What is a nominations committee? The role of the nominations committee is to examine the characteristics and skills required of board candidates and the people who make up the company’s board of directors. This Lexicon guide explains more.
What is a nominations committee?
With corporate responsibility and good governance being of such importance today, companies and nonprofits are evaluating their compliance with regulations at every level. This includes examining how the board is formed and how senior candidates are assessed.
Who sits on the nominations committee?
The committee usually consists of the company’s CEO, the chair of the board and the deputy chair. There should be at least two committee members, and the length of time members serve on the committee can vary depending on the nature of the organisation.
The duties of the nominations committee
One of the primary duties of the nominations committee is to seek out potential candidates to fill senior management positions and board membership roles. The committee is trusted to review candidates’ qualifications to ensure they match the organisation’s requirements.
Nominations committees are also sometimes called nominations and governance committees. They can be made up of directors who won’t be running for re-election. As the board performs one of the most essential roles in the organisation, the job of the nominations committee in selecting board members is critical.
Board members are chosen to perform their tasks using the required level of skills and qualifications, and nominations committees will select board members on that basis. Committees must maintain a high degree of confidentiality.
The nominations committee charter outlines positions that the nominations committee recruits for. They can recruit candidates by developing an application form for the roles they seek to learn more about the candidates they are reviewing. Both attracting and securing the best talent for the board will be the remit of the nominations committee.
The members chosen for the board should have a thorough knowledge of governance and should fit with the strategic objectives and vision for the organisation.
It is helpful if nominating committee members have leadership experience. Board members should be selected in line with the interest of shareholders and other stakeholders.
Choosing members for the nominations committee
Nominating committee members should have good recruitment skills, such as asking the right questions and maintaining confidentiality. They must be able to evaluate the responses from multiple candidates critically and show good decision-making skills in their choices.
Members should also be good at collaboration and group discussion with other members to form a diplomatic decision. Finally, they should be good time managers who can balance their time between meeting potential candidates and all of the other tasks above.
In summary, the role of the nominations committee is to recruit new board members who have the appropriate skills and experience to achieve the organisation’s strategic vision and act in the interest of shareholders and stakeholders.
To achieve this, they must possess excellent recruitment skills themselves, including collaborating with other members, assessing potential candidates, and maintaining a high level of integrity. Since the recruitment of effective board members is crucial to achieving the organisation’s vision, choosing influential members for your nominations committee is equally vital.
Mission: The purpose of the Corporate Governance and Nominations committee is to:
- Conduct general oversight of the board of directors.
- Propose candidates for election to the board of directors based on their qualifications.
- Identify and recommend appropriate corporate governance practices to the board.
- Examine the framework for assessing board performance and the board’s self-evaluation.
- Committee members oversee reputation and conduct risks that fall within their responsibility.
Membership of the committee
- There shall be a minimum of three non-management directors on the committee.
- The committee reviews and approves membership each year with the board, which also designates a chair.
- The board appoints all committee members and chairs.
- The committee will generally meet at least three times per year, but no less often than that. All committee meetings will be presided over by the chair, who will also set the agenda.
- The firm’s officers and employees may be invited to attend committee meetings or meet with members of the committee or their advisors.
- The committee has the authority to hire advisors when it deems it necessary and to approve fees and terms of engagement without asking the board or management first. It has the financial resources at its disposal to do so.
- The committee shall provide periodic updates to the board on its actions and significant matters reviewed following each committee meeting. This generally occurs at the next regularly scheduled board meeting.
In summary: the duties and responsibilities of the nominations committee
- The committee should consider the size and composition of the board and the tenure of directors.
Candidates for board membership should reflect the values outlined in the Corporate Governance Principles of the board.
- Nominate candidates to fill vacancies on the board and recommend candidates to stand for election as directors at the next annual meeting of shareholders (or, if necessary, a special meeting of shareholders).
- Identify and hire director candidates, and approve the search firm’s fees and other retention terms.
- Recommend director compensation to the board.
- Examine shareholder proposals and their proposed responses.
- The committee is expected to review and recommend any changes to the Corporate Governance Principles to the board.
- Evaluate the board’s performance framework and the board’s self-evaluation process regularly.