GOVERNANCE REPORT
67
Composition and succession planning The Board is satisfied that there is the right balance of skills and experience on the Board and its committees to support the Group’s challenges ahead. During the year the Board adopted a new Board diversity policy and is working via the Nomination Committee to achieve the Hampton- Alexander diversity targets. The appointments of Michelle Cracknell and Kalpana Shah have improved the gender balance of Directors on the Board. More information can be found in the Nomination Committee Report on page 70. In accordance with the Code, the Board believes that it has the appropriate balance of capabilities, skills, expertise, independence and knowledge to enable it and its committees to discharge their duties and responsibilities effectively. The Nomination Committee regularly reviews Board composition when considering succession planning. In line with best practice, it reviews the length of tenure of those Directors who have served on the Board for over two three-year periods. Further information regarding succession planning is included in the Nomination Committee Report on page 68. All Directors’ appointments are subject to annual re-election by shareholders and the reasons why their contribution is and continues to be important to the Company’s long-term sustainable success is set out During the year the Nomination Committee led a process to appoint a new Chair of the Group Board, John Hastings-Bass, who joined the Board on 13 August 2020. The Nomination Committee also led a process to appoint new Group Non-Executive Directors, Michelle Cracknell and Kalpana Shah, who joined the Board on 1 March 2020 and 1 March 2021 respectively. More information about the appointments is included in the Nomination Committee Report. Development in the explanatory notes accompanying the resolutions. Appointment of Chair and Non-Executive Directors All new Directors receive a formal induction on joining the Board and a tailored training plan. Their induction includes discussions with the Chair and Executive Directors as well as one-to-one briefings and presentations from senior management on matters relating to the Group’s business, its procedures and regulatory developments. As part of the annual Board effectiveness review, the Chair discusses with each of the Directors their training and development needs. Board evaluation Following the internal Board evaluation performed in 2020, the Board conducted an external evaluation using Value Alpha Limited. Value Alpha Limited is an advisory firmwhich specialises in evaluating board and director effectiveness. Value Alpha Limited has no other connections with the Group. The evaluation was conducted on the basis of two-hour face-to-face interviews, based around a structured questionnaire, with the Board’s Directors, as well as the Directors of the life companies. Key stakeholders were also interviewed during the process. Value Alpha observed a Board meeting and, separately, meetings of the GRCC and the JRL and PLACL Investment Committees. Two meetings of the Audit Committee were observed. The review concluded that the Board is performing strongly. Levels of skills, knowledge and experience are high, and the Board displays an independent mindset. Levels of diversity are improving with the appointment of two female Directors. The leadership of the Company has changed, with relatively recent arrivals of a new Chair, Group Chief Executive Officer and Group Chief Financial Officer. The evaluation found that the new Board members were settling in well, and that the relationship between the Chair and Group Chief Executive Officer was healthy. The relationship between the Chair and the Senior Independent Director was also found to be strong. The Board meeting was considered to be highly effective, as were the meetings of the committees. All meetings involved a Non-Executive Director-only session at the beginning, with management and advisers absent. Levels of constructive challenge was evident in all the meetings observed, and there was a strong sense of teamwork. The committees provided feedback to the Board in an effective manner, and the Group
Chief Executive Officer’s report to the Board was comprehensive. The Board allocated an appropriate amount of time to the key challenges facing the business. The nested board arrangement was working well. Opportunities for continued improvement identified in the evaluation process included: • Board refreshment - As Directors approach their term limits, this has grown in importance • Maintaining the focus on strategy, development, and identifying new business opportunities • Increasing Board visibility of the talent pipeline and strengthening succession planning • Continuing to improve the quality of the Board and committee packs The Group Company Secretary has devised an action plan which will be owned by the Nomination Committee, with periodic progress reports to the Board. AUDIT, RISK AND INTERNAL CONTROL The Board has established an Audit Committee and a separate Group Risk and Compliance Committee for oversight of audit, risk and internal controls. Audit Committee The Board has delegated responsibility for overseeing financial reporting, internal audit, external audit and the effectiveness of the internal controls to the Audit Committee. The Audit Committee conducts a review of the financial and non-financial statements to satisfy itself of the integrity of the Annual Report and Accounts and reports its findings to the Board. For information on the composition of the Audit Committee, its responsibilities and its activities during the year, including those activities required by provision 26 of the Code, please see the Audit Committee Report on pages 71 to 75. The Board takes care to present a fair, balanced and understandable assessment of the Group’s position and prospects. The Board believes that the Annual Report and Accounts are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s position, performance, business model and strategy. The Audit Committee received a report from the internal auditor regarding its review of the effectiveness of the Group’s internal controls. Information regarding this review is set out in the Audit Committee Report. The going concern statement and a review of whether there are any material uncertainties to the Group’s ability to continue to adopt the going concern basis of accounting in respect of the accounts is set out in the Audit Committee Report and Directors’ Report. Group Risk and Compliance Committee The Group’s risk management, including oversight of risk appetite and the risk management framework, is the responsibility of the GRCC. The information regarding management of risk can be found in the GRCC Report on pages 76 and 77 and the risk management report in the Strategic Report on page 32, which sets out the assessment of principal and emerging risks including the procedures in place to identify emerging risks. The Viability Statement is on page 33. REMUNERATION The Board has delegated oversight of remuneration policy and practices to the Remuneration Committee. The way in which the principles have been applied during the year and the information required by the Code in accordance with provision 41 of the Code, including a description of how executive pay policy was determined in accordance with provision 40 of the Code, is included in the Remuneration Committee Report on pages 78 to 92.
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