Nominations Committee Report.

THE COMMITTEE

The Nominations Committee leads the process for the appointment of new directors to the Board and reviews on a regular basis the succession plans in place for executive directors and key senior management, Board composition, the suitability of the directors standing for re-election at the AGM and whether the Chairman and the non-executive directors continue to be able to meet their commitments to the Company.

Members

 

John Stewart

Rudy Markham

Nick Prettejohn

Stuart Popham

Dame Clara Furse

Mike Fairey

Henry Staunton

Julia Wilson

The Nominations Committee is chaired by the Chairman, and all non-executive directors are members of the Committee. The executive directors, as well as the Group General Counsel and Group HR Director, may attend meetings by invitation. The Committee is currently chaired by Henry Staunton, the Senior Independent Director, when it is considering matters relating to the Chairman. The Nominations Committee met formally seven times in 2012.

GROUP CHIEF EXECUTIVE SUCCESSION

During 2012 the Committee met regularly to consider the plans for the Group Chief Executive succession. The Committee assessed the skills, competencies and qualities required for the position and produced a detailed candidate brief setting out in detail the responsibilities of the role. The Committee then engaged external search consultants, Odgers Berndtson, who are signatories to the Voluntary Code of Conduct for Executive Search Firms, to undertake a search that considered both external and internal candidates. The Committee considered a long list of applicants of appropriate merit, which included female candidates and candidates from a diverse range of backgrounds and then rigorously interviewed a refined list of candidates for the position. The Committee assessed and compared the merits of each of these candidates before recommending to the Board the appointment of Nigel Wilson as Group Chief Executive.

APPOINTMENT OF MARK ZINKULA

Following the appointment of the Group Chief Executive the Nominations Committee met to further examine the range of competencies and experience on the Board along with the importance of a diverse Board both in terms of thought, background, experience and gender and determined that it would be in the best interests of the Board and the Company as a whole for LGIM to be represented at the Board. The Committee evaluated the skills, knowledge and experience required for the role and determined that Mark Zinkula, CEO, LGIM met these requirements and should be appointed to the Board. The Committee believes that this appointment greatly contributes to the diversity of the Board as Mark brings international insight from his breadth of experience in the US.

SEARCH FOR CHIEF FINANCIAL OFFICER

The Committee is currently engaged in a process to identify and appoint a Chief Financial Officer following the appointment of Nigel Wilson, previous CFO, as Group Chief Executive.

DIVERSITY

Under its terms of reference, the Nominations Committee must review regularly the structure, size, and composition of the Board (including the balance of skills, knowledge, and experience) and make recommendations to the Board for any changes. This year the Board built on its previous diversity statement and adopted a Board diversity policy. The Nominations Committee will consider the policy in future appointments to the Board.

In accordance with the policy the Committee will encourage the emergence of female candidates and candidates of diverse backgrounds by: (i) engaging an executive search firm that is a signatory to the Executive Search Firms’ Voluntary Code of Conduct; (ii) liaising with the search firm to produce a brief that includes an appropriate emphasis on diversity of skills and background, independence of approach and other personal qualities in addition to career experience and compatibility with the values and behaviours of existing Board Members, with a view to enhancing the overall effectiveness of the Board; and (iii) encouraging the search firm to produce long lists which include female and other diverse candidates of appropriate merit. The Committee will also consider high-performing female and other senior executives from a diverse range of backgrounds who may not have previous Board experience in executive and non-executive directorship roles subject to the requirements for potential candidates to meet FSA approved person requirements for a Board director of a financial services firm.

The Committee believes that diversity at all levels of the organisation is important and is working to further strengthen the representation of women among the non-Board senior management who may be the Board directors of tomorrow. Board members play an active role in supporting and contributing to various employee talent development programmes by mentoring individual employees and meeting with groups of employees who take part in the programmes.

INDEPENDENCE

The Committee and the Board evaluate the independence of all non-executive directors, in particular any non-executive director serving over six years. A full review of each of the non-executive directors’ interests was carried out in September 2012. The Board was satisfied with the findings of this review and concluded that each non-executive director remained independent.

In October 2012, Rudy Markham reached six years of service on the Board and accordingly, the Committee met again to consider the independence of each non-executive director. The Committee was requested to give particular consideration as to whether Rudy remained independent in character and judgement given his length of tenure and to report back to the Board on its findings. As part of the assessment process, the Committee reviewed each of Rudy’s external business interests and other relationships which could materially interfere with the exercise of objective and independent judgement or could affect Rudy’s ability to act in the best interests of the Company. The Committee was satisfied that there were no circumstances which would affect Rudy’s judgement and determined that Rudy remained independent and continued to provide a valuable contribution to the Board’s deliberations.

DIRECTORS’ TIME COMMITMENT

All directors may serve on a number of other Boards, provided they can demonstrate that any such appointment will not interfere with their time commitment to the Company and that they obtain the agreement of the Chairman to the appointment before accepting. Executive directors must also obtain the permission of the Group Chief Executive. The major commitments of our executive and non-executive directors are outlined in their biographies. Currently, non-executive directors are contractually obliged to commit circa 25 days per year. However, in practice their time commitment is significantly in excess of 25 days. The Chairman’s time commitment is two to two and a half days per week. The Committee remains satisfied that all non-executive directors have sufficient time to meet their commitments to the Company and was also satisfied that during 2012 the Chairman’s other commitments did not interfere with the day-to-day performance of his duties for the Company.

The terms of reference for all Board Committees can be viewed on our website.