Board Composition
This is an extract of the cororate governance Statement contined in the Annual Report for the year ended 31 December 2008.
The full Annual Report can be downloaded as a PDF file HERE
2008 Report
The Board currently consists of 10 Directors, 7 of whom are Non-Executive (including the Chairman) and three Executive. The role of the Chairman is distinct from other positions, is clearly defined and is Non-Executive. The Company does not have a Chief Executive, instead it has an Executive Managing Director for Menzies Aviation, an Executive Managing Director for Menzies Distribution and an Executive Group Finance Director. Each Executive Director has clearly defined duties and responsibilities to the Board.
Non-Executive Directors are appointed for an initial term of three years, and all Directors are required under the Articles to retire and offer themselves for re-election at least every three years.
Appointments and Retirals in 2008
In September 2008, Iain Napier was appointed as an independent Non-Executive Director, and Ian Harley was appointed as an independent Non-Executive Director in February 2009. Iain Robertson has retired from the Board following the Annual General Meeting (AGM) in May 2009. The Board now has 10 Directors including four independent Non-Executive Directors, well in excess of the minimum recommended by Corporate Governance guidelines for a company of our size, and ensures that the Board is well balanced and able to meet the challenges and opportunities that face the business.
In accordance with the Company’s Articles of Association, Iain Napier and Ian Harley stood for election at the Company’s AGM in May 2009. The Company’s Articles of Association also required that a third of the Directors, or a number nearest to a third, must retire by rotation. The Combined Code requires Non-Executive Directors serving for more than nine years to offer themselves up for annual re-election. The Directors who therefore retired and, being eligible, offered themselves for re-election at the AGM are William Thomson, Dermot Jenkinson, Ian Harrison, Octavia Morley and David Coltman.
All five Directors who stood for re-election had undergone a formal performance evaluation and the performance of each continues to be effective and demonstrates commitment to their role, including commitment of time for Board and Committee meetings in addition to their other duties.
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Independence
Four of the Non-Executive Directors, David Coltman, Iain Napier, Ian Harley and Octavia Morley, are independent under the terms of the Code, where the number required for smaller companies is two. David Coltman has been Senior Independent Director since May 2006. Dermot Jenkinson and Ian Harrison are not independent under the terms of the Code due to their shareholding and length of service. However, they not only represent the continuing involvement of the founding Menzies family, but also contribute effectively to the Board and the work of its Committees. They bring to the Board a breadth of skills and experience from their knowledge of the Company and from their backgrounds in business and general management.
At least two of the members on each of the Audit and Remuneration Committees are independent (being a majority) including the Chairman of these Committees. The Nomination Committee only has one independent member and in this respect it is not fully compliant with the Code.
Succession Planning and Board Recruitment
The Board is aware that it is essential to have a suitable succession plan in place for when any members of the Board either move on or retire. With regards to the replacement of any Executive Directors, the Board has tasked the Nomination Committee with reviewing potential internal candidates and nominating suitable external candidates as and when such a position arises.
Alongside this, each of the Divisional Operating Boards have a responsibility to ensure that talented individuals within the business are nurtured and given every opportunity to develop their skills, such that they might become suitable candidates to join the Board.
For the Chairman, the Nomination Committee has responsibility for ensuring that there is a suitable candidate on the Board for a smooth transition of Chairmanship when required. The Committee will also engage external recruitment agencies in finding suitable candidates for either executive or non-executive positions where required, and any candidate will be expected to meet with each member of the executive team and the Nomination Committee prior to any offer being made.
