The Financial Reporting Council (FRC) in the UK has published a discussion paper entitled ‘UK Board Succession Planning’ which is seeking comments and feedback on board succession for both executives and non-executives in order to support a suitably talented, diverse ‘pipeline’ of directors ready to serve on the boards of UK listed companies, to which the UK Corporate Governance Code (the Code) applies. The content of this paper may be of interest to Irish companies which follow the Code.
The FRC has developed its initial thinking on the issue through discussions with a wide range of interested parties and has now moved gain wider feedback through a public consultation.
The FRC state that the absence of a succession plan can undermine a company's effectiveness and its sustainability. It can also be a sign that the company is not sufficiently clear about its purpose and the culture and behaviours it wishes to promote in order to deliver its strategy.
Issues explored in the paper include:
- how effective board succession planning is important to business strategy and culture;
- the role of the nomination committee;
- board evaluation and its contribution to board succession;
- identifying the internal and external ‘pipeline’ for executive and non-executive directors;
- ensuring diversity; and
- the role of institutional investors.
Comments must be received by 29 January 2016 and, based on the responses received, the FRC will consider whether any further action is needed.