2.5.11 Summary of the role of board members in the UK

The UK system of "comply or explain" codes with their increasing aspirational levels has allowed gradual improvement. The UK continues to lead the way in developing corporate governance.

The members of a UK one-tier board have joint responsibility for developing, achieving and monitoring all aspects of corporate strategy.

The NEDs are playing an ever more enhanced role in creative debate about strategy and in challenging the executives on the development of strategy as well as monitoring the achievements of the executives. This role differs from the general position of supervisory directors in the Netherlands.

All measures for promoting the better functioning of NEDs should be adopted, including the provision of early information and on-site information, time for debate about strategy, induction, training, time for the job, remuneration, evaluation and orderly succession procedures.

The role of the separate chairman involves spending about half of his working time at the company, ensuring that the board works well as a team and providing for all the aspects mentioned at (iv) above. He is complementary to the CEO and acts as his coach or partner. As such, the chairman is responsible for the image of the company and the communication with shareholders. He is actively involved in the communication with major shareholders about governance and strategy.

The comparison with US boards shows that in points (ii), (iii) and (iv) above, US boards and board members have more or less the same roles as their UK counterparts. There are two differences between the roles of UK and US outside directors. First, while UK outside directors are actively involved in developing strategy and sometimes even come forward with proposals. The US outside directors are also actively involved, but in the US there is more emphasis in asking challenging questions in a Socratic manner about the proposals of management. Second, the UK chairman is more prominent than the US chairman or lead director. He discusses strategy with shareholders, while US and Dutch chairmen do not do that.

The UK also has special roles for the SID in evaluating the chairman, which is being followed in the US and the Netherlands.

The UK company secretary has an important role in guiding the corporate governance of the company and clearly assisting the chairman in this task.