Page 9 - SCS May 2018 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

competitive nature of the industry all suggest the staff will need to be good quality and therefore
there needs to be a strong HR department to attract them and retain them.

A creative director should be considered on a permanent basis as Couchweb have found
commissioning their own TV series can be very popular and also can be more cost effective than
paying the major studios for programmes. The Board does not seem to have the creative skills at
present and have used a freelance creative director to facilitate their own content so far.

Couchweb has three Non-Executive Directors (NEDs), not including the chair, all with relevant and
Board experience.

Under corporate governance guidelines a Board should be balanced in terms of the number of
Executive and NED roles. There should be the same number of NEDs as Executives (excluding the
Chair), that is Executive Directors should not outnumber the NEDs. In addition, in order to ensure
the NEDs represent the interests of the shareholders they should be independent. A smaller
company should have at least 2 independent NEDs.

Couchweb only has 3 NEDs versus the 5 other members (excluding the chair) therefore the main
criteria (that appears to be most relevant) is not met. Little is known about the independence or
not, but be aware that further developments/information - particularly for Jade McLaren and
Leroy Dikko - could lead to the independence of the NEDs being questioned.

CEO and Chair roles

These roles have been split at Couchweb which is compliant with most countries’ Corporate
Governance guidance.

The Chair’s role is to run the Board; the CEO’s role is to run the company. Placing both in one
person’s hands may give them too much power. Given that Couchweb would not have sufficient
NEDs to keep such power ‘in check’ it is important that it is not in one person’s hands.

The Chair will also be expected to be the representative of the shareholders – they should be able
to communicate any matters of concern to the Chair. If the Chair is not independent the Board
should appoint a senior Independent NED to perform this role. The Chair at Couchweb is most
likely to be ok on the independence criteria, although she worked as head of innovation at
another major media company so she may have had a material business relationship with
Couchweb in her final years there.

Committees

There is currently no mention of committees at Couchweb, although that does not meant they do
not exist.

All committees make use of NEDs under most Corporate Governance Codes. The compulsory
committees are: Remuneration, Nominations and Audit committee.

The Audit committee should have at least three, or in the case of smaller companies two,
independent non-executive directors. In smaller companies the company chair may be a member
of, but not chair, the committee in addition to the independent non-executive directors, provided
he or she was considered independent on appointment as Chair. At least one member of the
audit committee should have recent and relevant financial experience. Given Couchweb’s size and
position as one the world’s leading media companies it would most likely require 3 NEDs. While
Couchweb has sufficient NEDs for this committee it is unclear if any of the NEDs have financial
experience from their previous roles.

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