There are eight directors on the Board of XYZ plc - two non-executive directors and six executive directors. Kyle XYZ is the Chairman and Chief executive of the company. Of the six executive directors, only one was recruited to an advertised position - the other five are members of the XYZ family and obtained their positions when they left university.
The directors' remuneration is decided at board meetings and the majority of the pay package is salary and pension - traditionally only a small proportion of directors' pay is performance related.
The finance director, Carla Clearwater is in charge of the entire accounting function which includes internal audit. She has worked at XYZ plc for 12 years and is therefore knowledgeable about the way the company is set up and how the finance systems and controls work. For this reason, the board has never seen the need for an audit committee.
The company is under pressure to comply with the Combined Code of Corporate Governance.
Required
a) Write an essay that critically appraises the role of Corporate Governance. You should make reference to any current developments.
b) Using the information provided above, make recommendations as to what XYZ needs to do in order to comply with the Combined Code.