You are an audit manager in HTQ & Co. One of your clients, SGCC, has recently become a listed company and has asked for your advice regarding the changes they should make to achieve appropriate compliance with corporate governance codes.The boardMr Sheppard is the Chief Executive Officer and Chairman of the board of SGCC. He appoints and maintains a board of five executive and two non-executive directors. While the board sets performance targets for the senior managers in the company, no formal targets are set for each director and no review of board policies is carried out. Board salaries are therefore set and paid by Mr Sheppard based on his assessment of all the board members, including himself, and not their actual performance.Internal controlsInternal controls in SGCC are monitored by the senior accountant, although the company assumes that, as external auditors, your firm will carry out a detailed review of internal controls. SGCC does not have an internal audit department or an audit committee.Annual financial statements are produced, providing detailed information on past performance.Which of the following statements is correct with regards to the composition of the board at SGCC?