Audit Committee
Simon Laffin is chairman of the Audit Committee. He is a chartered management accountant and the Board is satisfied that he has appropriate recent and relevant financial experience to lead the Committee in its duties and deliberations. The other members of the Committee are Charles Strauss and Martin Read.
At the invitation of the Committee’s chairman, meetings of the Committee may be attended, in whole or in part, by the Chief Financial Officer, the external auditors and the Chief Executive as well as the Company Secretary and head of internal audit. In addition, other members of senior management are invited to attend as necessary to provide updates and background information on matters considered by the Committee.
The Committee regularly meets with the auditors without executive directors or management present.
The Board considers that, through the Audit Committee, it has an objective and professional relationship with the Company’s external auditors.
Work carried out by the Committee, in accordance with its responsibilities, includes:
- monitoring the integrity of the Company’s financial statements and reviewing significant reporting judgements;
- reviewing internal audit and risk management and controls, and considering progress reports from the Risk Committee and head of internal audit;
- reviewing the Company’s internal financial controls and procedures;
- reviewing the external auditors’ independence, objectiveness and effectiveness;
- approving the external auditors’ terms of engagement, the scope of the audit and the applicable levels of materiality;
- reviewing its own terms of reference; and
- prior to the release of the preliminary announcement of the annual results, reviewing the year’s results and audit findings.
In reviewing the half year and annual financial statements the Committee focuses in particular on:
- any changes in accounting policies and practices;
- major judgemental areas;
- issues resulting from the external audit;
- the going concern assumption;
- compliance with accounting standards and the Combined Code; and
- compliance with stock exchange and legal requirements.
Based on written reports submitted to it, the Committee reviews with the external auditors the findings of their audit work, and considers whether all significant matters have been satisfactorily resolved.
The Committee has responsibility for making recommendations to the Board in relation to the external auditors’ independence and implements policy on the engagement of the supply of non-audit services. Details of amounts paid to the external auditors in respect of audit and non-audit services are given in the financial statements. The policy concerning rotation of audit partner complies with current guidance issued by the Institute of Chartered Accountants in England and Wales.
The current overall tenure of the external auditor dates from 2004. The audit engagement partner rotates every five years. Any decision to open the external auditor to tender is taken on the recommendation of the Audit Committee. There are no contractual obligations that restrict the Company’s current choice of external auditor.
The Committee considers the balance between fees for audit and non-audit work for the Group in the year and assesses whether the nature and extent of the non-audit fees do not present a threat to the external auditors’ independence.
Terms of Reference for the Audit Commitee
Remuneration Committee
The Remuneration Committee is chaired by Lorraine Trainer. The other members of the Committee are John Brady and John Napier. Both Lorraine Trainer and John Brady are independent non-executive directors and John Napier was considered to be independent on his appointment as Chairman in June 2008. Members of the Committee have no personal financial interest, other than as shareholders, in the Committee’s decisions and they have no conflict of interest arising from cross directorships.
Meetings of the Committee are generally attended, in whole or in part, by the Chief Executive Officer, the Group human resources director and the Company Secretary. These attendees are not present as of right and do not attend when their own remuneration is discussed.
The Committee meets at least three times a year and more frequently if required. Its main responsibilities are:
- determining and recommending the policy and framework for the remuneration of the Chairman, Chief Executive Officer, executive directors and other senior executive management;
- within policy terms and in consultation with the Chairman, Chief Executive Officer and external advisors as appropriate, determining the total remuneration packages of the Chairman, Chief Executive Officer and other executive directors; and
- overseeing the design and operation of the Group’s share based long-term incentive schemes, including approving the value and timing of awards and overseeing the operation of performance conditions.
The principal business of Committee meetings includes the following:
- conducting the annual review of base salaries for executive directors and the Chief Executive Officer’s recommendation for his executive team based on review of actual performance and suitably robust benchmarking;
- the consideration and approval of bonus payments;
- ongoing review and monitoring of performance conditions for vesting awards and approving new awards under the Group’s share option scheme and performance share plan;
- reviewing the Group’s executive reward arrangements;
- determination of the termination arrangements for those members of the senior executive team who leave the Group;
- drafting of the Remuneration report;
- reviewing the effectiveness of the Committee; and
- review of the Group’s share schemes’ design.
Terms of Reference for the Remuneration Committee
Nomination Committee
The Nomination Committee comprises all of the non-executive directors together with the Chief Executive Officer and is chaired by the Chairman of the Board. The Committee meets as and when required but at least once a year.
The Committee is responsible for:
- reviewing the Board structure, size and composition;
- identifying and nominating to the Board candidates for appointment or re-appointment as directors;
- reviewing the renewal or otherwise of terms of appointment for non-executive directors, with any individual in question not taking part in the discussion.
Terms of Reference for the Nomination Committee