Jennie S. Mills Milford International Associates Ltd

The importance of “independents” on the

supervisory board

Jennie Mills

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

Slovak Corporate GovernanceSlovak Corporate Governance

Slovak Corporate Governance Code Slovak Corporate Governance Code 2002 based on OECD Principles 19992002 based on OECD Principles 1999

Annex 1. Board Committees 2003Annex 1. Board Committees 2003

The ROSC Assessment 2003The ROSC Assessment 2003

Annex 2. The Role of the boardsAnnex 2. The Role of the boards

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

EU DevelopmentsEU Developments

The Corporate Governance Action The Corporate Governance Action PlanPlan

The Recommendation on supervisory The Recommendation on supervisory board members October 2004board members October 2004

The Recommendation on The Recommendation on remuneration of board members remuneration of board members October 2004October 2004

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

EU Recommendation on EU Recommendation on supervisory board memberssupervisory board members

Comply and explain approach Comply and explain approach endorsedendorsed

Role of independent is to Role of independent is to constructively challenge constructively challenge management decisions & provide management decisions & provide independent oversightindependent oversight

Sound CG practices benefit business, Sound CG practices benefit business, large and small, family owned as well large and small, family owned as well as listed companiesas listed companies

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

Oversight critical where conflicts of Oversight critical where conflicts of interest existinterest exist

Nomination of board membersNomination of board members RemunerationRemuneration AuditAudit

Other benefits important alsoOther benefits important also• Particular experience/ skillsParticular experience/ skills• Objective & fresh perspectiveObjective & fresh perspective• ContactsContacts

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

Slovak Code on Board CommitteesSlovak Code on Board Committees

Committees of SBCommittees of SB Audit: 3-5 members mainly or wholly Audit: 3-5 members mainly or wholly

independent to meet at least 4 times independent to meet at least 4 times per annum.per annum.

Remuneration: composition as Remuneration: composition as above, meetings twice p.a.above, meetings twice p.a.

Nomination: composition as above, Nomination: composition as above, meetings four times p.a.meetings four times p.a.

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

Qualification of supervisory board Qualification of supervisory board membersmembers

Each Co must determine this itselfEach Co must determine this itself Depends on size, activities & Depends on size, activities &

environmentenvironment Specific qualifications Specific qualifications Critical that each can devote Critical that each can devote

sufficient time to the rolesufficient time to the role IndependenceIndependence

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

Nature of independenceNature of independence

Absence of close ties, business, Absence of close ties, business, family or otherwise with:family or otherwise with:• ManagementManagement• Controlling shareholdersControlling shareholders• The company itselfThe company itself

Annex II gives outlineAnnex II gives outline

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

Number of independentsNumber of independents

Slovak Code in line with OECD Slovak Code in line with OECD Principles looks to majority of Principles looks to majority of independents on SB over a period of independents on SB over a period of years.years.

EU Recommendation EU Recommendation

““sufficient to ensure that any sufficient to ensure that any material conflict of interest involving material conflict of interest involving directors will be dealt with”directors will be dealt with”

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

Induction, director development & Induction, director development & evaluation evaluation

Induction to board & CoInduction to board & Co Director development…..”directors Director development…..”directors

are not born but develop”are not born but develop” Evaluation of performance annually Evaluation of performance annually

for :for :• MembershipMembership• Organisation Organisation • Operation as a groupOperation as a group• Includes board committeesIncludes board committees

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

The Central European Corporate The Central European Corporate Governance AssociationGovernance Association

Promote CGPromote CG

Support board members Support board members

Promote potential board membersPromote potential board members

Assist in director developmentAssist in director development

Jennie S. Mills Milford International Jennie S. Mills Milford International Associates LtdAssociates Ltd

How to joinHow to join

Contact:Contact: • Eva Hornakova at hornakova@bsse.skEva Hornakova at hornakova@bsse.sk

• Barbora Lazarova at lazarova@bsse.skBarbora Lazarova at lazarova@bsse.sk