To : Mr.

Timothy Rosh

From : External Consultant

Re : Assessment on requirement of formation of Nominations committee at Rosh and Company.

Introduction :

Rosh and Company has been in business for almost 100 years now and has been floated since last 20
years. Mr. Timothy Rosh, a member from Rosh family is the current chairman of the company and
retires in next two years. The following report comments on the corporate structure at Rosh and
Company.

Criticism :

Rosh family owns only 40% of the company still have always held the seniors position like executive
and chief executive, currently the Mr. Timothy Rosh and happens to be the chairman of the
company and plans to pass on the reigns of the organization to his younger brother Mr. Geoffrey.

On retiring, the executive directors are immediately appointed as Non-executive directors (NEDs).
The Board at Rosh and company comprises of 7 executive directors and 2 Non executive directors.
The directors know each other from several years.

During meetings, it has been noted that there is never a discussion of the strategies and the scrutiny
followed by it.

The above points are the indicator of a poor corporate governance structure at the company . However,
the problems can be solved by forming a Nominations committee. The committee should comprise the
new Non-executive directors and not the current ones, as the current NEDs already know each other
and hence there is familiarity threat here.

The new non-executive directors appointed should not be related to the company in last few years i.e
they should not be a shareholder, an employee, a supplier or significant customer. The NEDs should not
be a part of the board for more than 9 years.

Role of the nomination committee at Rosh and Company :

The newly formed committee will ensure that the proportion of the executive and non-executive
directors will be equal unlike current situation.

The next role of nominations committee will be to find a suitable successor for Mr. Timothy Rosh.
The Committee will also note the directors are not part of the board for more than 9 years.
Conclusion:

In my opinion, formation of the nominations committee will bring a balance to the board. There will be a
fresh perspective and the actions of the executive directors will be questioned and their decision will be
scrutinized. However, formation of such committee will hurt the actions of Mr. Rosh, but in the long run
it will benefit his family and other shareholders of the company as these actions will result in wealth
maximization of the company.