Role of the board

The Board has nine scheduled meetings each year and meets more frequently as required. It currently comprises the Chairman, eight independent non-executive directors and four executive directors. Each non-executive director serves for a fixed term of three years, which may be renewed by mutual agreement, and there is no limit to the number of terms a director may serve. The Company’s articles of association require that, following appointment by the Board, directors must submit themselves for election by shareholders at the following Annual General Meeting. The articles also provide that one-third of directors must retire by rotation each year, but are eligible to submit themselves for re-election by the shareholders, and that all directors are obliged to retire at least every three years.

The duties of the Board and its committees are set out clearly in formal terms of reference, which are reviewed annually, stating the items specifically reserved for decision by the Board. These include the approval of the Group’s strategic objectives and business plans; monitoring of the performance of the Company and its management against these strategic objectives; acquisitions and disposals outside delegated limits; significant financial decisions and approval of key business policies. The Board is also responsible for setting and upholding the values and standards necessary to ensure that the Company’s obligations to shareholders and other stakeholders are met. The terms of reference contain a procedure whereby directors may, in the furtherance of their duties, seek independent professional advice at the Company’s expense if considered appropriate. Directors are fully briefed in advance of Board meetings on all matters to be discussed and at the Board meetings directors receive regular reports on the Group’s financial position, key areas of the Group’s business operations and other material issues.

The directors bring to the Board a wide range of experience and skills and participate fully in decisions on the key issues facing the Group. To ensure that the non-executive directors are able to exercise an independence of judgement, the Nomination Committee undertakes an annual review of directors’ interests in which all potential or perceived conflicts and issues relevant to their independence are considered. Based on the review presented in December 2005, the Board considers that all of the current non-executive directors are independent of management and free of any relationship that could materially interfere with the exercise of their independent judgement.

The Board has a formal performance review process to assess how well the Board, its committees and processes are performing and how they might be improved. The review also assesses the performance of each director and the contribution he/she makes. The last review was presented to the Board in October 2005.

Directors receive appropriate training when joining the Board and are required to commit to continue their personal development through attendance and participation on courses, seminars, workshops and lectures on issues relevant to the Group’s business.

The Senior Independent Director is appointed by the Board to be available to shareholders to raise concerns which contact through the normal channels of Chairman, Chief Executive or Finance Director have failed to resolve, or for which such contact is inappropriate. The Senior Independent Director is responsible for leading the performance evaluation of the Chairman.

The Group Company Secretary is responsible for ensuring that Board procedures are followed and all directors have access to his advice and services.

The Board has established a number of committees, including Remuneration, Audit, Nomination, Risk and Regulatory and Corporate Social Responsibility. Each operates within clear terms of reference and the minutes of their meetings are circulated to all directors.

Remuneration Committee

The Remuneration Committee comprises the following non-executive directors, appointed by the Board:

• Scott Wheway (Chairman)
• Mary Francis
• Carole Piwnica
• Leslie Van de Walle

The Chief Executive normally attends the meetings of the Committee, except when his own remuneration is being discussed, as does the Group Human Resources Director.

The Committee, which has at least three scheduled meetings each year, considers all aspects of remuneration paid to senior executives, and makes recommendations to the Board on the remuneration policy, strategy and framework for this group of employees. The remuneration policy is reviewed by the Committee on a regular basis to ensure that it remains appropriate within the market and for the achievement of its objectives. Within the scope of the policy, which is approved by the Board, the Committee determines the level of remuneration paid to each of the executive directors.

On a regular basis, the Committee commissions its own independent review of the remuneration policy and the packages paid, to ensure that the policy reflects good practice and that the packages remain appropriate within the market.

In line with regulations in place, the Company puts its remuneration report to a vote at each Annual General Meeting.

Audit Committee

The Audit Committee comprises the following non-executive directors, appointed by the Board:

• Russell Walls (Chairman)
• Euleen Goh
• Richard Goeltz
• Mary Francis

The Committee meets at least four times each year to assist the Board in discharging its responsibilities for the integrity of the Company's financial statements; the assessment of the effectiveness of the systems of internal control and monitoring the effectiveness of the internal and external auditors and the objectivity of the external auditor. The Chief Executive, Group Finance Director, Group Audit Director and the external auditor normally attend, by invitation, all meetings of the Committee.

Nomination Committee

The Nomination Committee comprises the following directors, appointed by the Board:

• Lord Sharman (Chairman)
• Richard Goeltz
• Russell Walls
• Andrew Moss

The Committee deals with appointments and reappointments to the Board, monitors potential succession planning and conflicts of interests and reviews annually the independence of the non-executive directors. The Committee makes recommendations to the Board as appropriate.

In January 2006 the Board established two new committees, the Risk and Regulatory Committee and the Corporate Responsibility Committee.

Annual reports of the Remuneration, Audit and Nomination Committees are contained in the Company’s Report and Accounts.

Risk and Regulatory Committee

The Risk and Regulatory Committee comprises the following directors, appointed by the Board:

• Mary Francis (Chairman)
• Leslie Van de Walle
• Russell Walls

The Risk and Regulatory Committee was set up in order to provide leadership and oversight of the Group’s governance process including regulatory compliance. The work of this committee forms an important part of the Group’s control function and as such the Committee works closely with the Audit Committee.

Corporate Responsibility Committee

The Corporate Responsibility Committee comprises the following directors, appointed by the Board:

• Carole Piwnica (Chairman)
• Scott Wheway
• Euleen Goh
• Lord Sharman
• Andrew Moss

The Corporate Responsibility Committee was set up to provide guidance and direction of the Group’s corporate responsibility programme and monitor the Company’s progress.