OverviewThe following is an extract from the Directors' Statement on Corporate Governance contained in the Annual Report for 2009. The current composition of the board and board committees can be found here. Compliance with the Combined CodeThe Board is committed to maintaining high standards of Corporate Governance. The Board is accountable to the Company’s shareholders and this statement describes how it applies the principles of good governance set out in the 2008 FRC Combined Code on Corporate Governance. A copy of the Combined Code can be obtained from the Financial Reporting Council’s website, www.frc.org.uk. The BoardThe Board of Directors was made up of nine members at 31 December 2009 comprising the Executive Chairman, three other executive Directors and five non-executive Directors. Mr. Anthony Collins, Deputy Chairman, is Senior Independent Director. Directors' biographical details are set out on page 13 of the 2009 Annual Report. The Board believes that its Directors possess the relevant backgrounds and mix of skills, knowledge and experience required by the scale, geographic spread and complexity of the Group’s operations. The Board routinely meets seven times a year and additionally as required by time critical business needs. There is also contact with the Board between meetings as required in order to progress the Group’s business. The Board takes the major decisions while allowing management sufficient scope to run the business within a centralised reporting framework. The Board has a formal schedule of matters specifically reserved for its decision. The matters reserved by the Board for its decision cover all strategic decisions, acquisitions, major items of capital expenditure, financial statements, budgets and material matters currently or prospectively affecting the Group and its performance. The Board’s responsibilities also include ensuring that appropriate management, development and succession plans are in place; reviewing the environmental and health and safety performance of the Group; approving the appointment of Directors and the Company Secretary; approving policies relating to Directors’ remuneration and severance and ensuring that satisfactory dialogue takes place with shareholders. The Board also delegates some of its responsibilities to committees of the Board. The Directors have access to the advice and services of the Company Secretary who is responsible for advising the Board through the Chairman on governance matters. The Company’s Articles of Association and Schedule of Matters reserved for the Board for decision provide that the appointment or removal of the Company Secretary is a matter for the full Board. Directors have full and timely access to all relevant information in a form appropriate to enable them to discharge their duties. Reports and papers are circulated to Directors in preparation for Board and committee meetings. The non-executive Directors, together with the executive Directors, receive monthly management accounts, various reports and other information to enable them to review the performance of the Group on an ongoing basis. All Directors have access to independent professional advice at the Group’s expense where they consider that advice is necessary to enable them to discharge their responsibilities as Directors. The Board periodically holds meetings at Group locations and meets senior management in order to help Directors gain a deeper understanding of the Group’s operations and markets. The Board continues to hold the view that there are compelling commercial benefits to the Group and its shareholders in combining the roles of Chairman and Chief Executive and the holding of the combined roles by Mr. Michael Chadwick. Combining these roles is balanced by the strong input of the five non-executive Directors and the Board’s committee structure. It is Board policy that no individual or small group of individuals can dominate its decision making. The Deputy Chairman acts as Chairman in the absence of the Chairman and on other occasions as appropriate. The Deputy Chairman also serves as the Board’s Senior Independent Director and is available to shareholders where there are issues that cannot be addressed through normal channels. Directors’ Independence and Board BalanceIt is Board policy that the Board should include a balance of executive and non-executive Directors. Five non-executive Directors, Mr. Anthony E. Collins, Ms. Gillian Bowler, Mr. Richard W. Jewson, Mr. Roderick Ryan and Mr. Charles M. Fisher are considered by the Board to be independent in character and free from any business or other relationship which could materially interfere with the exercise of independent judgment. The Board has determined that each of the non-executive Directors fulfilled this requirement and is independent. In reaching that conclusion, the Board considered the principles relating to independence contained in the Combined Code. Mr. Collins was appointed to the Board in 1988 and both Ms. Bowler and Mr. Jewson were appointed to the Board in 1995. The length of their service on the Board exceeds nine years and the 2008 FRC Combined Code provides that an explanation be made to shareholders concerning their continued independence. The Board considers that the integrity and independence of these Directors is beyond doubt. All three Directors are financially independent of the Company and have other significant commercial and professional commitments. Each of these non-executive Directors brings her/his own senior level experience gained in their own field of international business and professional practice. Their experience and long-term perspective on the Group’s business has provided the Board with stability and continuity during the most challenging trading period in the Group’s recent history. It is Board policy that in any case where a non-executive Director has served on the Board for more than nine years he/ she should retire annually and go forward for re-election. In view of this requirement, the Board believes that the tenure of non-executive Directors should not be solely determined by imposing an arbitrary time limit on the length of service but should also have regard to continued evidence of the exercise of independent judgment and effectiveness in the role. It is the Board’s view that the independence of the three non-executive Directors has not been compromised by virtue of their period in office exceeding nine years. It is also the Board’s view that each of the three directors continues to demonstrate independence and make a valuable contribution to the role of the Board and its Committees. The Company’s Articles of Association provide that one third of the Directors retire by rotation each year and that each Director seek re-election at the Annual General Meeting every three years. New Directors are subject to election by shareholders at the next Annual General Meeting following their appointment. It is Board Policy that non-executive Directors are normally appointed for an initial period of three years, which is then reviewed. Ms. Bowler and Mr. Jewson retire from the Board and offer themselves for re-election at the AGM on 6 May 2010 in accordance with Board Policy. Mr. Charles Fisher was appointed to the Board since the last AGM and, in accordance with the Articles of Association and being eligible, offers himself for election. Mr. Michael Chadwick, Mr. Colm Ó Nualláin and Mr. Roderick Ryan retire from the Board by rotation and, being eligible, offer themselves for re-election. Mr. Collins will retire from the Board at the Annual General Meeting on 6 May 2010. The Board is satisfied as to the independence of Ms. Bowler, Mr. Jewson and Mr. Ryan and