This view received some indirect backing from the Walker Report, which argued for a greater emphasis on relevant industry experience among non-executive directors. Banks, in particular, have argued that only the incumbent CEO has the knowledge and experience of a large, multinational group’s operations to fulfil the chairman’s role. Any board in breach should consult major shareholders in advance and set out its reasons for the appointment, both at the time and in the next annual report. BOARD KINGS CODES CODEThe Code does concede that in exceptional cases the rule may be broken. Those in favour sing the praises of a chairman who may have years of experience with the company, still has much to offer and who is quite capable of establishing a good working relationship with a new CEO. Those against the practice argue that a new chief executive is going to have a next to impossible job if his predecessor stays as chairman, constantly looking over his shoulder and perhaps disagreeing with any departure from past policies. (See the case study on Marks & Spencer below).Įqually to be frowned upon, according to the Code, is the previously widespread practice of a chief executive stepping up to become chairman of the same company. In addition to the responsibilities described above, the chairman ensures there is a good working relationship between the executive and non-executive directors and sufficient time to discuss strategic issues.īy contrast, the chief executive has responsibility for the day to day management of the company and putting into effect the decisions and policies of the board.Īny big public company combining the roles of chairman and CEO will have to persuade shareholders that the right checks and balances are in place. BOARD KINGS CODES FULLThe chairman may not always be a part-time non-executive: many are full time and describe themselves as executive chairman, but the roles of chairman and CEO are at least distinct. No one individual should have unfettered powers of decision” – main principle A.2. “There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. The Code says the roles of chairman and chief executive should not be held by the same person. (See: Composition and structure of the board, an OUT-LAW guide.) And he must ensure that all board members receive accurate, timely and clear information. He must promote a culture of openness and debate and is responsible for effective communication with shareholders (but note the role of the senior independent director as well. The chairman leads the board, sets its agenda and ensures it is an effective working group at the head of the company. Guidance on drawing up a schedule of matters reserved for the board is available from the Institute of Chartered Secretaries and Administrators (ICSA) and from the Institute of Directors' book, The Effective Board. It states that: “there should be a formal schedule of matters specifically reserved for its decision” and that the annual report should include a “high-level statement of which types of decisions are to be taken by the board and which are to be delegated to management”. The Code recognises that there are some issues that can only be decided by the board. See: The reach of the UK Corporate Governance Code, an OUT-LAW guide) (Note: the Code does not apply to all companies. ensuring that obligations to shareholders and other stakeholders are understood and met.setting the company’s values and standards.ensuring the human and financial resources are available to achieve objectives.The UK Corporate Governance Code sets out its own view of the role of the board. Rewiring financial services: the digital future.Using voice technology in financial services.Pioneering voluntary collective redress.Paving the way for autonomous last-mile delivery.Leveraging legal tech to respond to privacy concerns.Helping an English Premier League club win.Establishing the Mindful Business Charter.Delivering democratized investment for AJ Bell.Building a private equity-backed micro city.Senior Managers and Certification Regime.Human Cyber Index - security culture development.Biotech Express - biotech startup documentation.Alteria - brand management and enforcement. All Your risks and regulatory environment.Climate change mitigation and sustainability.ADT – innovative legal services delivery.Technology, media & telecommunications and privacy.
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