Exam P3 Topic 1 Question 245 Discussion

Actual exam question for CIMA's P3 exam
Question #: 245
Topic #: 1

COM is a well established company in the construction industry The company was founded by the Mac family
30 years ago and several family members still serve on the Board The company obtained a listing five years ago The Board has an appropriate balance between executive and non-executive members It also has audit remuneration and nomination committees The average age of board members is 68 COM is profitable but profit margins have been falling steadily and this year's revenues are lower than it was achieved last year The Board recognis thai it does not have a long term strategy in place and has been losing business to newer, more aggressive competitors Which THREE of the following statements are correct?

A. The non-executive directors should have challenged the lack of long term strategic planning B. The audit committee should have alerted the Board to the impact of falling profit margins C. The remuneration committee should consider incentives such as share options to encourage the Board to focus on COM's long term strategy D. The nomination committee should have had a succession plan in place for directors. E. The nomination committee should be operating for the benefit of the directors.

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10 Years in Business