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Composition of the board - Coggle Diagram
Composition of the board
Typically consist of
A chair and possibly a deputy chair
A CEO
Other executive directors, such as finance director
NEDs
SID (may also be the deputy chair)
Balance of executive and non executives
The board should include an appropriate combination of executive and non executive (in particular independent non executive) directors such that no one individual or small group of individuals dominates the board decision making'
At least half the board excluding the chair should be NEDs whom the board requires to be independent
The idea that at least half the board, excluding the chair, should be indpednent NEDs is plainly designed to ensure that no one individual or small group of idnivdiauls dominate the boards decision making
It means that the independent NEDs will often hold the balance of power
If the indpednent NEDs number exactly half the board, they may need to garner the support of at least one other board memeber in order to push something through. Eg the NEDs would be able to force the removal of the CEO with the support of the chair or force the removal of the chair with the support of the CEO
If the NEDs number exactly one half of the board they may be able to block proposals, but this might depend on whether the chair has a casting vote at board meetings
The Chair is meant to be indepdenet on appointment and might therefore be expected to be a natural ally of the independent NEDs
Reporting on board composition
CA2006 requires the names of those who have served as directors during the financial year to be disclosed in the directors report
The Code used to require that the annual report identify the chair, depot chair, CEO, SID and the chair and members of the board committees
The Code requires the annual report
to identify the NEDs that the board considers to be independent together with any necessary explanations
To set out the number of meetings of the board and its committees and individual attendance by directors
The Code also requires
The responsibilities of the chair, CEO, SID, board and committees to be set out in writing and made publicly available (eg on the company's website)
The board to set out in the papers accompanying any shareholder resolution to elect a director the specific reasons why their contribution is and continues to be important to the company's long term sustainable success