I am pleased to introduce our Nomination Committee report for 2014. The Committee has continued to support the Board during the past year to ensure that its members have the right balance of skills, experience, independence and knowledge which are necessary to meet the expectations of the shareholders in the fast changing business environment in which the Group operates. In November 2014 we took the first step in refreshing the Board with the appointment of Ian Duncan as a Non-Executive Director. John Biles, the current Chairman of the Audit Committee and Senior Independent Director (SID), will stand down at the 2015 AGM and Ian Duncan will take over as Chairman of the Audit Committee. Board succession and composition will remain a priority for the coming year as the Board continues to execute its succession plan.
A.M. ThomsonChairman of the Nomination Committee
Role of the Nomination Committee
The Nomination Committee is a sub-committee of the Board, whose principal purpose is to advise on the appointment and, if necessary, dismissal of executive and non-executive directors. The Committee's terms of reference, which are listed on the Group's website, include all matters required by the UK Corporate Governance Code ("the Code"). Further information on the Code can be found on the Financial Reporting Council's website www.frc.org.uk. The terms of reference are reviewed periodically by the Group Company Secretary and the Chairman, and any changes are then referred to the Board for approval. No changes were made to the terms of reference during the year.
Composition of the Nomination Committee
As recommended by the Code, the Chairman of the Board acts as the Chairman of the Committee which also comprises J.A. Biles, S.C. Harris, R. Rajagopal, E. Lindqvist and I.B. Duncan (appointed on 17 November 2014). The Chairman may not chair the Committee when it is dealing with the matter of succession to the Chairmanship of the Group. Only members of the Committee have the right to attend the Committee meetings. Other individuals and external advisers may be invited to attend for all or part of any meeting as and when it is appropriate. The quorum necessary for the transaction of business is two, each of whom must be an independent non-executive director.
The Group Company Secretary is secretary to the Committee.
The Committee has the authority to seek any information that is required, from any officer or employee of the Company or its subsidiaries. In connection with its duties, the Committee is authorised by the Board to take such independent advice (including legal or other professional advice, at the Group's expense) as it considers necessary, including requests for information from, or commissioning investigations by, external advisers.
Nomination Committee - allocation of agenda time
Policy on appointments to the Board
Board appointments are made on merit against objective criteria. The issue of diversity was debated by the Board in 2012 and a formal policy adopted. Further details on diversity can be found in the Corporate governance statement. The Board's policy is to appoint the best possible candidates whilst embracing diversity in all its forms, but the Board has chosen not to set any measurable objectives.
The process of identifying candidates for Board appointments commences with drawing up a job specification which includes, in the case of non-executive appointments, an estimate of the time commitment required. The Committee will then engage executive search consultants to assist in ensuring a comprehensive listing of potential candidates from a range of backgrounds.
As a number of our non-executive directors have a tenure of over six years, we have started the process of refreshing the Board. In anticipation of the retirement of John Biles at the 2015 AGM, the succession of the Audit Committee Chairman was addressed and Ian Duncan was appointed as a Non-Executive Director in November 2014. The step-by-step refreshment of the Board will continue over the next two to three years.
Main activities of the Nomination Committee
In 2014 the Committee formally met four times and reviewed the composition and skills of the Board, with a view to considering the current and future skills and experience that the Board might require.
The Committee discussed succession planning and board diversity, and reviewed the performance of the Group Chief Executive and other senior executives. In particular, the need to broaden the Board membership with respect to gender, ethnicity and age was discussed. The Chairman led the ensuing recruitment project and The Zygos Partnership ("Zygos"), an international executive search consultancy, was engaged to identify suitable candidates with relevant experience. Zygos is an independent executive search consultancy and it has no other connections with the Group. Zygos produced a list of candidates and a sub-group of the Committee met with several shortlisted candidates. All members of the Committee and the executive directors met with the preferred candidate prior to confirmation of the appointment. Ian Duncan, a British national and chartered accountant, was appointed to the Board in November 2014. His international and financial experience will be a valuable addition to the Board.
The Committee considered and authorised the potential conflicts of interest which might arise where a director has fiduciary responsibilities in respect of other organisations. The Committee concluded that no inappropriate conflicts of interest exist. The Committee also assigned the Chairman to review and agree with the Group Chief Executive his personal objectives for the forthcoming year.
In December 2014 the Nomination Committee reviewed the Board's size and composition, the frequency of the process for Board and committee meetings, and best practice for the handling of a number of Board issues including drawing up a training programme for the directors. The terms of reference of the Committee were reviewed in conjunction with the Model Terms of Reference issued by the Institute of Chartered Secretaries and Administrators. The biographical details of the current directors can be found in the Board of Directors section. Having reviewed their independence and contribution to Board matters, the Committee confirms that the performance of each of the directors standing for re-election at the 2015 AGM continues to be effective and demonstrates commitment to their roles, including independence of judgement and time commitment for Board and Committee meetings. Accordingly the Committee has recommended to the Board that, with the exception of John Biles, all current directors of the Company be proposed for re-election at the forthcoming AGM.
Following 2012's external Board Evaluation, the Board agreed to undertake an internal evaluation during 2014. Further details of the review can be found in the Corporate governance statement. Recommendations arising from the 2014 internal evaluation of the Board have been addressed or are in the process of being addressed. An external Board Evaluation will be undertaken in 2015.
As Chairman of the Committee I will be available at the 2015 AGM to answer questions relating to the work of the Committee.
On behalf of the Nomination Committee:
A.M. ThomsonChairman of the Nomination Committee
26 February 2015