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Committee membershipNo. of meetings 2018: 2Main committee responsibilities
DirectorAttendance
  • Regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes.
  • Give full consideration to succession planning for directors and other senior executives in the course of its work.
  • Be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise.
A.C. Quinn2
I.B. Duncan2
E. Lindqvist2
P. Larmon2
L. Chahbazi2

Dear Shareholders

I am pleased to introduce the Nomination Committee report for 2018. The Committee's key objective is to support the Board in fulfilling its responsibilities to ensure there is a formal, rigorous and transparent process for the appointment of new directors to the Board and to ensure that effective succession planning processes are in place across the Group.

The year commenced with the appointment of a new Non-Executive Director on 1 January 2018, Lili Chahbazi, at the same time as I started as Chair. The Committee will continue to focus on ensuring that the present and future composition of the Board is appropriate for the delivery of the Group's strategy and that all relevant UK Corporate Governance Code requirements continue to be met.

A.C. Quinn
Chair of the Nomination Committee

Role of the Nomination Committee

The Nomination Committee is a subcommittee 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 annually by the Group Company Secretary and the Chair, and any changes are then referred to the Board for approval. No changes were made to the terms of reference during the year.

Key Activities

Board composition/succession planning

  • Supervised Board induction training
  • Reviewed and updated succession plans for the Board and senior management

Non-Executive directors

  • Reviewed continued independence of the Non-Executive directors
  • Reviewed the Non-Executive director time commitments and overboarding

Diversity

  • Reviewed the Group's diversity policy

Governance and evaluation

  • Reviewed the Committee's Terms of Reference
  • Evaluation of Committee's effectiveness

Succession Planning

  • Vacancy for a director is identified when one of the existing directors confirms his/her intention to retire.

Board Composition

  • The need for specific knowledge, skills and role behaviours is identified during discussions at Nomination Committee meetings.

Recruitment

  • External international search consultancies were appointed to assist with the search.

Selection

  • A subcommittee examined the longlist of candidates against the role specifications and a shortlist of candidates was identified.

Interview

  • Candidates are initially interviewed by the Chair and the Chief Executive for a Non-Executive director role. The final candidates then met with all other directors.

Balance of Skills

  • In order to maximise the effectiveness of the Board candidates are carefully considered ensuring that the Board has the right skills and experiences.

Appointment

  • New directors are announced as joining the Board.

Induction

  • The Committee and the Group Company Secretary play an active part in an induction programme that is tailored to the needs, skills and experiences of the new Non-Executive directors.

Composition of the Nomination Committee

As recommended by the Code, the Chair of the Board acts as the Chair of the Committee whose members also comprise the directors listed above. The Chair cannot chair the Committee when it is dealing with either the succession to the Chairship of the Group or the review of his or her own performance. 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 when it is appropriate. The quorum necessary for the transaction of business is two.

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.

Director appointment policy and progress

The Committee has developed a formal rigorous and transparent procedure for the appointment of new directors. Prior to making any appointment, the Committee, having evaluated the skills, experience and diversity of the Board, will determine the qualities and experience they seek and will then prepare a detailed description of the role with a view to appointing the most appropriate candidate. The Committee will use open advertising or the services of independent external advisers to facilitate the search.

A longlist of candidates will be drawn up, from which an appropriate number will be selected for interview. Upon completion the Committee will recommend to the Board the appointment of the preferred candidate.

Board succession planning

A.C. Quinn commenced as Chair as of 1 January 2018 and Lili Chahbazi also joined the Board as a Non-Executive Director on 1 January 2018. There were no further changes to the Board structure during the year.

Nomination Committee - allocation of agenda time

  • Board composition and succession planning 33%
  • Performance of Chairman and Group Chief Executive 29%
  • Governance and reporting 33%
  • Independence and re-election 5%

Main activities of the Nomination Committee

In 2018 the Committee formally met two 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 Committee has sought to ensure that appointments are of the best candidates to promote the success of the Company and are based on merit, with due regard for the benefits of diversity on the Board. Further information concerning Board diversity can be found in the Corporate governance statement as part of the corporate governance statement. We are pleased to report that as of 1 January 2018 the female representation on the Board has been 43% compared to 17% in 2017.

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 Chair to review and agree with the Group Chief Executive his personal objectives for the forthcoming year.

Following the external Board evaluation in 2015, the Board agreed to undertake its next external evaluation during 2018. Further details of the review can be found in the Corporate Governance section of the Annual Report. Recommendations arising from the 2018 Board evaluation are in the process of being addressed.

In December 2018 the Nomination Committee reviewed the Board's size and composition, the frequency of the process for Board and Committee meetings, and best practice for dealing with Board issues including drawing up a training and/or induction 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. The Committee, having reviewed their independence and contribution to Board matters, confirms that the performance of each of the directors standing for re-election at this year's 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 all current directors of the Company be proposed for re-election at the forthcoming AGM.

As Chair of the Committee, I will be available at the AGM in May 2019 to answer questions relating to the work of the Committee.

On behalf of the Nomination Committee:

A.C. Quinn CBE
Chair of the Nomination Committee
8 March 2019