Intertek Directors' Report 2015
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Directors’ report Chairman’s introduction DEAR SHAREHOLDER FOR MORE DETAIL ON CORPORATE GOVERNANCE Once again, on behalf of the Board, I am pleased to present the 52 Chairman’s introduction Corporate Governance Report for the year ended 31 December 2015. The Board believes that good governance is key to the 54 Compliance with the UK long-term success of the Group and we shall continue to Corporate Governance Code pursue the ‘comply or explain’ approach. Corporate 56 Board of Directors Governance lies at the heart of our Company as compliance and integrity form part of the foundations upon which our 58 Leadership values and mission as a Company are based. The Board 60 Effectiveness continues to be committed to improving the governance framework and the need to demonstrate to shareholders 63 Remuneration report that the Company is properly governed in order to support 78 Audit & Risk Committee the delivery of our strategic and business goals. 83 Nomination Committee COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE (THE ‘CODE’) 85 Other statutory information The Company is subject to the principles and provisions of 88 Statement of Directors’ responsibilities the Code, which is published and regularly updated by the UK Financial Reporting Council (‘FRC’). The latest applicable update was released in September 2014. A copy of the Code is available at www.frc.org.uk. I am pleased to report that throughout the year ended 31 December 2015, the Company has complied with the main and supporting principles and provisions of the Code, except for provision B.3.3. for the period 14 January to 15 May 2015. Wolfhart Hauser was given approval to join the Board of Associated British Foods plc as Non-Executive Director, taking the number of his non-executive directorships during this period to two. The Board considered Wolfhart’s other significant commitments and the decision was taken, in view of his publicly announced intention to retire, that despite taking on a second non-executive directorship he would continue to allocate sufficient time to the Company to discharge his responsibilities. From 16 May 2015 the Company complied fully with the Code. Overleaf is an overview of the Company’s compliance with the Code, which should be read in conjunction with this Corporate Governance Report. A fuller explanation of our compliance with the Code and the Disclosure Rules and Transparency Rules is set out on our website at www.intertek.com. SIR DAVID REID Chairman 52 DIRECTORS’ REPORT INTERTEK GROUP PLC ANNUAL REPORT AND ACCOUNTS 2015 SUCCESSION PLANNING SHAREHOLDER ENGAGEMENT As Chairman, I am focused on ensuring that the Board works During the year we consulted extensively with our shareholders effectively and cohesively under my leadership, with the right and we hope to continue this positive trend in 2016. range and balance of skills, expertise and attributes to ensure More information about our engagement with shareholders is the continued growth and success of the Group. In making any outlined in the Corporate Governance Report on page 62 and board appointments, the Nomination Committee is careful to in the Remuneration report in the letter from the Chairman ensure that it is presented with, and considers, a broad range to the Remuneration Committee on page 63. of candidates. With Wolfhart’s retirement in May 2015 one of our key priorities has been to ensure and support a smooth I am interested in hearing the views of our shareholders and transition in the role of Chief Executive Officer to André Lacroix. ensuring that the Board take these into account when Wolfhart remained available to support André as required until considering the strategic direction of the Group. the end of December 2015. I would like to thank him on behalf BUSINESS FOCUS of the Board and our shareholders for his exceptional leadership A key role for me as Chairman is ensuring that we continually over the past decade. strive to have high standards of corporate governance whilst With the retirement of Christopher Knight at the 2015 Annual ensuring that the right controls are in place to provide the General Meeting (‘AGM’), the Nomination Committee focused Board with the appropriate level of oversight and assurance. on evaluating the composition of the Board and its I hope the following report provides you with more information Committees. We welcomed Gill Rider to the Board as Non- and gives a greater insight into the discussions held at the Executive Director and Chair of the Remuneration Committee Board and its Committee meetings during the year. on 1 July 2015. She brings valuable experience to our Board and further strengthens our diversity not just in respect of gender but also experience, skill and personal attributes. DIRECTORS’ REPORT With Gill’s appointment we have three women on our Board, representing 30%, exceeding the aspirational target of the Lord Davies Report that 25% of the Board positions at