Legal fund for NED supported by Acorners

[Lucien Taylor]

I have started a thread on the Nominet forum about the issue of legal resources for NEDs. Please chip in with your views. At the same same time, I am sure that this will be answered with silence or flannel and I suggest we think about how to set up a legal fund support any of our NEDs who may be successful in gaining a place on the board. Someone who would then have a more even playing field to challenge the legality of things like direct.uk or directors' duties.

THREAD ON FORUM
-----------------------------

As candidates consider standing for the position of non-executive director, it would be helpful if the company would clarify the resources available for non-executives who may find themselves in disagreement with, or have concerns about the conduct of the board.

In 2008-9, Non-executive Directors Jim Davis and Angus Hanton challenged the board's decision to award the CEO extensive bonuses without a member vote. Indeed, the Combined Code, which the board follows, states that directors' pay and reward be put before the shareholders. This view was reflected in a late draft of the Garratt Report.
At the time, I understand that Jim Davis and Angus Hanton felt it necessary to take their own legal advice, which seems sensible, given the awkward position that in house counsel find themselves in, as both professional advisers and employees. Without making any allusions to the professionalism of legal staff it is clearly unacceptable for any staff to be asked to review the activities of their own bosses, and the non-executives were correct, in my view, to seek legal advice to help them exercise their duties as directors.

Professor Garratt also echoed this view in a late draft of the Garratt Report stating the NEDs Jim Davis and Angus Hanton should be reimbursed their legal expenses.
It later transpired that the board suggested a number of editorial changes to the Garratt Report before its final publication, including a suggestion that prevented Jim and Angus from receiving a refund of legal expenses, and another to allow the board to award directors long-term bonuses without having to go before the membership.
For any prospective NED candidate, would the company please clarify precisely what resources are now in place for any non-executives seeking an independent view to help them in exercising their duties. It would be perverse if only the majority of the board were able to access company legal resources, with the minority having to use their own funds for advice.

This is a critical issue for good corporate governance. We have seen recently that QCs can be asked to answer a narrow set of questions to avoid having an outside opinion on sensitive issues. On behalf of the membership, I would expect Nominet to support the view that NEDs should be able to seek independent financial or legal advice on any issue in the company's best interests, however awkward, currently enjoyed by the majority of the board.

 

[Edwin]

Unworkable in practice, because NEDs can potentially disagree on anything, not just on things that a "silent majority" think are wrong. I also think that the notion of "our NEDs" (vs "their NEDs"?) is fundamentally flawed: they will be Nominet's NEDs, and the law REQUIRES them to work in the best interests of Nominet and its shareholders.

While it is important to have a diverse panel of NEDs to ensure a wide range of views on divisive issues, trying to "puppet master" Nominet via control of parts of the board is a road to nowhere.

 

[GreyWing]

While it is important to have a diverse panel of NEDs to ensure a wide range of views on divisive issues, trying to "puppet master" Nominet via control of parts of the board is a road to nowhere.

If anyone lied to you about a domain transaction on here, would we ever deal with them again and negotiate on other names, no of course we wouldn't.

Mate I think you need to realise where we all are, you can't work with these people.... they lie to you. Anyone that thinks they can work with these people in an honest fashion is outright Gullible, simple as that. You still seem to be advocating sending someone to the board to negotiate in good faith.

From the judge "The Company Maintained a Deception", there is more than one liar.

 

[Edwin]

Mate I think you need to realise where we all are, you can't work with these people....

Please don't say "all" - I believe that it is inevitable that we HAVE to work with Nominet, like it or hate it. Their worst excesses (like direct.uk) should be fought in the media and by other means if necessary/warranted but day to day they still provide a decent service. The fact that they came up with one absolutely off the wall crazy idea (again, direct.uk) doesn't negate the fact that in general they do an excellent job of running the UK domain namespace, far better than the guardians of .com have done for example.

I don't see an inherent contradiction in my statement above. It's possible for somebody to be great at many things and at the same time absolutely rubbish at one particular thing. Nominet has been great at managing UK domains in general and absolutely rubbish with their approach to direct.uk.

 

[GreyWing]

The job of an NED is not to work with them mate, it is to watch them.

 

[Edwin]

The job of an NED is not to work with them mate, it is to watch them.

Nonsense, I'm afraid that's paranoia speaking. The job of a NED is to work with them and simultaneously provide a measure of oversight, not one or the other.

