Committee terms of reference

The terms of reference for the Remuneration, Audit and Nomination Committees were reviewed and, where appropriate, updated during the year.

Cross membership ensures that decisions of the three committees are consistent and, where appropriate, integrated.

Remuneration Committee

The names of members of the Committee during the year are given below. The Committee was chaired by Mr Brown and all members served on the Committee throughout the year, except where indicated.

Committee members

E G F Brown (Chairman)
L R Cairnie
C Girling (from 28 February 2011)
D G Savage (from 1 August 2011)
R T Scholes (until 17 May 2011)

All members of the Committee were considered by the Company to be independent throughout the period of their membership.

This Committee is responsible for agreeing with the Board the framework and policy for the remuneration of the Group’s executive management and for determining the remuneration packages of the Executive Directors. A more detailed examination of the Committee’s work during the year is available in the Directors’ remuneration report as set out on pages 29 to 37.

Terms of reference of Remuneration Committee

Nomination Committee

The Nomination Committee is chaired by the Chairman of the Board, except to the extent that it deals with succession to the chairmanship of the Board, in which case the Senior Independent Director assumes this role. The names of members of the Committee during the year are given below. All members served on the Committee throughout the year, except where indicated.

Committee members

R A Franklin (Chairman)
J R Atkinson
E G F Brown
L R Cairnie
C Girling (from 28 February 2011)
D G Savage (from 1 August 2011)
R T Scholes (until 17 May 2011)

The Nomination Committee’s role is to monitor the composition and balance of the Board and recommend to the Board the appointment of new Directors. Where appointments to the Board are under consideration, the Committee will normally employ external search consultants, except where exceptional internal candidates have already been identified.

The Committee met twice during the year to agree on the appointment of independent search consultants; consider the overall composition of the Board; agree the optimal profiles for new appointees to fill planned vacancies on the Board; and (after most members of the Board had had a chance to meet the shortlisted candidates) recommend the appointment of two new Non-executive Directors.

Terms of reference of Nomination Committee

Audit Committee

The Audit Committee is chaired by Mr Girling, a Chartered Accountant, who replaced Mr Scholes on 17 May 2011. The names of members of the Committee during the year are given below. All served on the Committee throughout the year except where indicated and all were considered by the Company to be independent. The Board has satisfied itself that at least one member of the Committee has recent and relevant financial experience.

Committee members

C Girling (Chairman from 17 May 2011; member from 28 February 2011)
E G F Brown
L R Cairnie
D G Savage (from 1 August 2011)
R T Scholes (Chairman and member until 17 May 2011)

In compliance with the Code, a majority of the members of the Committee were considered by the Company to be independent throughout the period of their membership.

This Committee assists the Board in discharging its responsibility for ensuring that the Group’s financial systems provide accurate and up-to-date information on its financial position and that the Group’s published financial statements represent a true and fair reflection of this position. It also reviews annually the Group’s systems of internal control and the processes for monitoring and evaluating the risks facing the Group.

This Committee met four times during the year, with the Company’s external Auditors (the ‘Auditors’) in attendance and on each of these occasions, the Committee met privately with the Auditors without management being present. During the year, the Audit Committee discharged its responsibilities by:

reviewing the scope and results of the audit, its cost-effectiveness and the independence and objectivity of the Auditors;
reviewing and approving the Auditors’ engagement letter and audit fee;
reviewing an annual report on the Group’s system of internal control and its effectiveness and receiving updates on key risk areas of financial control;
reviewing the Group’s draft financial statements prior to Board approval and reviewing the Auditors’ reports thereon;
reviewing the Group’s whistle-blowing policy and monitoring the procedures in place for employees to be able to raise matters of possible impropriety;
reviewing the Group’s policy on the employment of former employees of the Auditors;
reviewing the Group’s policy on employment of the Auditors for non-audit services;
reviewing the Committee’s terms of reference and evaluating its effectiveness;
reviewing the need for an internal audit function; and
approving a rolling three-year programme of independent reviews of aspects of the Group’s operations and financial controls and receiving reports on all reviews carried out during the year.

The Committee’s annual evaluation of the Auditors focused on: the calibre of the audit firm (including reputation, presence in the industry, size, resources and geographic spread); its quality control processes; the quality of the team assigned to the audit; the audit scope, fee and audit communications; and the governance and independence of the audit firm.

The Group takes pride in its good reputation and track record globally. A roll out of its new Business Conduct Programme, as approved by the Board, commenced during the year. The programme seeks to promote honesty, fairness and integrity in relations between employees and their work colleagues, customers, suppliers, competitors and the communities in which they work. A new training programme was implemented and is in the process of being cascaded down through the organisation. As part of this programme a new whistle-blowing hotline was introduced to facilitate the raising of any concerns, either by employees or external whistle-blowers.

In July 2010, PricewaterhouseCoopers was appointed to undertake a structured programme of independent, outsourced reviews of all material business units at least once every three to four years. During 2011, the Audit Committee received and considered reports from PricewaterhouseCoopers which detailed the progress against the agreed work programme for 2011. This programme covered reviews of business units in eight countries, which together represented approximately 20% of the Group’s turnover for the year. In October, the Committee formally reviewed the effectiveness of these arrangements, concluding that the internal audit arrangements were appropriate and effective.

Terms of reference of Audit Committee