Corporate governance

The following sections explain how the Company applies the main and supporting principles and the provisions of the 2008 Combined Code on Corporate Governance (the “Combined Code”). The Board confirms that throughout 2010 the Company has complied with the relevant provisions of the Combined Code save as detailed below. As from 1 January 2011 the Company became subject to the terms of the UK’s new Corporate Governance Code, which applies to accounting periods beginning on or after 29 June 2010 (the “Corporate Governance Code”) and will report against the Corporate Governance Code in its 2011 financial statements.

The Board /

All directors are collectively responsible for the overall success of the Company and for the creation of long-term shareholder value. Executive directors have direct responsibility for business operations, whereas the non-executive directors have a responsibility to bring independent, objective judgement to bear on Board decisions. This includes constructively challenging management and helping to develop the Company’s strategy.

The Board comprises ten directors – the Chairman (who also acted as interim Chief Executive Officer from December 2008 to April 2010), four executive directors and five independent non-executive directors. Details of the directors and their biographies are set out in the Board of directors. The directors have a broad range of expertise and experience, which we believe contributes significantly to the effectiveness of the Board.

Each of the non-executive directors has confirmed that they have been throughout the year, and continue to be, independent of the management of the Group and free from any business or other relationship that could materially affect the exercise of their independent judgement. The Chairman was independent at the time of his appointment.

The other significant commitments of the Chairman are set out in his biography in the Board of directors.

The Board believes, in principle, in the benefit of executive directors and other senior employees accepting external non-executive directorships in order to broaden their skills and knowledge for the benefit of the Company. The Board has adopted a policy on external appointments which is designed to ensure that employees remain able to discharge their responsibilities to the Group. Directors and employees are usually permitted to retain any fees in respect of such appointments.

Directors must not vote in respect of any contract or other proposal in which they (or any person connected with them) have a material interest otherwise than by virtue of their interests in securities of the Company. The Articles of Association were amended by shareholders at the 2009 Annual General Meeting to address the new statutory provisions regarding directors’ duties in relation to conflicts of interest which came into force on 1 October 2008 under the Companies Act 2006 and the Company has taken steps to ensure compliance with the new law on conflicts of interest and has procedures in place to identify and deal with any conflict situations should they arise. Those procedures have operated effectively throughout 2010. They include procedures for the Board to authorise any conflicts that may arise if necessary and a regular review of all such actual and potential conflicts (last undertaken in March 2011).

To avoid potential conflicts of interest, non-executive directors are required to inform the Chairman before taking up any additional external appointments.

Charles Strauss is the senior independent director and he is responsible for undertaking the annual review of the Chairman’s performance and chairing the Nomination Committee when considering the role of Chairman. He is available to shareholders if they need to convey concerns to the Board other than through the Chairman or Chief Executive Officer.

In accordance with the Articles of Association directors appointed to the Board since the previous annual general meeting, those who have not been subject to re-election at the previous two years’ annual general meetings and non-executive directors who have served nine years or more on the Board are all required to retire (and may offer themselves for re-election) at the next annual general meeting. The Corporate Governance Code provides for annual re-election of all directors.

The division of responsibilities between the Chairman and Chief Executive Officer is set out in writing and has been agreed by the Board.

The Chairman is responsible for:

  • the composition and leadership of the Board

  • monitoring corporate governance processes

  • ensuring effective communication with shareholders and other stakeholders

  • supporting the Chief Executive Officer.

The Chief Executive Officer is responsible for:

  • the development and execution of the Group’s strategy

  • the Group’s operational performance

  • leading the executive team

  • leading the management of relationships with external stakeholders.

Ordinarily the roles of Chairman and Chief Executive Officer are performed by separate individuals in accordance with provision A.2.1 of the Combined Code. However, following the departure of the former CEO in November 2008, the Chairman, John Napier, was appointed to the additional role of interim Chief Executive Officer as it was unanimously considered by the Board to be the most appropriate short-term arrangement. John Napier reverted to his role as Chairman upon the appointment of Jerry Buhlmann as Chief Executive Officer of Aegis Group plc on 1 May 2010.

Continue