SECTION 7: SUCCESSION PLANNING

198 | Nominating Committee Guide 7.1 Introduction 7.1.1 The departure of key personnel can create difficulties and risks for companies and result in serious disruption to their business and operations. This is why one of the Board’s most important roles is to put in place a sound succession plan to ensure leadership and continuity of the company’s operations and plans. This should help to protect the interests of shareholders and provide themwith confidence in the company’s long-term prospects. 7.1.2 In practice, the Board usually assigns the NCwith the responsibility of reviewing succession plans for the directors 1 as well as senior management, in particular the Chairman and the CEO. The NC should ensure a progressive renewal of the Board by spreading out changes to the Board composition gradually over time. Succession planningmay require the consideration of remuneration packages. However, remunerationmatters come under the purview of the RC and therefore the RC is sometimes involved partly or wholly in succession planning matters. In the event that both the NC and RC are involved, it is important that their respective responsibilities are clearly defined by the Board to avoid conflict or duplication of responsibilities. 7.1.3 The NC needs to ensure that the company is engaged in both long-term and contingency succession planning. Long-term succession planning is required when the approximate date of departure of the incumbent senior management personnel is known. This allows sufficient time for the NC to identify prospective successors either from within or outside the company. It also allows prospective candidates time to equip themselves with the necessary experience, skills and knowledge. Contingency succession planning, on the other hand, keeps the company prepared in the event of an unexpected vacancy due to, for example, personal reasons, negative public image or death. 1 Provision 4.1 of the Code. 7A-1