Roles and Remuneration

Current Board Remuneration

Roles and Remuneration

This document is designed to heighten awareness within LINX members of the structure of the LINX Board, together with the roles and responsibilities of the non-executive directors, and to put this information into a historical context. It also covers the selection process and details of remuneration.

1. Introduction

Non-executives of the LINX board typically work at member organisations. Although the person is elected to the board as an individual, they are taking time from their working day to attend to LINX business and most board members incorporate their role at LINX as part of their full time employment. There is a real benefit to the individual, as well as to their organisation, by being a LINX director in the status and insight it brings in being involved with the leading neutral Internet Exchange. As well as carrying considerable responsibility, for the director who adopts an active, effective role the position can be both challenging and highly rewarding.

LINX assumes the Board member has obtained necessary authorization from their employer to participate fully in the Board. The Board member’s participation is as an individual and not as a representative of their employer.

LINX will communicate directly with the Board member, not the employer, regarding all Board matters.

2. Board Structure

A board of a company typically consists of two or more executives with a number of non-executive positions. Various sub-committees, such as remuneration and audit, would often be formed from these people. This structure is not entirely appropriate to LINX due to its standing as a not-for-profit mutually owned organisation. However, some valid comparisons can be made with other similar and dissimilar organisations. Various codes have been produced and a wide range of research has been conducted into this subject and there are links in the further reading section.

The structure and operation of the LINX board has remain largely unchanged since September 2000 when circumstances resulted in the separation of the CEO and Chairman roles. This structure, which is explained below, was most recently reviewed and ratified at a Board strategy meeting in June 2015, and followed in November 2015 by the appointment of an independent non-executive Chairman. In 2017 further consideration led to the proposal to appoint up to 3 executive directors, which was passed by the LINX membership in November 2017.

The LINX board consists of the independent non-executive Chairman and the full time CEO with six people elected by the members as non-executives. To date, the appointment of executive directors has not been made. Elections for the non-executive directors are run annually in accordance with the Mem. and Arts of the Company (see Further Reading). The officers of the Company, as deemed appropriate by the board members, are decided and elected by the board following each election. This normally consist of a Vice Chairman.

The above process has been deemed appropriate where a Board has been elected by the members and may not have a complement of people with balanced skill sets and experience.

There is provision to have one further non-executive from outside of the organisation on the board, although to date this position has not been filled.

Aside from fiduciary duties associated with an office of the Company, the Chairman takes first responsibility for the HR and other requirements of the CEO and leads his/her annual appraisal.

Terms of Reference for Board members, their Biographies and their Declarations can be found in the Further Reading section of this document.

3. General Responsibilities and Risks

LINX board members are directors of the Company and therefore take on responsibilities and risks as individuals just as they would any other directorship. However, there is no statutory definition of a non-executive. The responsibilities include statutory items such as the filing of accounts and annual returns as well as all activities of the business. Ultimately, each director is responsible for any and all of actions the Company makes and has to comply with the duties of an executive director as established under common law and case law, such as the duty to exercise care, skill and diligence.

Alongside this, there is also a certain level of risk associated with a company of LINX’s size (50+ staff, turnover of £14-15m and cash reserves often in excess of £1m) and the business area it operates in. The failure of the Company to act within the Companies Act 1985 can result in prosecution for directors. They also face the risk of personal litigation by any party, including the Company itself, that believes they have reason to bring such an action. LINX takes out certain insurances to protect its officers but these do not protect the directors in a personal capacity in all circumstances.

Having said that, there have been no incidents of attempted prosecution of any of the directors of LINX or fines for late filing of information at Companies House.

4. Board Activity

Board meetings are fairly tightly controlled, with regular meetings combined with a consistent high level of reporting. The meetings, aimed to last for 3 – 4 hours, are generally held in the London office of the company as well as at least one visit per annum to the Peterborough office. Board members are expected to attend in person where possible although on occasion they can be conferenced in. Typically, ten meetings are held per year, with two of these being video conference only and four timed to coincide with the quarterly meetings of LINX members. Directors are expected to attend all board meetings, although in practice this may not be possible. Attendance by the non-executive directors usually averages over 90%.

