Corporate governance

Board committees

The Board has delegated certain authorities to committees. The principal committees of the Board are as follows:

Nomination Committee

The Committee consists of the three independent Non-Executive Directors, the Chairman and Group Chief Executive. The Committee is chaired by the Group Chairman, Peter Smith. The Committee meets at least once a year. The Committee provides a forum to consider Board succession planning, whether to recommend the re-election of a Director and to make recommendations to the Board on certain matters including its composition, structure, size and balance.

The Company's Articles of Association provide that Directors must submit themselves for reappointment every three years and that newly appointed Directors must submit themselves for re-appointment at the first Annual General Meeting after their appointment. Notwithstanding the requirements provided by the Articles, the Board has resolved, consistent with the recommendations of the Code (which applies to financial years starting on or after 29 June 2010), that all Directors stand for annual re-election. In making recommendations to shareholders for the re-election of any Director, the Nomination Committee considers the Director's performance and their ongoing contribution to the success of the Company and makes its relevant recommendation to the Board.

Audit Committee

The Committee consists of the three independent Non-Executive Directors. The Committee is chaired by Martin Angle. The meetings are also attended by the Group Chairman (Non-Executive), Group Chief Executive, Group Chief Financial Officer, Group Financial Controller, representatives from the internal and the external auditors, Group Director of Audit and Risk, Group Legal Director and Company Secretary and other senior executives of the Group by invitation. Martin Angle has recent relevant financial experience and the Board considers that the members of the Audit Committee collectively have sufficient recent and relevant financial experience to carry out the functions of the Committee.

The Committee is authorised to investigate any matter within its terms of reference and, where necessary, to obtain external legal or other independent professional advice.

The Committee also considers on an ongoing basis the independence of the external auditors and has established policies to consider the appropriateness or otherwise of appointing the external auditors to perform non-audit services including consideration as to whether the auditors are the most suitable supplier of such services.

The provision of internal audit services is jointly delivered by the Group's internal audit team and KPMG (KPMG having previously provided internal audit services on an outsourced basis). Globally, all of our businesses have established whistle blowing procedures to enable employees to raise concerns about possible improprieties in financial reporting and other matters on a confidential basis.

Remuneration Committee

The Committee consists of the three independent Non-Executive Directors and the Chairman (who was appointed as a Committee member in March 2010). It is chaired by Charles McVeigh and meets at least three times a year. The Group Company Secretary is secretary to the Committee and also provides advice to it. The Committee’s principal responsibilities are to determine Company policy on senior executive remuneration and to agree the remuneration packages of the Executive Directors. The Committee (excluding the Chairman) also determines the level of fees payable to the Chairman. Given the central part that remuneration plays in the success of the Group, in terms of recruitment, motivation and retention of high quality employees, the Group Chief Executive is consulted on the remuneration packages of the Group Chief Financial Officer and Group Executive Board members and attends Committee meetings by invitation. The Committee is advised by Towers Watson and the Group Company Secretary. The Committee does not deal with the fees paid to the Non-Executive Directors or the Chairman which are decided by the Executive Directors.

Group Executive Board (‘GEB’)

The GEB comprises the Group Chief Executive, the Group Chief Financial Officer, the heads of the Group’s businesses and the Group Legal Director & Company Secretary. Under the leadership of the Group Chief Executive, the GEB is responsible for overseeing the development and implementation of strategy, the operational performance of the Group and other specific matters delegated to it by the Board.

Board performance and evaluation

The Board engaged Linstock Limited (‘Linstock’) to undertake an independent evaluation of Board and Board Committee performance and to identify areas where performance and procedures might be further improved. In particular the review considered the following issues:

• Board composition, expertise and dynamics;
• Board support, time management and Board Committee performance;
• strategic, operational and risk oversight;
• succession planning and human resource management; and
• priorities for change.

On completion of the review process, Linstock presented a report, considering the key themes and issues raised, and formulated a number of recommendations to further enhance Board effectiveness. The programme of regular presentations by the heads of the Group’s businesses to the Board is maintained to ensure that the Board has full visibility over the performance of each business and has exposure to management below Group Executive Board level, in particular to support succession planning.

A performance assessment of the Non-Executive Directors and the Group Chief Executive is undertaken by the Chairman. In addition, the Group Chief Executive conducted a performance review of the Group Financial Officer and the Senior Independent Director leads a review of the Chairman’s performance, with input from all Directors.

The individual assessments of each Director confirmed that performance was effective, and the Board subsequently endorsed these assessments and confirmed that the contributions made by each Director continued to be effective.

Linstock have been engaged on a three year programme, so that the review content for subsequent evaluation is designed to build upon learning gained in the previous year and to allow measurement of year on year progress.

Relations with shareholders

The Group recognises the importance of maintaining regular dialogue with its shareholders. The Group Chief Executive and Group Chief Financial Officer have a regular programme of meetings and presentations with analysts and investors, including presentations following the publication of the Company’s full and half year results. This programme maintains the ongoing two-way dialogue between the Company and shareholders, and helps to ensure that the Board is aware of shareholders’ views on a timely basis. The Board also receives feedback at least twice a year from its corporate brokers on investors’ and the market’s perceptions of the Company.

The Annual General Meeting provides the Board with a valuable opportunity to communicate with private shareholders and is generally attended by the all the Directors.

The Company has taken advantage of the provisions within the Companies Act 2006 which allows communications with shareholders to be made electronically where shareholders have not requested hard copy documentation.