Chapter 5

Question 1

Higgs Report 2003 - NED Responsibilities
P
R
P
S

Answer 1

Performance

Risk

People

Strategy

Question 2

Appointing a NED

Answer 2

Establish need - Assess gap, create role, advertise

Interview - Selection process, expertise, other roles, availability, nomination committee

Reference - Fit and proper, referencing, due diligence

Question 3

Hector Sants 2009 - NED Competence
B
E
S
K

Answer 3

Behaviours

Expertise

Skills

Knowledge

Question 4

Walker Review 2009 - Recommended Improvements

Answer 4

Training improved for directors

Support and advice for NEDs

Increased time commitment for NEDs

Strengthen interview process for NEDs

Question 5

Cadbury Report 1992

Answer 5

Voluntary code

Chairman and Chief Executive - separate roles

Majority of board external directors

Remuneration committee - majority NEDs

Audit committee to include at 3 or more NEDs

Question 6

7 Responsibilities of Directors

Answer 6

Act in line with the constitution

Promote company success

Exercise independent judgement

Care skill and diligence

Conflict of interest

Don’t accept benefits

Declare personal interests

Question 7

UK Corporate Governance Code 1992
L
E
A
R
S

Answer 7

Leadership

Effectiveness

Accountability

Remuneration

Shareholder relations

Question 8

Higgs Attributes - NED Behaviours
B
S
K
E

Answer 8

Behaviours - Judgement, debate, challenge, ethics, listen

Skills - Question, Challenge, Interpersonal Skills, Influence

Knowledge - FCA/PRA, Specialist areas, Risk Management, Corporate Code

Expertise - Knowledgable, understand environment, previous board experience

Question 9

Board Responsibility
A
R
A
M
E

Answer 9

Approve accounts

Regulate the exec

Appoint CEO/succession plan

Manage risk

Ensure the company meets its obligations