QCA Building Better Boards Forum: Session 1 – Creating the right board
As part of our Building Better Boards theme for 2019, we held our Annual Forum on Tuesday 11 June 2019 at Haberdashers’ Hall in London, with over 70 guests from across the small and mid-size quoted company community in attendance.
This year’s forum builds upon our work on corporate governance and is aimed at helping smaller quoted companies build effective boards and develop good practices and behaviours that will drive improved performance and help stimulate their growth.
Please see below highlights from our first panel session, featuring:
- James Ashton, Business Writer
- Nick Naylor, Chief Executive, Allenby Capital
- Judith Mackenzie, Partner and Head of Public Equity, Downing LLP
- Tim Hammett, Managing Partner, Norman Broadbent Executive Search
James Ashton, business writer, speaker and media consultant, chaired the first panel session at the QCA Building Better Boards Forum, which explored the ways in which companies can create the right board.
Nick Naylor, Chief Executive at Allenby Capital, was eager to emphasise the importance of an effective board for smaller quoted companies, highlighting that boards and their composition were becoming more and more significant, as well as being subject to heightened scrutiny. From the perspective of a nominated adviser, he explained that it was crucial to make sure that the composition of the board was right for a company at an early stage. He added that board efficacy had been incorporated within the AIM Rules for Nominated Advisers to say that the efficacy of the board should be considered in light of the company’s needs, which has magnified the extent of interest in an individual’s appropriateness for sitting on a board.
Tim Hammett, Managing Partner at Norman Broadbent Executive Search, agreed with the crucial nature of getting the board right at an early stage when offering his viewpoints from the recruitment perspective. He highlighted the pre-IPO requirement to the recruitment process, affirming that the earlier involved in the recruitment process the better the company board would be.
In regards to the talent pool of non-executive directors (NEDs), Tim explained that the amount of those wanting to become an NED outweighed the amount of individuals actually qualified or appropriate to become an NED. Tim declared that this was surprising given that the risk to reward ratio does not equate, with NEDs only earning between £25,000 and £40,000 for their role. He stated that a board should be supported by a minimum of two independent NEDs in order to ensure that independent views carry sufficient weight on the board.
Judith Mackenzie, Partner and Head of Public Equity at Downing LLP, stated that the QCA Corporate Governance Code had been an essential tool in helping to formulate the right process for a board to go through. Judith added that a one size fits all approach is not appropriate for smaller quoted companies due to the nature of the market and the significant variation in companies and that the QCA Code has helped to fill the void in helping these smaller companies build their boards. In reflecting on her own experiences, she mentioned that it is crucial for company boards to pursue good governance practices in order to attract investment.
In the Q&A segment of the discussion, the issue over board diversity and what constituted diversity was raised. James indicated that diversity consisted of many things, including: gender, race, age, as well as diversity of thought. The importance of board diversity was stressed and the merits of having a diverse board have numerous benefits, such as bringing unique perspectives in, enhancing board performance and improving relationships with investors. It was highlighted that investors and shareholders were especially keen on the idea of board diversity.
For more from the QCA Building Better Boards Forum 2019, see also:
- Highlights from keynote speaker, Andrew Kakabadse of Henley Business School
- Highlights from the second panel session on the evolution of the board