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Chapter 9

2.2 UK Corporate Governance Code – CEO, Chairman and EDs

 CEO and Chairman must be different individuals.

 The CEO cannot go on to be Chairman of the same company.

 Chairman should be independent on appointment.

 A full time ED can’t also take on more than 1 FTSE 100 NED role.

 A full time ED can’t also be the chairman of a FTSE 100 company.

 A significant portion of EDs’ pay should be performance related.

2.3 UK Corporate Governance Code – NEDs

 Appoint one independent non-executive director (INED) as the senior
independent director.

 A director may not be independent if they:

– were an employee within the last 5 years

– represent a significant shareholder

– have close family ties with Co.
– receive other pay or benefits in addition to a directors' fee

– had material business relationship with the Co. within the last 3 years

– have served on the board for more than 9 years.

 NEDs serving longer than 6 years should be subjected to a rigorous review.

Illustrations and further practice

Now try TYU 3, 4 and 7 from Chapter 9

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