Executive and non-executive Directors
30. The Board should include a balance of executive and non-executive Directors (including independent non-executive Directors). No individual or small group of individuals should be able to dominate the Board's decision making. At least one third of the Board should comprise non-executive Directors, of which at least two non-executive Directors should be independent.
31. The Board should consider a non-executive Director to be "independent" if that Director meets, upon an assessment, objective criteria of independence set by the Board. Such independence criteria should encompass independence in character and judgement of the individual by having no commercial or other relationships or circumstances which are likely to affect or could appear to impair his judgement in a manner other than in the best interests of the Reporting Entity. In making the assessment of independence against such criteria, the Board should consider matters such as whether the person:
a. has already served as a member of the Board for a significant period;
b. has been an Employee of the Reporting Entity or a member of the Group within the last five years;
c. has or has had, within the last three years, a material business relationship with the Reporting Entity, either directly or as a Partner, Shareholder, Director or senior Employee of another body that has such a relationship with the Reporting Entity;
d. receives or has received, in the last three years, additional remuneration or payments from the Reporting Entity apart from a Director's fee, or participates in the Reporting Entity's Share option, or a performance-related pay scheme, or is a member of the Reporting Entity's pension scheme;
e. is or has been a Director, Partner or Employee of a firm which is the Reporting Entity's external auditor;
f. has close family ties with any of the Reporting Entity's advisers, Directors or senior Employees;
g. holds cross Directorships or has significant links with other Directors through involvement in other Companies or bodies; or
h. represents a significant Shareholder.
32. The terms and conditions of appointment of non-executive Directors should be made available for inspection by any person at the Reporting Entity's registered office during normal business hours. The letter of appointment should set out the expected time commitment. Non-executive Directors should undertake that they will have sufficient time to meet what is expected of them. Their other significant commitments should be disclosed to the Board before appointment, with a broad indication of the time involved. The Board should be informed of subsequent changes.
33. The annual report of the Reporting Entity should identify each non-executive Director it considers to be independent, and the chairman and members of each of the Board committees. It should also state the relevant skills and expertise which each Director brings to the Board and set out the number of meetings of each of the committees and individual attendance by Directors.
34. As part of their role as members of the Board, non-executive Directors should constructively challenge and help develop proposals on business objectives and strategies for achieving those objectives. Non-executive Directors should scrutinise the performance of Senior Management against agreed goals and objectives and monitor the reporting of their performance.