Governance JeoPardy

Committee

100

Governance and compliance Committee

Ensure compliance with legal, regulatory, and CG requirements.

200

Remuneration Committee

Sub-committee of the main board which is composed partly or fully of INEDs; its task is to monitor the renumeration packages of board members.

300

Audit Committee

is composed of INEDs and provides a bridge between external auditor and the main board; its authority is derived from the formal board policy and is accountable to the board.

400

Nomination Committee

A check-and-balance mechanism to reduce the possibility of a dominant director (e.g. chairman or CEO) which is composed of mainly INEDS; it can recommend additional members or the replacement of members.

Chairman of the Board

100

Member of both BoD and management, usually the CEO, COO and CFO)

Executive directors

200

A director who has been nominated to the board by a major shareholder or other contractual stakeholders

Nominee Director

300

Corporate Director

Another company, not a human being, is a director

400

Shadow Director

A person that, although not formally a member of a board, is able to exert pressure on the decision of the board (in many jurisdictions he can be held liable as a director)

500

A person who can take the place of another director if that director cannot attend meetings

Alternate Director

Directors Duties

100

Trust

Acting with integrity, behaving honestly and fairly for the benefit of the shareholders equally, recognizing the interests of any minority shareholders; they should also promote the aims of the company to ensure success, and act solely within the powers delegated to them in the company’s constitution, and act for own benefits only if owners of stocks

200

Care

Exercise reasonable care, diligence and skill

Indolent Behaviour Examples

100

Lack of independence 

Conflicts of interests often arise

200

Avoidance of conflict

It is hard even for directors to confront management. Relationship between management and directors is likely to break down mainly during crises and directors are more worried about liability and spotlight (decrease in share price lead to increase in board activity)

300

Insufficient Attention

On meetings they may rely on the (selective) information disclosed by the firm’s management

400

Insufficient incentives

• Courts penalize only extreme forms of moral hazard (fraud)
• Firms buy routinely liability insurance for their directors
• Liabilities often paid by the firms, which indemnify directors who have acted in good faith
• Plaintiff’s lawyers may be inclined to buy off directors in order to settle