The content of the reporting to the Board is under continual review to ensure the appropriate level of detail, supporting information and transparency are provided. The minutes of each Board Meeting are published on the private part of the LINX website and are available to all Members. Certain subjects that are deemed sensitive, such as individual HR matters, are omitted from the published minutes. The information at each meeting typically includes reports on or by:

  • CEO
  • Financials
  • Admin
  • Technology
  • Marketing & Business Development
  • Public Affairs

As well as a number of key performance indicators comprising of graphs and stats showing metrics such as network traffic. The CEO provides a report containing a summary of topics and decisions taken from each meeting back to the Management.

Directors are expected to read CEO’s summary report and any specific papers prior to board meetings. A time guide for the publication of reports to the board, actions from any party (including the board and the management) and a protocol for dealing with matters has been adopted.

In addition to board meetings, management staff of LINX and in particular the CEO may have meetings of varying length with individual board members to cover specific issues such as statutory, accounting, technical and human resource. Increasingly, Board sub-committees are used to deal with such matters. Other communications are affected as required via email, individual voice conversations and via conferencing. The Chairman maintains a more one to one relationship with the CEO and becomes the first port of call for some issues.

In a typical year a non-executive board member may be expected to spend on average:

  • 3 board meetings at 4 – 5 hours each inc. travelling (usually longer if held at Peterborough)
  • 1 multi-day meeting devoted to strategic issues
  • 4 shorter meetings combined with meetings of the LINX membership
  • 2 video meetings
  • An undetermined amount of time on sundry items including email, the reading of background documents and telephone time.

None of the above includes time spent at LINX General Meetings or other ad-hoc meetings. In addition to the above the Chairman will perform the appraisal of the CEO, alongside other board member(s), and may attend offsite meetings for business planning.

5. Remuneration

It is clear that a LINX directorship involves a considerable amount of time and commitment for the board as a whole to be successful. Indeed, that time and commitment is expected of each director and a remuneration package is provided to reflect this, alongside recognising other factors of risk.

Although remuneration is not performance based, the board has the power to suspend, withhold or otherwise decline to pay any remuneration if they consider, by majority vote, this to be the appropriate course of action.

The 2005 strategy review included action items on the CEO to review external board structure and remuneration. In light of this, the board considers it appropriate for the CEO to propose any changes to remuneration from time to time.  At LINX67 in late 2009, a new version of the LINX Memorandum of Association was adopted, and one change resulting from this is that Board remuneration will henceforth be subject to a separate vote of approval alongside the annual budget presentation.

6. Original Implementation

This document was presented and discussed at LINX39, in November 2002, with discussions continuing on-list afterwards. General approval was received and a resolution put forward, and passed, at LINX40 to commence with the October 2003 budget year.

Since then it has been reviewed internally in November 2005 and December 2006 and most significantly in November 2009. There have also been interim updates just to the remuneration levels. This edition was revised by the LINX executive in March 2016 to bring some details up to date.

External Resources

Those who wish to know more about companies and directors should browse http://www.companies-house.gov.uk and http://www.ecgi.org/ and in particular the Codes and Best Practice documents that can be found at http://www.ecgi.org/codes/search_code.php?country=United%20Kingdom

DTI Review of Non-Exec Directors – the Higgs Report

The Combined Code – principals of good governance and code of best practice. (Combines the Committee of Corporate Governance’s Final Report and the “Greenbury” and “Cadbury” Reports)

Independent Remuneration Services – commercial services exist for the setting of remuneration plus reports and surveys.

Changelog

Grahame Davies, LINX Chairman to 2014

Changelog:

  • First published: December 2006
  • Updated in 2007 with new remuneration details
  • Updated again in 2008 with new remuneration details
  • Updated again in 2009 with new remuneration details
  • Updated again in late 2009 to move the remuneration details into a separate document, and to update various aspects of the text
  • Updated in March 2016 to update some aspects of the text.
  • Updated in July 2016 to fix broken links.
  • Updated in December 2017 to cover the changes approved to the Articles in November 2017.
  • Updated in March 2018 to adapt to new website format and structure.