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Board and Committee meetings and attendance in 2008
Name |
Board |
Audit Committee |
Remuneration Committee |
Nomination Committee |
|---|---|---|---|---|
| Meetings | 10 |
4 |
5 |
2 |
| W Thomson | 10 |
- |
- |
2 |
| P Dollman | 10 |
- |
- |
- |
| C Smyth | 10 |
- |
- |
- |
| E Watson | 10 |
- |
- |
- |
| D Coltman | 10 |
- |
5 |
2 |
| D Jenkinson | 10 |
- |
5 |
2 |
| I Harrison | 10 |
4 |
- |
- |
| O Morley | 10 |
4 |
5 |
- |
| I Robertson | 9 |
4 |
- |
- |
| I Napier (1) | 3 |
1 |
3 |
- |
| I Harley (2) | 1 |
- |
- |
- |
(1) I Napier was appointed to the Board on 15 September 2008
(2) I Harley was appointed to the Board on 1 February 2009, after the year end
A description of the Board’s Committees is provided HERE, along with the Chairman and membership of each Committee. The Board met 10 times in 2008 and has a formal schedule of matters specifically reserved to it for decision. These include: strategic plans, the approval of financial statements, acquisitions and disposals, major non-recurring projects and major capital expenditures. The Board also delegates specific responsibilities with written terms of reference to the Board Committees detailed HERE.
Information of an appropriate quality is issued in a timely manner to assist the Board in performing its duties. New Directors receive an appropriate induction tailored to their needs. All members of the Board have access to the advice and services of the Company Secretary and may take independent professional advice as appropriate at the expense of the Company. Directors are also encouraged to visit both divisional operations and to undertake such activities and training as is appropriate or may be required or desirable in order to carry out their duties.
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Board Performance Evaluation
The Board is supportive of the principles and provisions of the Code on Board Performance Evaluation. The Board’s policy is to conduct performance evaluations internally on an annual basis, using external consultants to refresh the process every three to five years. During 2008, an independent external consultant was again used to undertake a rigorous process of performance evaluation of the Board and its members, and to investigate whether any individual Board members had any concerns that they wished to be addressed.
The Chairman then undertook an informal discussion with each member of the Board, reviewing performance and addressing any concerns they had relating to their performance, the Board’s performance and the composition of the Board and its Committees.
The results of the external evaluation were reported to the Board in January 2009, and actions are under way to implement the findings. In addition to this review, the Non-Executive Directors held one meeting last year without the Chairman being present, during which his performance was reviewed. They also held a meeting with the Chairman present at which the performance of the Executive Directors was discussed.
Communication with shareholders
The Board has developed a comprehensive programme to ensure that effective communication with shareholders, analysts and the financial press is maintained throughout the year. Through its annual and interim reports, results and other announcements, as well as through presentations to institutional shareholders and the dissemination of information via the Group’s website, the Board seeks to present its strategy and performance in an objective and balanced manner.
Shareholders attending the AGM are invited to ask questions during the Meeting and also to meet the Directors after the formal business of the Meeting has concluded. The Chairmen of the Board Committees are also available to answer questions from any shareholder at the Meeting. Full details of proxy votes cast on each resolution are made available to shareholders at the Meeting and, in keeping with best practice, are made available on the Company’s website HERE after the Meeting.
The Board receives reports at each of its meetings on any meetings held with shareholders or analysts. The Chairman and Senior Independent Director are also available for contact by shareholders at any time.
Divisional Operating Boards
The Operating Boards of both Menzies Aviation and Menzies Distribution consist of senior executives from within each division, together with the Divisional Executive Managing Director and the Group Finance Director. The Boards have responsibility for the day-today running of their division and the implementation of the strategy for their division agreed by the Group Board. They also retain responsibility for approving divisional performance targets consistent with the strategic objectives set by the Group Board, and monitoring achievement. The Operating Boards also have responsibility to make recommendations to the Group Board and to monitor major initiatives. Each Operating Board normally meets a minimum of four times per year.
The three Executive Directors also meet prior to each Board meeting, with the Chairman joining them as appropriate. The meetings provide a forum for sharing ideas and experiences from within the Operating Divisions. It also allows the common financial controls, managed at Group level, to be reviewed and discussed. The composition of the Menzies Aviation Operating Board and the Menzies Distribution Operating Board is shown HERE.
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