Nomination committee

Introduction to the nomination committee

The role of the nomination committee straddles all committees of the board as well as the board itself. Its remit covers the current and future composition of all these forums, with the exception of the appointment of a new chair of the board. This latter is most often led by the most senior independent director on the board unless they are a potential candidate, in which case another non-executive board member would take the lead. The nominations committee does not work in isolation but draws on input from the existing board directors and committee members, as well as external experts, particularly on selection, evaluation and training. An increasingly topical area for nomination committees is that of boardroom diversity and dynamics. As organisations come to realise the benefits of diverse boards, the role of the nomination committee in identifying suitable candidates from a broader range of backgrounds is becoming more important.

The nomination committee sets the framework for the board itself through its recommendations for appointments, evaluations of composition, and planning for future succession. It has a key role in identifying expertise that could add additional value to forums, whether in the near or long term.

The nomination committee interacts closely with the remuneration committee, and these two forums can be combined. You may also consider combining a nomination committee with a governance committee reflecting the importance of the governance framework and its members.

Duties, responsibilities and tasks

In general terms, the nomination committee acts as an internal audit for the board and their committees in respect of their composition and effectiveness. The nomination committee must give consideration to the diversity, skills, experience and knowledge available to these forums. Specifically, this should be in respect of individuals, individual roles, the board or committee as a whole, and the interaction of appointed members when undertaking their roles. This means that the committee has a dual focus on both the individual appointees as well as the board or committee as a collective. The appointment, retirement or removal of one individual must be considered against the impact on the wider group and not just in isolation. When considering the full composition, the committee should consider the dynamics of the board and the effectiveness of its current composition, as well as any areas where new members could enhance or improve the effectiveness of the board.

In practice, the board establishes a nomination committee to:

• Plan: ensure plans are in place for orderly succession to both the board and senior management positions. Within this, they should oversee the development of a diverse pipeline for succession.
• Identify: lead the process for determining board and executive appointments
• Evaluate: undertake or oversee regular evaluations of the board and its committees
• Train: ensure induction and ongoing training is in place for directors/board members, executives and committee members