7.2.4.4 Other independence recommendations

The UKCGC addresses tenure as well, because due to a long-term relationship as NED the critical view might diminish. Code provision B.2.3 does not contain a maximum tenure requirement for a NED, but mentions that NEDs should be appointed for specified terms, subject to re-election and to statutory provisions relating to removal. It is explicitly mentioned that any term beyond six years should be subject to rigorous review. Furthermore, code provision B.7.1 provides that NEDs who have served more than nine years should be subject to annual re-election. Moreover, code provision B.1.1 does not regard a NED with more than nine years in office as independent.

With respect to remuneration, code provision D.1.3 states that the remuneration of NEDs should reflect their time commitment and responsibilities. Furthermore, the remuneration package should not include any share options or other components that are dependent on the performance of the company. In exceptional cases and after shareholder approval share options may be granted, but the shares bought by exercising these share options must be held until at least one year after the retirement of the NED from the board. Since the remuneration committee should comprise independent NEDs only, the board itself should determine the remuneration of NEDs (D.2.3). If the articles of association so require, shareholders may determine the remuneration and – if allowed by the articles of association – delegate this task to a committee, of which the CEO might be a member. However, the board and the shareholders are limited by the provisions in the articles of association in these cases.