BOARD PERFORMANCE EVALUATION
A performance evaluation process is undertaken annually based on a questionnaire that includes questions about Board administration, the role of Chairman, risk oversight, succession planning and the Board Committee structure. Whilst this is normally facilitated by the Company Secretary who is considered a suitable and independent person to conduct this process, in line with corporate governance best practice which requires an independent external assessment to be undertaken triennially, this year the Board and Committee evaluation was externally facilitated by Clare Chalmers Ltd.
The Board considered Clare Chalmers appointment appropriate given she is independent and had undertaken the previous externally facilitated evaluation and would therefore be best placed to comment on progress achieved since the Board’s last external evaluation.
Following appointment, Clare Chalmers met with the Chairman and Company Secretary to gain a greater understanding of the strategy of the business and context within which the evaluation was being undertaken and to agree the scope of the evaluation process.
In person meetings were then held by Clare Chalmers with each Director and Company Secretary during which a range of agreed topics were discussed, including:
- Board Composition
- Leadership and succession planning
- Board dynamics and decision making
- Strategy, purpose, values and culture
- Operation of Board Committees
- Board logistics and secretariat support
In addition, Clare Chalmers reviewed Committee Terms of Reference and a range of Board papers and also interviewed a number of Senior Executives who interact regularly with the Board and the Board’s remuneration advisers and auditors in relation to the operation of the Remuneration Committee and Audit Committee. Additional insight was also provided by observing the February Board and Committee meetings.
Clare Chalmers then discussed her initial conclusions with the Chairman and a report was prepared which was circulated to all members of the Board which included Clare Chalmers findings and a number of recommendations. The report was then presented to the Board by Clare Chalmers and discussed at its
Clare Chalmers’ evaluation report was robust and informative and provided a valuable independent external perspective on the Group’s governance. In particular, Clare found that:
- The Board operates effectively in a collegiate manner with a strong sense of common purpose.
- The Board provides a good balance of challenge and support to management.
- Significant steps have been taken since the last external review to enhance the governance of the Company and independence of the Board.
In connection with the presentation of the evaluation report Clare made a number of recommendations where there was scope for further improvement which the Board considered, including the following:
The need for a more formal, structured approach to long-term executive
- A more central role for the Board in articulating and overseeing strategic aims of the business.
- A deeper understanding of certain risks faced by the Group and to test the Board’s appetite for risk.
- Further development of the ESG Committee in relation to the social aspects of its remit.
- Consideration of the frequency and duration of Board and Committee meetings with less emphasis on operational matters.
The Board considered the recommendations and approved an action plan at its April meeting prepared by management to address these. The principal actions covered by the plan include:
- The development and maintenance of a formal long-term succession plan based on existing capacity and future needs by the CEO and Group HR Director.
- Greater focus in Board reports on strategic objectives by the Executive Directors and other Senior Executives and review of forward agendas by the Chairman and Company Secretary to maintain attention to strategic priorities.
- Continuing to review risk appetite and deepen the understanding of the Board in relation to certain risks faced by the Group by the Risk Committee and through Board presentations.
- Chairman and Company Secretary to review the Board and Committee forward calendars to reduce scheduled Board meetings to eight per annum and include greater focus on Committee Meetings.
- The summary of the Board Performance Evaluation set out above has been reviewed and approved by Clare Chalmers.