5 Major Changes Presented by The Corporate Governance Code
As of today, the 1st January 2019, the new Corporate Governance Code is officially in effect. Boardrooms across the country will be expected to adhere to the new rules including the codes greater emphasis on diversity, corporate culture and board engagement.
The new version of the legislation sets the tone for modern best practices in the boardroom, good behaviours and making sure that all members of the board are remunerated fairly and equally.
While the revised Code covers a lot of changes which will affect the boardroom, here’s a short overview of the five biggest changes businesses and boardrooms can expect.
1. A new provision to encourage greater board engagement with the workforce. The Corporate Governance Code now expects companies to evidence how they consider the interests of their workers and other stakeholders and how their viewpoints shape board decision-making.
2. A monitoring and assessing culture, ensuring the board grows and creates a culture that aligns company values with wider strategy.
3. The length of tenure of the chair should carefully consider the length of time chairs remain in place over time. The code also places more focus on the role of the nomination committee in suspension planning and developing a diverse board.
4. Addressing public concern over executive pay, remuneration and related policies when setting director remuneration. Formulaic calculations of performance-related pay should be rejected. Rates of pension contributions for executives should be in line with the wider workforce.
5. Excluding the chair, at least half the board should be made up of non-executive directors determined by the board to be independent. For smaller companies, the board should include at least two independent non-executive directors.
With the code now in effect, many companies will now start to actively look for additional non-executives to add to their boards. Do you think you have what it takes to become a Non-Executive Director? Join our network today.
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