Compliance with the UK Corporate Governance Code.

Compliance with the UK Corporate Governance Code.

For the year ended 31 December 2013, we are pleased to report that the company has complied with the principles and provisions of the UK Corporate Governance Code. A full version of the Code can be found on the Financial Reporting Council’s website: www.frc.org.uk

A. LEADERSHIP

A1 The Board’s role

The Board met formally nine times during the year and the Board’s agenda prioritised strategy and performance. There is a clear schedule of matters reserved for the Board and schedules of delegation, as further described in the The Board and how we operate section.

A2 A clear division of responsibilities

The roles of the Chairman and group chief executive are clearly defined and the scope of those roles is reviewed on an annual basis. John Stewart, the Chairman, is responsible for the leadership and effectiveness of the Board. Nigel Wilson, the group chief executive, is responsible for leading the day-to-day management of the company within the strategy set by the Board.

A3 Role of the Chairman

The Chairman sets the agendas for meetings, manages the meeting timetable and facilitates open and constructive dialogue during the meetings.

A4 Role of the non-executive directors

The Chairman promotes an open and constructive environment in the boardroom and actively invites the non-executive directors’ views. The non-executive directors provide objective, rigorous and constructive challenge to management and meet regularly in the absence of the executive directors. See also the Nominations Committee report.

B. EFFECTIVENESS

B1 The Board’s composition

The Nominations Committee is responsible for regularly reviewing the composition of the Board. In making appointments to the Board, the Committee considers the wide range of skills, knowledge, experience, backgrounds and perspectives required in order to maintain an effective Board.

B2 Board appointments

The appointment of new directors to the Board is led by the Nominations Committee. Further details of the appointments undertaken during the year and succession planning can be found in the Nominations Committee report.

B3 Time commitments

On appointment, directors are notified of the time commitment expected from them which in practice, goes beyond that set out in the letter of appointment. External directorships, which may impact existing time commitments, must be agreed with the Chairman.

B4 Training and development

Ongoing training and induction programmes are in place and the Chairman reviews each of the non-executive directors’ training needs. Further details are set out in the Induction, training and development section,

B5 Provision of information and support

The Chairman, in conjunction with the company secretary, ensures that all Board members receive accurate and timely information.

B6 Board and Committee performance evaluation

The Board undertook an internal evaluation during 2013. Details of the evaluation can be found in the Assessing our effectiveness section.

B7 Re-election of the directors

All directors were subject to shareholder election or re-election at the 2013 AGM, as will be the case at the 2014 AGM.

C. ACCOUNTABILITY

C1 Financial and business reporting

The strategic report sets out the performance of the company, the business model, strategy and the risks and uncertainties relating to the company’s future prospects.

C2 Risk management and internal control systems

The Board sets the company’s risk appetite and annually reviews the effectiveness of the company’s risk management and internal control systems. The activities of the Audit and Group Risk Committees, which assist the Board with its responsibilities in relation to risk setting and management, are set out in the Audit Committee report and the Group Risk Committee report.

C3 Role and responsibilities of the Audit Committee

The Board has delegated a number of responsibilities to the Audit Committee which is responsible for overseeing the Groups’ financial reporting processes, internal control and risk management framework and the work undertaken by the external auditor. The chairman of the Audit Committee provides regular updates to the Group Board.

D. REMUNERATION

D1 Levels and elements of remuneration

The company aims to reward employees fairly and our remuneration philosophy seeks to link reward to performance, thereby aligning the interests of the directors and shareholders.

D2 Development of remuneration policy and packages

Details of the work of the Remuneration Committee and the approach to setting the remuneration policy can be found in the Directors’ Remuneration Report.

E. RELATIONS WITH SHAREHOLDERS

E1 Shareholder engagement and dialogue

The Board takes an active role in engaging with both institutional and retail shareholders. The Board particularly values opportunities to meet with shareholders and the Chairman seeks to ensure that the Board are kept apprised of shareholder views.

E2 Constructive use of the AGM

The AGM provides the Board with an important opportunity to meet with shareholders, in particular retail shareholders, who are invited to meet with the Board following the formal business of the meeting.

 

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