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I got confused regarding the function of BOD and CEO or Chairman. Could you confirm my understanding if they are correct.
1/ Board of Director: The main responsibility is determining the strategy of the company. BOD also monitoring and controling the activities of CEO. 50% of BOD should be NEDs , 50% is the full time and employed Executive Directors such as Human Resources Directors, Finance Directors and NEDs could replacing and recruiting Exectuvive Directors through Nomination Committee
Under governance best practice, the Chairman should be an independent non-executive director and hence well-placed to adopt a supervisory and monitoring role.
2/ CEO: Lead the Company, only act in the authority assigned by the Board. The CEO’s accountability to the board’s leader. The Board is accountable to Shareholder.
3/ Nomination: Lead by both Executive Directors and NED.
4/ Audit Committee: Lead by NEDs. The board should establish an audit committee of at least three, or in the case of smaller companies’ two, members. These should be independent non-executive directors.
5/ Remmuneration Committee: Lead by NEDs only.
The UK Corporate Governance Code states that for the nomination committee:
There should be a nomination committee which should lead the process for board
appointments and make recommendations to the board. A majority of members of
the nomination committee should be independent non-executive directors. The
chairman or an independent non-executive director should chair the committee, but
the chairman should not chair the nomination committee when it is dealing with the
appointment of a successor to the chairmanship.With respect to the remuneration and audit committees, really, the sames rules apply to both ie, as you say ” least three, or in the case of smaller companies’ two, members. These should be independent non-executive directors.”
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