Corporate Governance

Question 1

What are the 4 sub committees that would be good CG practice

Which is the least essential

Answer 1

Audit comm
Nominations comm
Remuneration comm
Risk comm

Risk comm not compulsory but listed companies subject to significant financial market risk will usually have one

Question 2

What does the nominations comm do (2)

How should this comm be made up

Answer 2

Ensure BOD has right balance of ex and NEDs with appropriate skills knowledge and experience

Recommend new board members

Made up of a majority of independent NEDs

Question 4

What does the audit comm do

How is it made up

Answer 4

Liase with external auditors on financial reporting
Supervise internal audit (or consider the need for internal audit)

At least 3 NEDs one who has recent relevant financial experience, no exec directors

Question 5

What does the risk comm do

How is it made up

Answer 5

Oversee the organizations risk management systems

Comprised entirely of NEDS

Question 6

What does the remuneration comm do

How is it made up

Answer 6

Setting remuneration for all exec directors and usually senior management

At least 3 NEDs and no exec directors

Question 7

What is the difference between how exec directors and NEDs should be paid

Answer 7

Exec directors should have an element of their pay that is performance related

NEDs should not include share options or other performance related elements