small suppliers, and one survey found that his firm paid the lowest average wage in the FTSE 100.
Thompson still sits on other boards, including those of Sainsbury and BAT. Shareholders in these companies may wonder just what he does for their money. When Rentokil hit the buffers last year, Thompson said: 'Shareholders should be very pleased that I wake up screaming at night with the pressure.' Does he feel the same about Sainsbury and BAT? Almost certainly not - and that, surely, is the argument against serial directors: it is hard to lie awake at night worrying about seven, eight, nine or 10 businesses.
THE JOBBING DIRECTORS
JOHN JACKSON, 70. Industrialist
Ch CELLTECH GIROSCIENCE
Ch HILTON GROUP
Ch LADBROKE GROUP
Ch OXFORD TECHNOLOGY VENTURE CAPITAL TRUST
Ch WYNDEHAM PRESS GROUP WPP
Ch XENOVA GROUP
ROBIN RENWICK, 62. Lord Renwick of Clifton. Former UK ambassador
COMPAGNIE FINANCIERE RICHEMONT
Dep ch *ROBERT FLEMING HOLDINGS
Ch FLUOR DANIEL
*SOUTH AFRICAN BREWERIES
WEST RAND CONSOLIDATED MINES
SIR PETER MIDDLETON, 66. Former mandarin
Dep ch UNITED UTILITIES
FINANCIAL REPORTING COUNCIL
Ch INSTITUTE OF CONTEMPORARY
Governing board NIESR
Pro-Chancellor SHEFFIELD UNIVERSITY
RAY SEITZ 59. Former US ambassador
CABLE & WIRELESS
HONG KONG TELECOM
Vice-ch LEHMAN BROTHERS
THE TELEGRAPH GROUP
ROBERT BAUMAN, 69. Industrialist
MORGAN STANLEY DEAN WITTER
RUSSELL REYNOLDS ASSOCIATES
UNION PACIFIC CORPORATION
COLIN MARSHALL, 66. Lord Marshall of Knightsbridge. Industrialist
Ch BRITISH AIRWAYS
Dep ch BRITISH TELECOM
Dep ch INVENSYS
Ch LONDON DEVELOPMENT PARTNERSHIP
Board member NYSE
BRITAIN IN EUROPE
ROYAL INSTITUTE OF INTERNATIONAL AFFAIRS
JOHN THORNTON, 45. Investment banker
FORD MOTOR COMPANY
President & COO GOLDMAN SACHS
GOLDMAN SACHS ASIA
PACIFIC CENTURY GROUP
Board of trustees ASIA SOCIETY
Advisory board YALE SCHOOL OF MANAGEMENT
SIR RALPH ROBINS, 71. Industrialist
*CABLE & WIRELESS
DEFENCE INDUSTRIES COUNCIL
HONG KONG TELECOM
*MARKS & SPENCER
Ch *ROLLS ROYCE
PETER SUTHERLAND, 54. Former Eurocrat
Ch *BP AMOCO
Ch GOLDMAN SACHS INTERNATIONAL
ROYAL ACADEMY OF ARTS
COUNCIL OF FOREIGN RELATIONS
Ch OVERSEAS DEVELOPMENT COUNCIL
SIR CLIVE THOMPSON, 57. Industrialist
CEO *RENTOKIL INITIAL
CHARTERED INSTITUTE OF MARKETING
Ch FINANCIAL REPORTING COUNCIL
[QQ]SOURCE: PENSIONS INVESTMENT RESEARCH CONSULTANTS (PIRC)
(ALL DATA FROM PUBLICLY DISCLOSED INFORMATION IN MOST RECENT ANNUAL REPORTS)
SID SENIOR INDEPENDENT DIRECTOR (HAMPEL/GREENBURY COMBINED CODE)
* ALSO ON REMUNERATION COMMITTEE
UNLESS OTHERWISE STATED, DIRECTORSHIPS ARE NON-EXECUTIVE POSITIONS.