Following the publication of a discussion paper on board succession planning in October 2015, on 23 May 2016, the Financial Reporting Council (the "FRC") issued a feedback statement on the issues surrounding board succession for both executives and non-executives. The key points identified by respondents include:
- establishing a clear link between the business strategy of a company and its succession plan and talent development programme;
- suggestions as to how to increase the standing of the nomination committee and improve its reporting to provide enough information (subject to commercial sensitivities) to all classes and sizes of investors about the committee's role in managing talent;
- suggestions as to how to offer more management experience (for example, by providing board apprenticeship schemes and offering more exposure to directors and board experiences for those on track to be considered for board positions);
- the role of continuous board evaluations and separate board sessions (rather than conducting annual evaluations) to inform and influence succession planning;
- the incorporation of diversity thinking in achieving a holistic approach to boardroom inclusion in an organisation; and
- the need for better reporting on board quality without disclosing insider information to investors.
The FRC has committed to avoiding updates to the UK Corporate Governance Code until 2019. Guidance in this area therefore will be considered as part of the revision of the Guidance on Board Effectiveness, which will begin later this year.
The FRC's feedback statement can be accessed here:
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