Nominations Committee report.

Nominations Committee report.
John Stewart, Chairman Nominations Committee (photo)
“There have been a number of changes to our Board composition during the year. In recommending new appointments to the Board the Committee considers the importance of a diverse Board in terms of thought, background, experience and gender.”
JOHN STEWART, CHAIRMAN

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 annual general meeting and whether the Chairman and the non-executive directors continue to be able to meet their commitments to the company. This year the committee has focused on strengthening, broadening and balancing the range of skills, experience and diversity on the Board, its committees and below Board level.

Members

 

John Stewart

Julia Wilson

Rudy Markham

Lindsay Tomlinson

Stuart Popham

Lizabeth Zlatkus

Mike Fairey

 

In addition to the members listed above, the group chief executive normally attends meetings (although this would not be the case if the Committee were discussing matters in connection with the appointment of a successor to the group chief executive). The Group HR director may also attend to support the Committee’s discussions on talent management and succession planning in the Group. The Chairman would not attend if the meeting were considering any matters relating to the Chairman in which case the meeting would be chaired by the senior independent director, Rudy Markham.

The Nominations Committee met formally six times in 2013.

EXECUTIVE APPOINTMENTS

The Committee reported last year that the process for the appointment of a group chief financial officer was ongoing. This was an extremely thorough process and the Board was focused on identifying a candidate with: an appropriate level of insurance experience; the skills to effectively complement the group chief executive and other members of the executive team, as well as effectively interact with other Board members; and the ability to represent the company with investors, analysts and other key stakeholders, such as our regulators and Government. In June we announced the appointment of Mark Gregory, previously the executive director of the Savings division to the role of group chief financial officer. Mark moved to the role following the successful delivery of the company’s RDR strategy and the acquisition of Cofunds under his leadership as the executive director of the Savings division.

The Committee produced a detailed candidate brief for the role and engaged external search consultants, Odgers Berndtson, who are signatories to the Voluntary Code of Conduct for executive search firms and have no other connection to the company, 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. Committee members rigorously interviewed a refined list of candidates for the position and liaised, as is standard practice with Board level appointments, with the appropriate regulatory bodies before recommending to the Board the appointment of Mark Gregory.

At this time the Committee also considered the balance of non-executive and executives on the Board, along with plans to restructure the business to combine the Savings and Protection business units into a single LGAS business division. It was determined that four executive directors would be the most appropriate composition for the Board. All business areas would be effectively represented at the Board following the restructure of operations, and the composition most effectively aligned with the Group’s strategic objectives.

NON–EXECUTIVE APPOINTMENTS

2013 saw a great deal of change in the composition of non-executive directors on the Board. Henry Staunton previously senior independent director, vice chairman and chair of the Audit Committee retired in May after serving on the Board for nine years. Dame Clara Furse stepped down from the Board in May after four years of service to take up a position at the Financial Policy Committee and Nick Prettejohn stepped down in June after two years of service in order to join the Prudential Regulation Authority as a non-executive director.

Following a thorough search process, the Committee were delighted to recommend the appointments of Lindsay and Lizabeth to the Board, taking up their appointments as non-executives in May and December respectively. The Committee considered the importance of a diverse Board and assessed the balance of skills, knowledge and experience on the Board to pinpoint any gaps that could be filled to enhance the Board’s performance in light of the Group’s strategy. The Committee instructed external search consultants, Odgers Berndtson, to assist in the identification and shortlisting of potential candidates. Lindsay was selected as he strengthens the Board through his significant experience of asset management and investor corporate governance. Lizabeth brings diversity to the Board due to her extensive experience in the US insurance industry.

DIVERSITY

We consider a diverse Board to be extremely important, be that diversity of thought, background, experience or gender. Last year we published our first Board diversity policy which the Committee considers throughout the candidate search process.

The Committee encourages 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 females and other diverse senior executives who may not have previous board experience in executive and non-executive directorship roles subject to potential candidates meeting the regulatory requirements for a board director of a financial services firm. The appointment of Lizabeth clearly demonstrates this, as Legal & General is Lizabeth’s first UK non-executive role.

The Committee is also 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 any non-executive director serving over six years. Rudy Markham has served on the Board for seven years and as a result his continued independence has been subject to vigorous review by the Nominations Committee. The Committee has determined that Rudy continues to demonstrate the attributes of an independent non-executive director, in particular an objective view point and constructive challenge to management and that his length of tenure has had no detrimental impact on his level of independence. All of the non-executive directors are considered to be independent and the Chairman was considered independent on appointment.

The Committee was also satisfied that during 2013 the Chairman’s other commitments did not interfere with the day to day performance of his duties for the company.

The Committee’s terms of reference can be viewed on our website.

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