The Board
Composition
The Board currently consists of 10 Directors, seven 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 under the Articles one-third of the Directors are required to retire from office at every Annual General Meeting (AGM) and offer themselves for re-election.
Appointments and Retirals
Ian Harley was appointed as an independent Non-Executive Director in February 2009 and Iain Robertson retired following the AGM in May 2009. In July 2009, David McIntosh was appointed as an Executive Director and Managing Director of Menzies Distribution, replacing Ellis Watson who resigned from the Board to take up another appointment.
William Thomson, Chairman of the Company, will retire from the Board following the AGM in May 2010, and will be replaced as Chairman by Iain Napier. The Board will then have nine Directors including three independent Non-Executive Directors, which is 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.
Having been appointed since the last AGM and in accordance with the Company’s Articles of Association, David McIntosh will stand for election at the Company’s AGM in May 2010. The Company’s Articles require that a third of the Directors, or a number nearest to a third, must retire by rotation. The Combined Code also requires Non-executive Directors serving for more than nine years to offer themselves up for annual re-election. The Directors who therefore retire and, being eligible, offer themselves for re-election at the AGM are Dermot Jenkinson, Ian Harrison, David Coltman and Craig Smyth.
Dermot Jenkinson contributes from his breadth of knowledge gained both from his experiences in the Company and through a wide range of executive management roles, whilst Ian Harrison provides counsel and support to the Board and brings particular skills relating to pension investment and currency management. The latter two Directors also represent the interests of the Menzies family, who collectively are our major shareholder.
David Coltman has substantial industry knowledge and expertise in the Aviation Sector, whilst Craig Smyth has successfully managed Menzies Aviation through a period of unprecedented turmoil in the aviation sector, and has positioned the business well to benefit from an upturn in that sector. David McIntosh, standing for election at the AGM, has significant industrial knowledge and expertise within the newspaper and magazine distribution sector, having joined Menzies in 1989, working as both Finance Director and Commercial & Marketing Director before assuming the position of Managing Director at Menzies Distribution.
All Directors standing for re-election have 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. The Board recommends to shareholders the re-election of Dermot Jenkinson, Ian Harrison, David Coltman and Craig Smyth, and the election of David McIntosh.
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Independence
Currently, three of the Non-Executive Directors, 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 joined the Board in 2001 and has been Senior Independent Director since May 2006. To provide continuity and stability to the Board over the period where Iain Napier assumes Chairmanship, the Board has agreed that David Coltman should continue to serve as a Director and Senior Independent Director for one further year. David has indicated, and the Board have accepted, that he will then step down from the Board at the AGM in 2011. The Board believes that he will continue to demonstrate independent thought and opinion through this period and provide a valuable counsel to both the Chairman and the other Directors.
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, and therefore formally reviews succession plans each year. With regard 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. It was through this process that David McIntosh was identified and proposed as the Managing Director for Menzies Distribution following the resignation of Ellis Watson.
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. This process was followed to identify Iain Napier as a suitable candidate to replace William Thomson. During 2010, the Board will follow this procedure to identify a replacement Non-Executive Director for David Coltman.
Board and Committee meetings and attendance
Name |
Board |
Audit Committee |
Remuneration Committee |
Nomination Committee |
|---|---|---|---|---|
| Meetings | 9 |
3 |
5 |
2 |
| W Thomson | 9 |
- |
- |
2 |
| P Dollman | 9 |
- |
- |
- |
| C Smyth | 9 |
- |
- |
- |
| D McIntosh* | 4 |
- |
- |
- |
| E Watson | 5 |
- |
- |
- |
| D Coltman | 9 |
- |
2 |
2 |
| D Jenkinson | 9 |
- |
5 |
2 |
| I Harrison | 9 |
3 |
- |
- |
| O Morley | 9 |
3 |
5 |
- |
| I Napier * | 9 |
3 |
4 |
- |
| I Harley* | 8 |
3 |
- |
- |
| I Robertson | 3 |
1 |
- |
- |
*Appointments and retirals:
Ian Harley was appointed on 2 February 2009.
Iain Robertson resigned on 10 May 2009.
Ellis Watson resigned on 24 July 2009.
David McIntosh was appointed on 24 July 2009.
A description of the Board’s Committees is provided HERE, along with the Chairman and membership of each Committee. he Board met nine times in 2009 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 rigorous performance evaluations internally on an annual basis, using external consultants to refresh the process every three to five years. An independent external consultant was used in 2008 to undertake a rigorous process of performance evaluation of the Board and its members and therefore in 2009 an internal process was undertaken to evaluate the contribution of each member of the Board and its Committees and the performance of the Board and its Committees overall.
A questionnaire was circulated to all Directors covering all aspects of the Board’s performance, with the results being amalgamated and circulated by the Chairman. 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 evaluation were reported to the Board in December 2009 and actions have been taken 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 two meetings with the Chairman present at which the performance of the Executive Directors was discussed.
The evaluation produced areas for consideration and changes were implemented as appropriate. Overall, the evaluation process in 2009 confirmed that the Board and its principal Committees had functioned efficiently during the year and that all the Directors continue to contribute effectively and with proper commitment to their roles, including time commitments.
Conflict of interest
The Company’s Articles of Association permit the Board to consider and, if it sees fit, to authorise situations where a Director has an interest that conflicts, or may possibly conflict, with the interests of the Company (‘Situational Conflicts’). The Board has a formal system in place for Directors to declare Situational Conflicts to be considered for authorisation by those Directors who have no interest in the matter being considered. In deciding whether to authorise a Situational Conflict, the non-conflicted Directors are required to act in the way they consider would be most likely to promote the success of the Company, and they may impose limits or conditions when giving authorisation or subsequently if they think this is appropriate. The Board believes that the systems it has in place for reporting and considering Situational Conflicts continue to operate effectively.
Director's indemnity
As permitted by the Articles of Association, the Directors have the benefit of an indemnity which is a qualifying third-party indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force throughout the last financial year and is currently in force. The Company also purchased and maintained throughout the financial year Directors’ and Officers’ liability insurance in respect of itself and its Directors. No indemnity is provided for the Company’s auditors.
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 and the dissemination of information via the Group’s website at www.johnmenziesplc.com, 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 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 with shareholders at any time.
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