Board Composition

Question 1

List Five factors that a board may take into consideration when determining its size

Answer 1

BUSAC

1. The requirements for a balanced board
2. The requirements of the UK Code on the composition of the board (Principle K)
3. The need to service board committees
4. The ability of the board to hold productive, constructive discussions and make prompt rational decisions
5. Also dependant on the size and complexity of the business and industry sector and anything in the articles

Question 2

List five of the key elements of the ‘balanced board’

Answer 2

1. Separate roles of chair and CEO
2. An appropriate balance of executive, non-executive and independent directors
3. Appropriate skills, experience and knowledge
4. Gender balance
5. Diversity

Question 3

Provide two recommendations from the Women on Boards Review (2011) to increase the number of women serving on boards

Answer 3

• Companies should periodically advertise non-executive board positions to encourage greater diversity in applications.
• Executive search firms should draw up a voluntary code of conduct addressing gender diversity and best practice which covers the relevant search criteria.

Question 4

Provide three recommendations from Higgs Report (2003) relating to recruiting NEDs from diverse backgrounds

Answer 4

1. The nomination committee should be tasked with considering candidates from a wide range of backgrounds.
2. It should draw more actively from areas such as human resources, change management, customer care and the professions where women tend to be more strongly represented
3. It should also consider recruiting candidates from private companies, charities and public sector bodies

Question 5

List four tasks that a NED should undertake as due diligence before accepting a board position

Answer 5

1. Look at the company’s annual report and website to see how it articulates its business model, governance, the market environment and dynamics, recent operational performance, strategy, risks and uncertainties, sustainability and financial performance;
2. Arranging to meet the chair, CEO, CFO, company secretary and all members of the nomination committee, if not the entire board, before accepting an appointment;
3. Review regulatory and media announcements issued since the last annual report was published
4. Check scheduled board dates for the year ahead at an early stage in the due diligence process to ensure free to attend.

Question 6

Provide five actions that the Chair can undertake to improve boardroom dynamics

Answer 6

1. Maintains control of proceedings (Does not dominate)
2. Facilitates decision-making
3. Stimulates debate, encourages all to contribute
4. Steers towards consensus
5. Creates a positive environment

Question 7

List five aspects of the company secretary’s role in ensuring an effective for board meeting

Answer 7

1.Planning a schedule of board meetings, maintaining a provisional agenda for those meetings and ensuring that those who will be required to submit board papers are kept informed of the timetable.
2. Co-ordinating the preparation of the board pack
3. Supporting those writing and presenting board papers
4. Acting as the ‘guardian’ of the house style and format for writing board papers
5. Co-ordinating the collation, storage and distribution of the board pack

Question 8

List 5 of the steps in setting a company’s culture

Answer 8

VCPCI

1. Agree what the company’s values are and considering how the company’s purpose and strategy are aligned with those values
2. Develop and adopt a company Code of Ethics which sets out the company’s values and expectations as to behaviours
3. Ensure that the values that have been agreed are taken into account when developing the company’s operational policies and procedures – the Board also needs to ensure that this message is clear to the company’s senior managers
4. Publicise the company’s values, or its Code of Ethics, for example in public and internal documents and by including them in employee induction and training
5. Integrate the values into all of the functions and operations of the company

Question 9

. Provide four ways in which a company can measure that its Code of Ethics is effective

Answer 9

1. Using staff surveys to check employees’ views
2. Having the Code of Ethics as standing items for the Board meetings
3. Receiving a report of customer complaints
4. Receiving reports and feedback about the company’s whistleblowing policies and procedures, how effective they are and issues raised via any whistleblowing helpline.

Question 10

List four ways in which the company secretary can assist the board in maintaining an ethical culture

Answer 10

1. Suggesting that discussions about corporate culture are on the board’s agenda
2. assisting in developing the reporting to stakeholders on the organisation’s culture
3. Developing a dashboard for the culture indicators that should be reviewed from time to time by the board
4. organising site visits so that members of the board can get out and about and meet employees to assess for themselves the culture embedded within the organisation

Question 11

Reporting on diversity - CA2006 requires quoted companies to include in their strategic report a breakdown showing…

Answer 11

at the end of the financial year the number of persons of each sex who were:

directors;

senior managers; and

employees of the company (s. 414C).