 

[GreyWing]

Nonsense, I'm afraid that's paranoia speaking. The job of a NED is to work with them and simultaneously provide a measure of oversight, not one or the other.

Paranoia? Have you been sleeping under a bridge for the last few months?

You, yourself go on the Nominet forum and show your own paranoia over .uk several times. You openly question their honesty and press statements and then you come on here and say you can work with them.

Weren't you one that claimed in February that .uk was dead?

http://directorbank.com/directorbank/library/files/Hanson Green Law & Policy.pdf

"A NED’s primary responsibility
is to act as the eyes and
ears of the shareholders
and to act so as to ensure
that the executive directors
understand the boundaries of
their responsibilities."

 

[websaway]

A few of us on here felt that direct uk was dead in February. Can I just confirm that my opinion was that it was dead in the form that Nominet had presented it. Nominet then said they would continue to look at ways of introducing .uk and that was the best we could have hoped for because a total climbdown would be admitting gross incompetence, which of course we all new it was.
Nominet have got to find a way to introduce .uk in a manner that satisfies and doesn't penalise current co.uk owners, but if, as originally proposed,.uk is going to be a direct competitor to co.uk as a business extention then that is not going to be easy and could again meet with strong opposition to it's introduction.

 

[Nigel]

I have no faith whatsoever in Nominet, its executives, its ceo or its BOD (the ones who have supported direct.uk and haven't acted on failings in nominet). I cannot praise them at all for running a virtual monopoly. It's executives encouraged domain owners to invest heavily in .co.uk, attended domain conferences around the world pumping up .co.uk, and even encouraged us to partake in their very own auction. Then, out of the blue, they do a U-turn. Just a couple of months after devastating reports into the way nominet is being run.

I think its very important to get Graeme or Lucien on the Board. Put it this way - do you think Nominet's CEO wants them on the board? I'm not sure about a legal fund though. I'd have to think about the consequences. I had read that NEDs can draw a wages/expenses of around £30k. I think I remember Graeme saying that he didn't intend drawing any money from nominet if he got on the board. I personally think anyone who gets elected should draw the maximum amount. It's a bit like UKIP MEPs drawing their salary/expenses from the European Parliament. In the early days some UKIP members objected but those expenses have helped them get where they are today. Why not take some money (if you're able) for all the hassle of representing domain owners. Just an idea - I might be wrong but would be interested to hear other views on this.

 

[Edwin]

Weren't you one that claimed in February that .uk was dead?

I thought it was "dying in stages" i.e. that they would come back in June and conclude that there was no way to put together a proposal that worked for all stakeholders. While that's looking less likely, it may still happen.

 

[Lucien Taylor]

Edwin, no one is suggesting a policy of disagreement with the majority. That would be a ridiculous bonfire of the vanities. Any NED is there to represent the best interests of the company, but they are also supposed to be the “critical friend”, someone who hasn’t drunk the Kool Aid, and can maintain an independent viewpoint.

This is also something that Hazel Pegg is pushing about me and Graeme on the other forum, and it is simply not true. They would have as all believe that we are rebels, baying for blood and out to destroy the .UK. Utter rubbish. I believe in best practise, high quality corporate governance - open and transparent. I provide services for schools and local authorities, I am not a trouble-maker, I am a pragmatic person who has been trusted by Nominet themselves, to develop IT systems in the past, and even chaperone MPs on one occasion, who Nominet were struggling look after as their guests.

We already know that on direct.uk and the alleged breaches of directors’ duty, Graeme and I seem to be in complete disagreement with the majority of the board. The board has been dismissive of every attempt to bring the alleged breaches of duty to their attention, or investigate them in any way that’s not a whitewash. In the past, the board didn’t hesitate to sue a director (Jim Davies) for breaches of duty which were much more minor in comparison.

So, I think it’s sensible to ask what would happen should someone get on to the board who finds themselves in disagreement on one or two issues that are very important. I made that suggestion. As Nigel suggests, maybe another approach would be to put aside the NED payment. But however you approach it, if there isn’t some resources available to a NED who is trying to do their duty to the company, then they’ll just be a voice howling in the wilderness, right?

Prof Garratt originally thought it was perfectly reasonable for the company to pay the legal fees of directors which are incurred to help them do their duty.

I’m not particularly keen on any of the solutions proposed, even mine, but the problem is there isn’t it?