SECTION 3: NOMINATION AND APPOINTMENT PROCESS

Section 3: Nomination and Appointment Process | 71 A: This is a common scenario for smaller companies with relatively small Boards and that have only two to three IDs to serve on all three Committees. Although the Code does not explicitly restrict how many Committees a single director can serve on, this practice is not recommended. One of the reasons for having separate Committees is to spread out the Board’s workload. Will all the directors in this case be able to commit the time and be effective on all three Committees? In fact, the NC and the Board should ask whether a director can adequately carry out his duties as a Board member and Board Committee member before they appoint him to a second or third Board Committee. Among the NC’s key responsibilities is to evaluate the performance of the Board Committees. As such, if the common directors are on the same Board Committees, there will be conflicts of interest during the evaluation process. It is difficult to expect the same Board members to evaluate their own performance on each of these Committees. To ensure that the NC is able to discharge its responsibilities independently and effectively, companies should consider increasing the number of their IDs. Alternatively, the Board should consider combining the NC and RC into one. This avoids having separate Committees with identical directors if the size of the Board is small to begin with.