Role of the board
The key responsibilities of the board are to set strategy and deliver value to shareholders and stakeholders, monitor management activity and performance against targets, provide constructive challenges to management; and set parameters for promoting and deepening the interest of shareholders.
The board also has formal matters reserved for its decision, which include:
- Group strategy, business objectives, long-range plans and annual budgets;
- Annual and interim results;
- Material acquisitions, disposals and contracts;
- Major changes to internal controls, risk management or financial reporting policies and procedures;
- Determining risk appetite
- Changes to capital, corporate or management structure; and
- Succession planning for the board and senior managementBoard composition and independence
Matters which are outside the scope of the reserved matters are decided by the Executive Board.
Division of responsibilities
An open, honest and transparent working relationship between non-executive directors, executive directors and senior management ensures that the board operates effectively.
The roles of the Chairman and the Chief Executive Officer are separately held and the division of their responsibilities is clearly established, set out in writing and regularly reviewed by the board. The Chairman is regularly on site at our head office in London, and this facilitates frequent interaction, discussion and collaboration with the Chief Executive Officer. Where required, the Chairman also ensures that discussions with other board members, including non-executive directors, are held outside of the formal board meeting programme.
The Chairman, Iain Ferguson, has the following key responsibilities:
- Responsible for the leadership of the board, ensuring its effectiveness by creating and managing a constructive relationship between the executive and non-executive directors;
- Promotes a culture of challenge, debate, openness and support, ensuring that there is adequate time available for discussion;
- Ensures ongoing and effective communication between the board and its key stakeholders;
- Ensures that the board receives accurate and clear information in a timely manner in advance of board meetings; and
- Ensures that all non-executive directors receive ongoing training and development so that they can appropriately perform their duties.
Chief Executive Officer
The Chief Executive Officer, James Drummond, has the following key responsibilities:
- Responsible for leading and managing the business within the authorities delegated by the board;
- Develop the group's objectives and strategy and, following board approval, the successful execution of strategy;
- Ensures that a sound system of internal controls is in place;
- Manages the group's risk profile, including the maintenance of appropriate health, safety and environmental policies;
- Responsible for the effective and ongoing communication with shareholders; and
- Ensures that the board is fully informed of all key matters.
Independent non-executive directors
Our independent, non-executive directors, Maarit Aarni-Sirviö, Lucy Dimes, David Lowden, Andrew Wood, provide a valuable breadth of experience and independent judgement to board discussions. The board considers that during 2015, the non-executive directors were integral to providing a solid foundation for good corporate governance for the group, ensuring that no individual or group of individuals dominated the board's decision-making, and that this will continue in 2015. The board considers that the non-executive directors have a suitable breadth and depth of strategic, management and international experience.
Our non-executive directors have the following key responsibilities:
- Promote the highest standards of integrity, probity and corporate governance throughout the company and particularly at board level;
- Constructively challenge and help develop proposals on strategy;
- Scrutinise the performance of management in meeting agreed goals and objectives, and monitor the reporting of the performance;
- Review the integrity of financial information, and that financial controls and systems of risk management are robust and defensible;
- Determine appropriate levels of remuneration for executive directors and have a prime role in appointing and, where necessary, removing executive directors; and
- Ensure no individual or group dominates the board's decision-making.
Senior Independent Director
David Lowden, our Senior Independent Director, plays an important role on the board and has the following key responsibilities:
- Experienced and trusted sounding board for Chairman and CEO;
- Acts as conduit between Chairman, non-executives and shareholders;
- Leads the annual evaluation of the Chairman with assistance from the non-executive directors;
- Strengthens understanding of major shareholders' key interests by receiving reports from the company's brokers on investor relations; and
- Makes himself available to meet shareholders.
David is highly suited to the role of Senior Independent Director through his extensive knowledge of the Berendsen group combined with his wealth of commercial experience as a previous Chief Executive of Taylor Nelson Sofres plc, in addition to being a non-executive director of William Hill PLC and the non-executive Chairman of Michael Page International plc.
David Lawler, our Company Secretary, has the following key responsibilities:
- Secretary to board and committees;
- Develops board and committee agendas, and collates and distributes papers
- Ensures compliance with board procedures;
- Advises on regulatory compliance and corporate governance;
- Facilitates induction programmes;
- Responsible for the organisation of the Annual General Meeting (AGM); and
- Makes himself available to all directors.
The Executive Board
The Executive Board sits at the apex of management decision-making within the company. It is chaired by the Chief Executive Officer, James Drummond. In addition to regular communications between its members, the Executive Board formally met 11 times during 2015. The members of the Executive Board have collective responsibility for ensuring the successful implementation of our strategy and for embedding our governance culture. Their key responsibilities include:
- Developing and implementing strategy
- Prioritising investments and allocating resources
Independence, conflicts of interest and succession planning
The independence of non-executive directors is fundamental to the board's decision-making and discussion.
Board independence and re-election
The composition of our board is reviewed annually by the nomination committee to ensure that there is an effective balance of skills, experience and knowledge. The committee conducted a specific
review of the independence of Andrew Wood and David Lowden in 2015 as their three-year appointments were due to expire on 28 February 2016. Neither Andrew nor David were present during the committee's discussion which took into account the following considerations:
- Length of tenure on the board;
- Board composition;
- Independence; and
- Other external commitments.
Having conducted its review, the committee was satisfied that it was appropriate to recommended to the board that Andrew's and David's appointments should be extended for a further three years (subject to re-election by shareholders at the 2016 AGM). In accordance with the Code, all directors wishing to continue will retire and offer themselves for re-election by shareholders at the 2016 Annual
With effect from 31 December 2015, David Lowden became the non-executive Chairman of Michael Page International PLC. David notified our Chairman and board in advance of his appointment and the board has confirmed that it does not believe that this change in directorship will effect David's commitment to, or involvement with, the Berendsen board.
Conflicts of interest
The board operates procedures to identify and manage situations where a director has a conflict of interest, and each Director has confirmed that no conflicts of interest arose during 2015.
An element of the procedure, designed to safeguard the independence of our non-executive directors, restricts a director from voting on any matter in which they have a material personal interest unless the board unanimously decides otherwise. Where necessary, directors are required to absent themselves from a meeting of the board while such matters are being discussed, although no such situations arose in 2015.
The board also has agreed procedures by which directors can, for the purposes of discharging their duties, obtain independent professional advice at the company's expense. No director had reason to use this facility during 2015.
We have continued to develop and monitor extensive succession plans both at board and senior management level throughout the group. The nomination committee's input and oversight into the succession planning process can be summarised as follows:
- In May 2015, Chris Thrush, Group Director, Human Resources presented to the nomination committee details of the succession planning and development programmes throughout the group for senior management. Potential successors, including a mix of internal and external candidates have been identified for the top 100 senior management positions and the committee again reviewed the profiles of all of these positions during the year;
- The board and nomination committee met with specifically targeted individuals identified as potential executive talent during their site visits in the year; and
- The nomination committee regularly monitored the schedule on the length of tenure of the Chairman and non-executive directors, and reviewed potential departure dates assuming the relevant directors are not permitted to serve more than three three-year terms.
The committee continues to be satisfied that adequate succession planning is in place for the Executive Board and senior executives. Succession planning will remain a key ongoing focus of the committee in 2016 and beyond.