GHY is a listed company. Tom is GHY’s CEO and Peter is its non-executive Chair of the Board. Tom and Peter both have substantial relevant business and industrial experience and both are believed to have considerable integrity. Tom and Peter quickly developed a good working relationship after Peter’s appointment. They have become close friends.
Tom briefs Peter on every aspect of the business. Tom and Peter jointly agree the agenda for every board meeting and both agree on the manner in which matters will be presented to the board.
Taking account of the principles of good corporate governance, which of the following statements is correct?
A . It is entirely appropriate that Tom and Peter have this kind of relationship and both are acting in the best interests of the company.
B . Non-contentious board meetings show how well Tom and Peter are running the company and shows that the management is cohesive.
C . The relationship between Peter and Tom may have a detrimental effect on company decision making as the Board is not always being informed about matters in an unbiased manner.
D . Since the non-executive chair clearly has a significant role within this company there is little danger that any individual will become excessively dominant.
Answer: C