recommends their re-election. The Board undertakes a formal annual evaluation of its Directors and is satisfied that the three non-executive Directors proposed for re-election continue to discharge their obligations as Directors and contribute effectively to the work of the Board and its committees. The overall composition and balance of the Board is kept under review. The Board is managing the orderly succession of non-executive Directors without compromising the effectiveness and continuity of the Board and its committees. Induction and TrainingIt is the policy of the Board that formal induction is offered to all Directors appointed to the Board. This includes on-site visits and meetings with Senior Management in the Group’s businesses and briefings from executive Directors and the Company Secretary. Induction covers matters such as the operations of the Group, the role of the Board and matters reserved for its decision, powers delegated to Board committees, corporate governance policies and the latest financial information about the Group. Directors are advised on appointment of their legal and other duties and of their obligations as Directors of a listed company. Evaluation of BoardThe Board has put in place procedures which involve the conduct of an annual evaluation process to periodically assess its performance, the performance of Board Committees and the performance of individual Directors. This process also seeks to identify areas in which the effectiveness of the Board may be improved. Evaluation of the Board is achieved through annual discussion between each Director and the Senior Independent Director. The results of the evaluation process are presented to the Board for consideration of issues identified. Succession PlanningThe Board plans for succession with the assistance of the Nomination Committee. The Board believes that it is necessary to have appropriate executive Director and non-executive Director representation to provide Board balance and to provide the Board with the breadth of experience required by the scale, geographic spread and complexity of the Group’s operations. Communication with ShareholdersThe Company recognises the importance of communication with shareholders. Presentations are made to both existing and prospective institutional shareholders principally after the release of half-yearly and annual results. Interim Management Statements are issued in compliance with the EU Transparency (Directive 2004/109/EC) Regulations 2007 and the Group issues trading updates in January and July. Conference calls are held following the issue of the half-yearly and annual results. Any major acquisitions are also notified to the market and the Company’s website www.graftonplc.com provides the full text of the half-yearly and annual results, investor presentations and all Stock Exchange and other announcements. The Chairman and Finance Director give feedback to the Board on issues raised by investors during the course of presentations following the half-yearly and annual results and Analysts’ reports on the Group are circulated to all Directors. Non-executive Directors are offered an opportunity to attend meetings with major shareholders. The Senior Independent Director is available to meet with shareholders if they have concerns which have not been resolved through the normal channels of Chairman or Finance Director or where such contacts are not appropriate. General MeetingsThe Company’s Annual General Meeting (AGM), which is held in Ireland, affords individual shareholders the opportunity to question the Chairman and the Board. The Notice of the AGM, which specifies the time, date, place and the business to be transacted, is sent to shareholders at least 20 working days before the meeting. The AGM is normally attended by all Directors. At the meeting, resolutions are voted on by either a show of hands of those shareholders attending, in person or by proxy, or, if validly requested, by way of a poll. In a poll, the votes of shareholders present and voting at the meeting are added to the proxy votes received in advance and the total number of votes for, against and withheld for each resolution are announced. This information is made available on the Company’s website following the meeting. All other general meetings are called Extraordinary General Meetings (EGMs). An EGM called for the passing of a special resolution must be called by at least twenty-one clear days’ notice. Provided shareholders have passed a special resolution at the immediately preceding AGM and the Company allows shareholders to vote by electronic means, an EGM to consider an ordinary resolution may, if the Directors deem it appropriate, be called at fourteen clear days’ notice. A quorum for a general meeting of the Company is constituted by four or more shareholders present in person and entitled to vote. The passing of resolutions at a meeting of the Company, other than special resolutions, requires a simple majority. To be passed, a special resolution requires a majority of at least 75 per cent of the votes cast. Shareholders have the right to attend, speak, ask questions and vote at general meetings. In accordance with Irish company law, the Company specifies record dates for general meetings, by which date shareholders must be registered in the Register of Members of the Company to be entitled to attend. Record dates are specified in the Notice of a general meeting. Shareholders may exercise their right to vote by appointing a proxy/proxies, by electronic means or in writing, to vote some or all of their shares. The requirements for the receipt of valid proxy forms are set out in the Notice convening the meeting. A shareholder, or a group of shareholders, holding at least 5 per cent of the issued share capital of the Company, has the right to requisition a general meeting. A shareholder, or a group of shareholders, holding at least 3 per cent of the issued share capital of the Company, has the right to put an item on the agenda of an AGM or to table a draft resolution for inclusion in the agenda of a general meeting, subject to any contrary provision in Irish company law. Memorandum and Articles of AssociationThe Company’s Memorandum and Articles of Association set out the objects and purposes of the Company. The Articles detail the rights attaching to each share class; the method by which the Company’s shares can be purchased or re-issued; the provisions which apply to the holding of and voting at general meetings; and the rules relating to the Directors, including their appointment, retirement, re-election, duties and powers. A copy of the Memorandum and Articles of Association can be obtained from the Group’s website, www.graftonplc.com. Board CommitteesThe number of Board meetings and committee meetings held during the year and attended by each Director was as follows:
Column A – refers to the number of meetings held during the period the Director was a member of the Board and/or Committee The Board is assisted by committees of Board members which focus on specific aspects of its responsibilities. The terms of reference of the Audit Committee, Remuneration Committee and Nomination Committee were approved by the Board and comply with the 2008 FRC Combined Code and are available from the Company and can also be found on the Group’s website at www.graftonplc.com. Membership of the various committees is shown on page 13 of the 2009 Annual Report. The Company Secretary is secretary of the Audit, Remuneration and Nomination Committees. To read the PDF documents on this page you may need to download the free Adobe Reader or you can use the free online conversion tools. |
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