general policy on executive and senior management remuneration. Aligning executive Companies are required to develop and disclose a “Statement of and board pay Remuneration Philosophy” in annual report, and 83% of listed companies comply (per FRC data). Interviews suggest that in many companies remuneration practices are sophisticated, and remuneration is tied to short and long-term performance. Transparent board There are no requirements or special election procedures that enable nomination/election minority shareholders to nominate or appoint board members. The process Code calls for a clearly defined and transparent procedure for shareholders to recommend potential candidate, although it is not clear if this is in place. Nominating outside board members considered by outsiders to be difficult and not transparent. The 2009 Survey of corporate governance practices commissioned by the NCCG notes that “contestation by minority shareholders of election of a Director’s on the Board seems to be very rare in companies responding to the survey, with only 2% mentioning such an event.” Oversight of insider Boards are responsible for overseeing internal controls but there no conflicts of interest explicit requirements for oversight of related party transactions. Oversight of Boards are responsible for accounting and financial reporting systems. accounting and The Companies Act requires all companies to have their financial financial reporting systems statements signed on behalf of the board by two directors of the company within 6 months of the year-end. The Code recommends a board-level risk committee, depending “on the nature and complexity of the business.” When constituted, the separate board committee would “set risk strategy, advise the board on risk issues and monitor the risk management process.” The committee should be chaired by a non-executive director, include the CEO, and should include at least one independent director. Overseeing There are limited requirements in the Code or in the legal framework disclosure and related to the board’s role in overseeing information disclosure, communications processes although they play a major role. Board Independence and Objectivity The Code The Code provides that the board should have an appropriate balance of recommends two executive, non-executive and independent directors under the firm and independent directors objective leadership of a chairperson, to manage conflicts of interest and
general policy on executive and senior management remuneration. Aligning executive and board pay Companies are required to develop and disclose a “Statement of Remuneration Philosophy” in annual report, and 83% of listed companies comply (per FRC data). Interviews suggest that in many companies remuneration practices are sophisticated, and remuneration is tied to short and long-term performance. Transparent board nomination/election process There are no requirements or special election procedures that enable minority shareholders to nominate or appoint board members. The Code calls for a clearly defined and transparent procedure for shareholders to recommend potential candidate, although it is not clear if this is in place. Nominating outside board members considered by outsiders to be difficult and not transparent. The 2009 Survey of corporate governance practices commissioned by the NCCG notes that “contestation by minority shareholders of election of a Director’s on the Board seems to be very rare in companies responding to the survey, with only 2% mentioning such an event.” Oversight of insider conflicts of interest Boards are responsible for overseeing internal controls but there no explicit requirements for oversight of related party transactions. Oversight of accounting and financial reporting systems Boards are responsible for accounting and financial reporting systems. The Companies Act requires all companies to have their financial statements signed on behalf of the board by two directors of the company within 6 months of the year-end. The Code recommends a board-level risk committee, depending “on the nature and complexity of the business.” When constituted, the separate board committee would “set risk strategy, advise the board on risk issues and monitor the risk management process.” The committee should be chaired by a non-executive director, include the CEO, and should include at least one independent director. Overseeing disclosure and communications processes There are limited requirements in the Code or in the legal framework related to the board’s role in overseeing information disclosure, although they play a major role. Board Independence and Objectivity The Code recommends two independent directors The Code provides that the board should have an appropriate balance of executive, non-executive and independent directors under the firm and objective leadership of a chairperson, to manage conflicts of interest and
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