2.3 Defining structural elements of boards

Question 1

Cross lists four types of board structures based on levels of director independence. What are these?

Answer 1

All execuctive board
Majority executive board
majority independent board
Two-tier board

Question 2

In what two scenarios are all-executive boards most common?

Answer 2

Startups or family businesses where the owner is also the director.

Subsidiaries where strategy is delegated to a parent company.

Question 3

What is the UK Code requirement on board independence?

Answer 3

At leat half the board, exclduding the chair, should be non-executive directors whom the board considers to be independent.

Question 4

What is a two-tier board?

Answer 4

Two separate boards, one made up of all external directors to govern and one comprised of internal personnel to manage.

Question 5

Where is the two-tier board most common?

Answer 5

Germany, Austria and Denmark (known as the Continental European Approach)

Question 6

Cross identifies four elements with the “board structures” quadrant of the 11Cs model. What are these?

Answer 6

1 Basic set up (NED ratio, size, committees)
2 Chair set up (CEO split, former CEO, Exec)
3 Director set-up (tenure, diversity, remuneration)
4 Board tasks (meeting frequency, review, induction/development)