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ITEM PF16
- ANNEX 1
PENSION
FUND COMMITTEE – 29 AUGUST 2003
SOCIALLY
RESPONSIBLE INVESTMENT AND CORPORATE GOVERNANCE ISSUES
The key
points of the new Combined Code of Corporate Governance drawn up by the
Financial Reporting Council
- At least 50 per
cent of a company’s board should be comprised of independent non-executive
directors
- A chief executive
should not become chairman of the same company. However, if ‘exceptionally’
a board decides such a move is appropriate, it should consult shareholders
and state its reasons.
- The chairman of
the board should be independent at the time of the appointment.
- A senior independent
director should be appointed and be available to shareholders if they
have concerns that contact with the chairman or executives has failed
to resolve any particular issue
- Boards should
undertake a formal and rigorous annual evaluation of the performance
of its committees and individual directors
- Institutional
shareholders should avoid a box-ticking approach to assessing a company’s
corporate governance
- Companies should
adopt rigorous, formal and transparent procedures for the recruitment
of new directors to the board
- No individual
should be appointed to a second chairmanship of a FTSE-100 company
- After a non-executive
director serves six years – two three-year terms – on a board, their
continued appointment should be subject to a ‘particularly rigorous
review’
- After nine years
on a board, non-executive directors should be subject to annual re-elections
and they may no longer be considered independent
- Boards should
not agree to a full-time executive director taking on more than one
non-executive directorship or the chairmanship in a FTSE-100 company
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