Peachtree 2013 Annual Report Download - page 60

The Board of the Company is committed to ensuring that it provides
effective leadership and promotes uncompromising ethical standards.
One of the ways in which the Board achieves this is by requiring that
good governance principles and practices are adhered to throughout
the Company. The Board determined that the following is a helpful
summary of its role:
Good corporate governance is about helping to run the Company well.
It involves ensuring that an effective internal framework of systems
and controls is put in place which clearly defines authority and
accountability and promotes success whilst permitting the management
of risk to appropriate levels. It involves the exercise of judgement as
to the definitions of success, the appropriateness of risk and the levels
of delegation to the executive. The exercise of this judgement is the
responsibility of the Board and involves consideration of processes
and assumptions as well as outcomes.
It also involves the creation of a sensitive interface for the views
of shareholders and other stakeholders to be given appropriate
consideration when reaching these judgements.
The executive team is required to provide such information to the
Board as the Board needs to enable it to exercise its judgement over
these matters.
There is a very fine distinction between the approval of processes and
their definition. Wherever possible it is the role of the Board to approve
process rather than initiate or define it. Only exceptionally would the
Board intervene to initiate or define.
The Board also sets the tone for the Company. The way in which it
conducts itself, its attitude to ethical matters, its definitions of success
and the assessment of appropriate risk, all define the atmosphere within
which the executive team works.
Good corporate governance is not about adhering to codes of practice
(although adherence may constitute a part of the evidence of good
governance) but rather about the exercise of a mindset to do what
is right.
One of the challenges facing any Board is the way in which the
non-executive and the executive directors interact. It is clear that they
each have the same legal responsibility but it is generally unrealistic to
expect executive directors to speak individually with the same freedom
as the non-executive directors. Equally, executive directors who just
“toe the executive line” in contradiction to their own views may not
be effectively contributing to good governance. A well-functioning
Board needs to find the right balance between hearing the collective
executive view and being aware of the natural internal tensions in
an executive team.
One of the consequences of both increasing the watchdog role of the
Board and finding this balance between individuality and team behaviour
is driving more and more Boards to have fewer and fewer executive
directors. In our circumstances as a holding company for a number of
businesses, the reduced Board size works effectively and an appropriate
balance is struck. Notwithstanding the tensions created by many
external expectations, which may be wholly or in part unrealistic, a
successful Board should, ideally, be composed of a group of respected,
experienced, like-minded but diverse people who coalesce around a
common purpose of promoting the long-term success of the Company,
provide a unified vision of the definitions of success and appropriate risk,
endeavour to support management (i.e. those who honestly criticise
at times but encourage all the time) and who create confidence in all
stakeholders in the integrity of the business.
A Board meeting should feel like a meeting at which everyone is
participating to solve problems together. Above all, all participants
should be able to say after a Board meeting that value has been added
as a result of the meeting taking place. This added value will come in
many forms: challenge, advice, clarity, imagination, support, sharing
of problems, or creating strategic intent. The list is not exhaustive.
Board membership is for 365 days of the year. Board responsibilities
do not start and end with formal meetings. Board members, on the
Company’s and their own initiative, should endeavour to engage outside
of meetings to bring their experience to the assistance of the executive
team whenever possible.
Above all there should be a sense of value added from the engagement
of the Board members in all their interaction with the Company, formal
or otherwise.
To enhance its performance and effectiveness, the Board sets itself
explicit objectives, which are separate from objectives set for the
Company and for the Chief Executive, following the outcome of the
Board appraisal process for the prior year. In relation to the objectives for
the year ended 30 September 2013, the Board has regularly monitored
its performance against these and has found this process adds value.
Donald Brydon CBE, Chairman
The Sage Group plc | Annual Report & Accounts 2013
58
Chairman’s introduction to Corporate Governance