ABSTRACT
THE CADBURY COMMITTEE WAS APPOINTED by the Conservative Government of the United Kingdom in May 1991 with a broad mandate to “ . . . address the financial aspects of corporate governance” (Report of the Committee on the Financial Aspects of Corporate Governance, 1992, Section 1.8). The Committee was chaired by Sir Adrian Cadbury, CEO of the Cadbury confectionery empire, and included other senior industry executives, finance specialists, and academics. In December 1992, the Committee issued its report, the cornerstone of which was The Code of Best Practice, which presents the Committee’s recommendations on the structure and responsibilities of corporate boards of directors.The two key recommendations of the Code are that boards of publicly traded companies include at least three nonexecutive (i.e., outside) directors and that the positions of chief executive officer (CEO) and chairman of the board (COB) of these companies be held by two different individuals.1
