Plan ahead for long-term success
The Financial Reporting Council has published feedback on its discussion paper on UK Board Succession Planning.
The FRC stresses that planning ahead for both executive and non-executive director positions is more likely to lead to long-term success and that an active nomination committee is key for effective board succession. Committees should ensure that succession planning is aligned to current and future company strategy. The nomination committee should also consider its role in developing the talent pipelines.
According to the FRC, there is some support for further nomination committee guidance and, therefore, it will consider this as part of the revision of the Guidance on Board Effectiveness, which is to begin later this year.
The feedback statement also looks at the contribution made by board evaluations, board diversity and the role of institutional investors.
The FRC are also planning to analyse nomination committee disclosures this reporting season and report on their findings in the 2016 Developments in Corporate Governance and Stewardship report. No further updates to the UK Corporate Governance Code are expected to be made until at least 2019.