CG Week 2 Flashcards
(10 cards)
What are the principles regarding board appointments and succession planning?
The appointment procedure should be formal, rigorous, transparent, and promote diversity, inclusion, and equal opportunity. There should be an effective succession plan for both the BOD and senior management.
What should the BOD and its committees possess in terms of composition?
The BOD and its committees should have a combination of skills, knowledge, and experience. The board’s tenure should be reviewed regularly, and membership should be refreshed.
What is the role of the Nomination Committee in board appointments and succession planning?
The Nomination Committee is responsible for the appointment and succession of BOD members and top management. A majority of its members should be independent NEDs, and the chair should not chair this committee for their own successor’s appointment.
How often should directors undergo re-election?
All directors should undergo annual re-election.
What is the limitation on the chair’s tenure according to the UK Corporate Governance Code (2024)?
The chair should not hold the position for more than 9 years from their first appointment. Any extension should be clearly explained and permitted for a limited time.
What is required in the appointment process for the chair and NEDs?
The process should involve open advertising and/or an external search consultancy, and it should be stated in the annual report.
How should the BOD’s performance be evaluated?
The BOD should undergo annual formal and rigorous evaluations of its performance, including the chair, committees, and individual directors.
How often should the chair have an externally facilitated evaluation?
The chair should have an externally facilitated board evaluation at least once every three years for FTSE 350 companies.
What should the annual report describe regarding the Nomination Committee?
The report should include details of the Nomination Committee’s work, including appointment and succession plans, evaluations, diversity and inclusion policies, objectives, and their alignment with company strategy.
What should be included in the report regarding senior management’s gender balance?
The gender balance of senior management and their direct reports should be included in the report.