FTSE 100 companies should be filled by women. More information on the role and activity of the Nomination SIR DAVID REID Committee is detailed on pages 83 and 84. Chairman PERFORMANCE EVALUATION As announced last year, the evaluation and performance review of the Board and its Committees was undertaken with the assistance of an independent party, Egon Zehnder. I am pleased to report that the evaluation concluded that the Board and its Committees operate effectively, with each Director making significant contributions to debate and discussion. Further details on the outcome of the evaluation and its process can be found on pages 60 and 61. INTERTEK GROUP PLC ANNUAL REPORT AND ACCOUNTS 2015 DIRECTORS’ REPORT 53 Directors’ report Corporate governance COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE For the year ended 31 December 2015, the Company has complied with the main and supporting principles and provisions of the 2014 UK Corporate Governance Code (the ‘Code’), except for provision B.3.3. for the period from 14 January to 15 May 2015. Further details can be found on page 52. From 16 May 2015 to the date of this Report the Company fully complied with the Code. A full version of the Code can be found on the Financial Reporting Council’s website at www.frc.org.uk. A. LEADERSHIP A.1 Role of the Board The Board meets formally on a regular basis in order to formulate Intertek’s strategy and commercial objectives and to review the Company’s performance and strategy against set objectives, whilst ensuring the necessary finances and human resources are in place. There is a clear schedule of matters reserved for the Board as detailed on our website at www.intertek.com. A.2 A clear division The Company has both a Chairman, who is responsible for the of responsibilities leadership and effectiveness of the Board, and a Chief Executive Officer who is responsible for leading the day-to-day management of the Company within the strategy set by the Board. A.3 Role of the Chairman The Chairman sets the agendas for the meetings ensuring adequate discussion time especially on strategy, planning and execution, manages the meeting timetable and facilitates open and constructive dialogue during the meetings. A.4 Role of the The Non-Executive Directors actively engage and monitor Non-Executive Directors performance and help to develop proposals on strategy. They are responsible for determining the remuneration of the Executive Directors and have a prime role in appointing Executive Directors and in succession planning. B. EFFECTIVENESS B.1 The Board’s composition The composition of the Board is reviewed regularly by the Nomination Committee to ensure that there is an appropriate mix of skills, experience, independence, knowledge, gender and other qualities. B.2 Board appointments The appointment of new Directors to the Board is led by the Nomination Committee. The appointment process is clear, rigorous and transparent. Further details of the appointments undertaken during the year and succession planning can be found on page 83. B.3 Commitment The time commitments of Non-Executive Directors are defined on appointment and regularly evaluated. In practice, the time commitments go beyond those set out in the Letters of Appointment. The Chairman gives consideration to new directorships that may impact existing time commitments. B.4 Training and A comprehensive induction programme is in place for all new development Directors. The Chairman reviews and discusses training and development requirements with each of the Directors. Directors attend relevant training as necessary to update their knowledge. B.5 Information The Chairman, in conjunction with the Group Company Secretary, and support ensures that all Board members receive timely, accurate and effective information using the latest technology. B.6 Board, Director and An externally facilitated evaluation was undertaken at the end of Committee evaluation 2015 by Egon Zehnder and is described on pages 60 and 61. B.7 Re-election of Directors All Directors were subject to shareholder re-election or election at the 2015 Annual General Meeting (‘AGM’), as will be the case at the 2016 AGM, with the exception of Edward Astle, who is retiring. The Directors’ biographies are available on pages 56 and 57. 54 DIRECTORS’ REPORT INTERTEK GROUP PLC ANNUAL REPORT AND ACCOUNTS 2015 COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE C. ACCOUNTABILITY C.1 Financial and The Annual Report and Accounts sets out the performance business reporting of the Company, the business model, strategy and the risks and uncertainties relating to the Company. The Board have arrangements in place to ensure that the Annual Report and Accounts present a fair, balanced and understandable assessment of the Company’s position and prospects. C.2 Risk management The Board sets the Company’s risk appetite to achieve its strategic and internal control objectives and annually reviews the effectiveness of the Company’s risk management and internal control systems.