Equity Culture

Tel: +44 (0)7956 691 104

  • Home
  • About Us
  • Board Evaluations
  • Regulatory Compliance
  • Clients and Case-Studies
  • Noticeboard
  • Blog
  • Contact Us

NED Letters of appointment

14th February 2011 11 Comments

“Our convention is to provide NEDs with letters of appointment for 3 years, subject to AGM re-election, and at the end of 3 years provide them with a further letter extending the initial term by a further 3 years. With the new Corporate Governance Code and the requirement for annual re-election of all directors, do companies still believe such extension letters are necessary and/or desirable?”

Leave a Reply Cancel reply

Only your comment and indication of company type will be published

Comments

  1. FTSE 250 said

    14th February 2011 at 12:01 am

    For the reasons already outlined in other responses, we have retained the 3 year letter of appointment and are proposing to supplement it with an annual letter confirming re-election post AGM – all other terms of appointment will be as per the 3 year term letter as reviewed by the Nomcom and Board. This feels preferable to producing a new appointment letter each year when we might otherwise feel obliged to review all terms and conditions annually.

    • FTSE 100 said

      14th February 2011 at 12:01 am

      0

      • FTSE 250 said

        14th February 2011 at 12:01 am

        We adopted the ridiculous new provision that all directors stand for annual re-election as there seemed no downside, other than a longer meeting. I then sent them updated letters and will do so annually. Why wouldn’t we? What’s the issue there?!

        • FTSE 100 said

          14th February 2011 at 12:01 am

          We too concluded that there was some merit in retaining the three year terms of office, on the same basis as an earlier answer in that it indicates some sort of longer-term expectation and commitment from both the company and the NEDs. Have to admit I’m less precious on extension letters themselves, the record is within the minutes of the NomCo and Board meetings.

          • FTSE 100 said

            14th February 2011 at 12:01 am

            I n recent times we have moved to a rolling term, subject to annual re-election. Directors have been subject to annual re-election for a number of years now. Each year the Nominations and Governance Committee consider the submission of Directors for re-election. The term is also subject to the recommendation of the Combined Code, i.e. after nine years service, directors will not be submitted for re-election.

            • FTSE SMALL CAP said

              14th February 2011 at 12:00 am

              We have continued with the three year initial and extension letters.

              • FTSE 100 said

                14th February 2011 at 12:00 am

                We have always reviewed the terms of each NED’s appointment annually and issued an updated letter following each review.

                • FTSE 250 said

                  14th February 2011 at 12:00 am

                  We adopt the same approach as the questionner.
                  We have not addressed this specifically but I see merit in continuing with the same approach (subject to some reference to annual re-election) for the same reasons as described by the FTSE 100 company.
                  Having a term set out in the letter of appointment is better than leaving it open to the AGM process. The sense of commitment given by both the appointing company and the NED is an important ingredient.

                  • FTSE 250 said

                    14th February 2011 at 12:00 am

                    Opportunity to stop doing the extension letters, so will be using the AGM re-election to go on the file of the NEDs.

                    • FTSE 100 said

                      14th February 2011 at 12:00 am

                      We debated this and concluded that there was some merit in retaining the three year terms of office, as it indicates some sort of longer-term expectation and commitment on both the company and the NEDs part. This is despite the move to annual re-election, but means the three year term has to be expressed as being “subject to re-election”. I’m just about to do three extension letters!

                      • AIM said

                        14th February 2011 at 12:00 am

                        We have the NEDS on 12 month rolling letters of appointment, subject to AGM re-election, in our case every 3 years as we do not need to comply with the Code as an AIM company but it would be easy to make this do so.

                        Sections

                        • Home
                        • About Us
                        • Board Evaluations
                        • Regulatory Compliance
                        • Clients and Case-Studies
                        • Noticeboard
                        • Blog
                        • Contact Us

                        Recent Notices

                        • Corporate Gifts and Hospitality Policy

                          Corporate Gifts and Hospitality Policy

                          3rd June 2025
                        • How often does your Board meet?

                          How often does your Board meet?

                          29th April 2025
                        • Know Your Customer & Ultimate Beneficial Owner requests

                          Know Your Customer & Ultimate Beneficial Owner requests

                          28th March 2025
                        • The Market Abuse Regulations (MAR) & Insider Dealing training

                          The Market Abuse Regulations (MAR) & Insider Dealing training

                          28th March 2025
                        • Reviewing and updating our Board skills matrix

                          Reviewing and updating our Board skills matrix

                          24th February 2025

                        Contact EquityCulture

                        Address:

                        89 Kesteven Way,
                        Corby,
                        Northamptonshire
                        NN18 8GF

                        Registered in England and Wales No. 06008649.

                        • Blog
                        • UK Board Evaluations
                        • UK Corporate Governance

                        © 2025 EquityCulture | Site Designed & Built by Midland Tech