2.4.9 At least half the board members to be NEDs

At least half of the board, excluding the chairman, should be made up of independent NEDs. The aim should be to strike a balance and not to ensure a large majority. This is better for a well-balanced debate.

The board should have nomination, remuneration and audit committees, of which NEDs should be the only members or majority members. Needless to say, NEDs should decide on the remuneration of executive directors. NEDs may often be the only members of the remuneration committee. The company chairman may be a member but not the chairman of the remuneration committee.1

The nominations committee is nearly always chaired by the chairman of the board, who should be independent upon appointment, but will cease to be independent in due course because of his intense contacts with the company.2 Succession is a vital issue and the chairman should take the lead in that area.

Evaluation of directors and possible criticism of the chairman and his dismissal may be led by the senior independent director (SID) in separate meetings of NEDs.

The audit committee will be chaired by a NED with a financial background, and often attended by the CFO.3

The Walker Review recommends that a risk committee be added for baraks and other financial institutions (BOFIs).4