14e54the Cadbury & Green Code of Best Practice

THE CADBURY CODE OF BEST PRACTICE
THE CODE OF BEST PRACTICES
1. The Board of Directors
1.1 The board should meet regularly retain full and effective
control over the company and monitor the executive
management.
1.2 There should be a clearly accepted division of

responsibilities at the head of a company, which will
ensure a balance of power and authority such that no
one individual has unfettered powers of decision.
Where the chairman is also the chief executive, it is
essential that there should be a strong and independent
element on the board, with a recognized senior
member.
1.3 The board should include non-executive directors of

sufficient caliber and number for their views to carry
significant weight in board’s decision.
1.4 The board should have a formal schedule of matters
specifically reserved to it for decision to ensure that the
direction and control of the company is firmly in its hand
(Note 2).
1.5 There should be an agreed procedure for directors in

the furtherance of their duties to take independent
professional advice if necessary at the company’s
expense (Note 3).
1.6 All directors should have access to the advice and

services of the company secretary. CS is responsible to
the board for ensuring that board procedures are
followed and that applicable rules and regulations are
complied with any question of the removal of company
secretary should be a matter for board as a whole.
2. Non-Executive Directors
2.1 Non-executive directors should bring an independent
judgement to bear on issues of strategy, performance,
resources, including key appointments and standards of
conduct.
2.2 The majority should be independent of management

and free from any business or other relationship which
could materially interfere with the exercise of their
independent judgement, apart from their fees and
shareholding. Their fees should reflect the time which
they commit to the company.
2.3 Non-executive directors should be appointed for

specified terms and reappointment should not be
automatic.
2.4 Non-executive directors should be selected through a

formal process and both this process and their
appointment should be a matter for the board as a
whole.
3. Executive Directors
3.1 Directors’ service contracts should not exceed three
years without shareholders’ approval.
3.2 There should be full and clear disclosure of directors’

total emoluments and those of the chairman and
highest – paid UK Director, including pension
contributions and stock options. Separate figures
should be given for salary and performance – related
elements and the basis on which performance is
measured should be explained.
3.3 Executive directors’ pay should be subject to the

recommendations of a Remuneration Committee made
up wholly or mainly of non-executive directors.
4. Reporting and Controls
4.1 It is the board’s duty to present a balanced and
understandable assessment of the company’s position.
4.2 The board should ensure that an objective and

professional relationship is maintained with the
auditors.
4.3 The board should establish an audit committee of at

least 3 non-executive directors with written terms of
reference which deal clearly with its authority and
duties.
4.4 The directors should report that the business is a going

concern, with supporting assumptions or qualifications
as necessary.
Appendix ‘B’
GREENBURY RECOMMENDATIONS
CODE OF BEST PRACTICES
1. Introduction
1.1 The purpose of the accompanying code is to set out
best practice in determining and accounting for
Directors’ remuneration.
1.2 The detailed provisions have been prepared with large

companies mainly in mind, but the principles apply
equally to smaller companies.
1.3 We recommend that all listed companies in the UK

should comply with the Code to the fullest extent
practicable and include a statement about their
compliance in the annual reports to shareholders by
their remuneration committees or elsewhere in their
annual reports and accounts. Any areas of non-
compliance should be explained and justified.
1.4 We further recommend that the London Stock

Exchange should introduce the following continuing
obligations for listed companies.
 An obligation to include in their annual Remuneration
Committee reports to shareholders or their annual reports
a general statement about their compliance with Section A
of the Code which should also explain and justify any area
of non-compliance.
 A specific obligation to comply with the provisions in
Section B of the Code which are not already covered by
existing obligations and with provision C 10 of the Code,
subject to any changes of working which may be desirable
for legal or technical reasons.
1.5 Within Section-B provision B-3 requires remuneration

committees to confirm that full consideration has been
given to Section C and D of the Code.

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THE CADBURY CODE OF BEST PRACTICE

THE CODE OF BEST PRACTICES

1. The Board of Directors

1.2 There should be a clearly accepted division of

1.3 The board should include non-executive directors of

1.5 There should be an agreed procedure for directors in

1.6 All directors should have access to the advice and

2.2 The majority should be independent of management

2.3 Non-executive directors should be appointed for

2.4 Non-executive directors should be selected through a

3.2 There should be full and clear disclosure of directors’

3.3 Executive directors’ pay should be subject to the

4.2 The board should ensure that an objective and

4.3 The board should establish an audit committee of at

4.4 The directors should report that the business is a going

1.2 The detailed provisions have been prepared with large

1.3 We recommend that all listed companies in the UK

1.4 We further recommend that the London Stock

1.5 Within Section-B provision B-3 requires remuneration

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