The board should include an appropriate combination of executive and non

The board should include an appropriate combination

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The board should include an appropriate combination of executive and non-executive directorssuch that no individual or small group of individuals can dominate the board's decision taking. Except for smaller companies, non-executive directors should comprise at leasthalf the board (excluding the chairman). A smaller company should have at least two non-executive directors. The board should identify in the annual report each non-executive director it considers to be independent.
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Corporate governance 161 CHAPTER 4 Effectiveness Appointments to the board There should be a formal, rigorous and transparent procedurefor the appointment of new directors to the board. There should be a nomination committee, which should lead the process for board appointments and make recommendations to the board. A majority of members on the nomination committee should be independent non-executive directors. Non-executive directors should be appointed for specified terms. Any terms beyond six years should be subject to rigorous review. The annual report should include a description of the work of the nomination committee, including the board's process for board appointments. Commitment All directors should be able to allocate sufficient time to the company to discharge their responsibilities effectively. The board should not agree to a full-time executive director taking on more than one non-executive directorship in a FTSE 100 company nor the chairmanship of such a company. Development All directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge. Information and support The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties. The company secretary is responsible for ensuring good information flows and for advising the board through the chairman on all governance matters. Evaluation The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. The board should state in the annual report how performance evaluation of the board, its committees and its individual directors has been conducted. Evaluation of the board of FTSE 350 companies should be externally facilitated at least every three years. The identity of the facilitator should be disclosed in the financial statements. Re-election All directors should be required to submit themselves for re-election at regular intervals(at least once every three years). Directors of FTSE 350 companies should be subject to annual election. Non-executive directors who have served longer than nine years should be subject to annual re-election.
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