CG Week 1 Flashcards
What is the primary responsibility of a CEO?
The CEO has the executive responsibility for the leadership of the company’s business.
What is the main role of the chair of the board?
The chair is responsible for the leadership of the board, ensuring the board meets frequently, and that directors have the necessary information to contribute effectively.
Why should the roles of CEO and chair not be combined?
Combining the roles would give an individual too much power, which is not ideal for proper corporate governance.
What does the UK Corporate Governance Code (2024) say about a CEO becoming the chair of the same company?
A CEO should not become chair of the same company. If exceptionally proposed, major shareholders must be consulted, and the board should explain the reasons and publish them on the company website.
What is the role of the Senior Independent Director (SID)?
The SID acts as a sounding board for the chair, serves as an intermediary for other directors and shareholders, and leads the non-executive directors in appraising the chair’s performance.
What is the responsibility of the company secretary?
The company secretary ensures directors have the necessary information for meetings, advises on governance matters, and assists with director induction and professional development.
What does the Code (2018) say about the SID’s role in relation to the chair?
The SID should lead annual meetings without the chair present to appraise the chair’s performance and meet as necessary.
What are the main subcommittees of the board?
The main subcommittees are:
- Remuneration Committee
- Audit Committee
- Nomination Committee
- Risk Committee
- Ethics Committee
What are the key duties of a chair according to the lecture?
The chair ensures that the board meets regularly, that directors have the information they need, and that all directors have the opportunity to speak at board meetings.
What does Charkham (2005) say about the purpose of board committees?
Charkham states that board committees are used to help the board handle business in more detail and to increase objectivity, especially in areas like executive remuneration or personal biases.
What responsibility does the board have regarding subcommittees?
Although subcommittees can be delegated certain tasks, the board remains accountable for the areas covered by these subcommittees, ensuring they still oversee their effectiveness and decision-making.
