Page 130 - SBL Integrated Workbook STUDENT 2018

Chapter 11

4.1 Importance of committees

Board sub-committees are a generally accepted part of board operations.

Positives:

 reduces board workload and enables them to improve focus on other issues

 creates structures that can use inherent expertise to improve decisions in key
areas

 communicates to shareholders that directors take these issues seriously

 increase in shareholder confidence

 communicates to stakeholders the importance of remuneration and risk

 satisfy requirements of the UK Corporate Governance Code (2010) (or other
governance requirements).

4.2 Nominations committee

The need for nominations committee is identified in many codes of best practice.

For example, the UK Corporate Governance Code (2010) requires that there should
be a formal, rigorous and transparent procedure for the appointments of new
directors to the board:

Responsibilities of nominations committee

 review regularly the structure, size and composition of the board
and make recommendations to the board

 consider the balance between executives and NEDs on the board
of directors

 ensure appropriate management of diversity to board composition

 provide an appropriate balance of power to reduce domination in
executive selection by the CEO/chairman

 evaluate the balance of skills, knowledge and experience of the
board

 full consideration to succession planning for directors

 prepare a description of the role and capabilities required for any
particular board appointment including that of the chairman

 identify and nominate for the approval by the board candidates to
fill board vacancies as and when they arise

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