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Governance proposals 2017

This document contains revised proposals for revision of the LINX Memorandum & Articles of Association (M&A) - our fundamental governance document. 

(Copy of this document as a pdf formatted to print.)

We put a proposal to the general meeting at LINX96 for a comprehensive update of the M&A, and although the voting was 64% in favour, this failed to meet the 75% threshold required for changes to something as fundamental as this. Given the substantial majority in favour of the proposals, we have reworked them in accordance with the feedback received.

Revision of the proposals

The original proposals were thought to be too complicated, so we have simplified them in this revised set. The area that was by far the most complicated, and which proved most controversial with members, was a set of “special powers” for elected non-executive directors. We had proposed these as a guarantee that the other governance changes would not change LINX’s fundamental character as a membership organisation, but we recognise that these powers were over-complicated and over-engineered - and so we have dropped them.

See more on this below.

Overview of the proposals

In summary, the revised M&A is based on the following key changes:

  1. To allow for up to three executive directors to join the Board.
  2. Some changes to Board governance:
    • Changing the power to dismiss the Chair so that it is exercisable exclusively by the elected non-executive directors (NEDs); executive directors will not get a vote on this
    • Removing from the Articles an unused power to co-opt external unelected directors;
    • Updating the M&A list of matters required to be referred by the executive to the Board, with greater detail.
  3. To clarify the Board quorum requirement (at present the Articles only say that this is for the Board to determine, and there are no further rules on quorum).
  4. To clarify term limits for elected NEDs, and to require Board members who have served for a very long time to sit out for a minimum of three years before standing again.
  5. To change the name of LINX’s board of directors from “LINX Council” to “LINX Board”.
  6. To provide for the voting on elected NEDs to occur after the "hustings" where members can question candidates rather than at present where many members will vote prior to the hustings. 

In addition, we have taken the opportunity to substantially clean up the old M&A, since it had quite a bit of arcane language, old/unused clauses, and even some clauses that applied to the transitional aspects of establishing LINX, 23 years ago.  We do not believe that there are any controversial or contentious aspects to this ‘clean-up’ exercise.

Executive directors

On the matter of executive directors, it should be noted that in this respect our Board hasn’t changed much for 17+ years - but during that time LINX has changed substantially. 

Seventeen years ago LINX had around 120 members, 18 employees and an annual revenue of around £3.5M.  Today it has around 750 members, 66 employees and an annual revenue of over £15 million. In addition it now has significant activities in technology, membership relations and public affairs – most of which did not exist 17 years ago.

At present, we only have one executive director (the CEO), and expecting all executive capability and perspective in one person is unreasonable. 

The current and proposed revised Board structures look like this:

Board table picture illustrating current and proposed directors

We believe that the Board will simply be more effective with the change we are proposing, which allows us to add up to three executive directors from the current senior management team at no extra cost.  The suggestion that the current executive attend in an ‘ex‑officio’ capacity was considered, and you can read more about this in the governance ‘journey’ document (see references at the end).

The proposal to add executive directors has the following benefits:

  • Fits with good governance practice [according to the UK Governance Code: “A good Board has effective representation of the executive body”]
  • Is good for contingency planning and resilience
  • If the CEO is hit by a bus, any interim CEO would be from the senior management team; so it is better if some of them are already integrated
  • Provides for the future and succession planning
  • Helps with the development of potential future leadership

Your board believes that these are persuasive arguments in favour of the principle of what we are proposing.

Safeguard in the M&A

You will note that we have referred to simplifying the revised proposals and making them less complicated.  In previous proposals we included some elaborate arrangement designed to give you the assurance that the ethos and essence of LINX, as a mutual association, would not change.

We would not want this change to result in the Board itself becoming dominated by a ‘staff view’, separate from that of the membership. The simplified version of this safeguard is the existing in-built voting majority of the NEDs, which ensures that the elected directors’ role in ensuring the primacy of member interests is not diminished.

Timetable

Summer 2017:

publish full revised/simpler proposal - this document

At and around LINX98 (August):

Publish revised proposals (as necessary)

Discuss the full revised proposals and take stock

After LINX98 (September):

Two open evenings in the LINX office (“beer & governance”)

Two ‘webinars’ for members who can’t come to office meetings

LINX99 GM (November): fully explain again

Then vote on revised proposals at the LINX99 general meeting

Guide to this document

You may be satisfied with the explanation we have given in this introduction, but if you want to examine the full details of the proposals, and the background to them, we have assembled a comprehensive set of appendices for your review:

Appendix 1     Complete revised draft of the M&A for approval including notes on the changes

Appendix 2     Guiding principles as to how we modified the M&A

Appendix 3     The consultation process we have used

Appendix 4     The ‘journey’ (history of governance review)

Appendix 5     Comparison between the current & revised M&A

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