Advantages And Disadvantages Of The Composition Of Retail Plc 's Main Board And Audit Committee

1085 Words Dec 10th, 2014 5 Pages
1. Evaluate the advantages and disadvantages of the composition of Retail PLC’s main board and audit committee.

In the board of Retail PLC, the number of executive directors is greater than non-executive directors including the chairman. This do not comply with the UK Corporate Governance Code (B.1.2) which requires that at least half the board, excluding the chairman, should comprise non-executive directors determined by the board to be independent. One of the important responsibilities of NED is to monitor the performance of executive management. In Retail PLC, the board might be considered as not effective and balance according to agency theory. Because of that the short of NEDs may reduce their power on monitoring executive directors and, as a result, influence their judgement and independence.

In addition, UK Corporate Governance Code (C.3.1) requires that, the board should establish an audit committee of at least three independent non-executive directors. The audit committee in Retail PLC only has two members. Furthermore, one of them is the former chair of the audit committee, the independence of him/her should be considered since he or she might work for the company for long period of time. In the other hand, the company has met the requirement of having at least one member of the committee has recent and relevant financial experience. The audit committee chair Terry Muir is a qualified accountant and recently retired as an FD of another listed company. He is…
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