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Boardroom Behaviour and The QCA Corporate Governance Code

Wednesday 19 December 2018

Boardroom Behaviour and The QCA Corporate Governance Code

Observations from The QCA / YouGov Mid-Cap Sentiment Index in the context of the QCA Code.    

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Description

Download a new paper from the QCA and NEDA -  Boardroom behaviour and the QCA Code.

The QCA Corporate Governance Code states that the board of a company is responsible for setting the vision and strategy for the company to deliver value to its shareholders. But how do small and mid-sized companies and their advisors think boards and directors are performing in relation to this in the real world?

A recent QCA/YouGov Small & Mid-Cap Sentiment Index presented an opportunity to explore the role of NEDs and examine board effectiveness from the viewpoint of small and mid-size companies and advisory firms.

The Sentiment Index has taken place twice a year since 2011 with regularly recurring questions, and some rotating topical questions. Questions relating to non-executive directors (NEDs) and board effectiveness have been asked every two years since 2013, enabling us to make points of comparison over time and to spot the trends and developments which are examined in this paper.

The 2018 release of the updated QCA Corporate Governance Code positions NEDs as one of the cornerstones of good governance and expectations have become both higher and wider. The question is have we reached a crossroads where we have good people trying to do an impossible task which is doomed to fail?

The QCA Code presents 10 principles for companies to adopt to follow good governance practices and a number of these are especially relevant for the role of the NED. In this paper, we take four of the 10 QCA Code principles and use the data from the Sentiment Index to explore them from the viewpoint of the NED, with input and insight from the Non-Executive Directors’ Association (‘NEDA’). 

Download  Boardroom behaviour and the QCA Code here.

The QCA Code principles and the views of companies and advisors explored in this paper are:

Contents

Chapter
Questions asked
1.Establish a strategy and business model which promote long-term value for shareholders (Principle 1)
How should NEDs contribute to the business strategy and business model?
2.Maintain the board as a well-functioning, balanced team led by the Chair (Principle 5)

What skills do boards lack and what do NEDs bring? 

How do companies recruit directors?

3.Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities (Principle 6)

How independent are NEDs? 

How gender diverse are small & mid-cap boards?

4.Evaluate board performance based on clear and relevant objectives, seeking continuous improvement (Principle 7)
How should you evaluate board effectiveness?
5.NED remuneration, working hours, and number of board positions
What should NEDs expect in terms of remuneration, working hours, and number of board positions?

Looking forward
Five questions for NEDs to ask themselves

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Observations from The QCA / YouGov Mid-Cap Sentiment Index in the context of the QCA Code.