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Board Performance EvaluationReview of the 2009 annual reports of the FTSE 200 companies

April 2010

ICSA Board Evaluation16 Park Crescent London W1B 1AHPhone: 020 7612 7080 E-mail: [email protected]

www.icsaboardevaluation.co.uk

Review of the 2009 annual reports of the FTSE 200 companies

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Aberdeen Asset Management PLC 8

Admiral Group plc 8

Aegis Group plc 8

Aggreko plc 9

Alliance Trust PLC 9

AMEC plc 9

Amlin plc 9

Anglo American plc 10

Antofagasta plc 10

Aquarius Platinum Limited 10

ARM Holdings plc 10

Arriva plc 11

Ashmore Group plc 11

Associated British Foods plc 11

Astra Zeneca PLC 11

Autonomy Corporation plc 12

Aviva plc 12

Babcock International Group plc 12

BAE Systems plc 13

Balfour Beatty plc 13

Barclays PLC 14

Barratt Developments plc 15

Bellway p.l.c. 15

The Berkeley Group Holdings plc 15

BG Group plc 15

BHP Billiton Limited 16

Black Rock World Mining Trust plc 17

BP p.l.c. 17

British Airways Plc 17

British American Tobacco PLC 17

British Sky Broadcasting Group plc 18

BT Group plc 18

Bunzl plc 18

Burberry Group plc 19

Cable & Wireless plc 19

Cadbury Schweppes plc 19

Cairn Energy PLC 20

Caledonian Investments plc 21

Capita Group Plc 21

Carillion plc 22

Carnival Corporation & plc 22

The Carphone Warehouse Group PLC 22

Catlin Group Limited 23

Centrica plc 23

Charter plc 24

Chemring Group PLC 24

Close Brothers Group plc 25

Cobham plc 25

Colt Telecom 25

Compass Group PLC 26

Croda International Plc 26

Daily Mail & General Trust plc 26

Dana Petroleum plc 27

De La Rue plc 27

Debenhams plc 27

Derwent London plc 28

Diageo plc 28

Dimension Data Holdings plc 28

Drax Group plc 29

DSG International plc 29

Easyjet plc 29

Eurasian Natural Resources Corporation PLC 30

Experian plc 30

Ferrexpo 31

First Group plc 31

F & C Asset Management plc 31

Introduction 5

Contents


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Fresnillo plc 31

G4S plc 32

GKN plc 32

GlaxoSmithKline PLC 32

Great Portland Estates plc 33

Greene King plc 33

Halma p.l.c. 33

Hammerson Plc 34

Hargreaves Lansdown Plc 34

Hays plc 34

Henderson Group plc 34

Heritage Oil Limited 35

Hikma Pharmaceuticals PLC 35

Hiscox Limited 36

Hochschild Mining plc 36

Home Retail Group plc 36

Homeserve plc 36

HSBC Holdings PLC 37

ICAP plc 37

IG Group Holdings plc 37

IMI plc 38

Imperial Tobacco Group PLC 38

Inchcape plc 38

Informa plc 39

Inmarsat PLC 39

Intercontinental Hotels Group PLC 40

Intermediate Capital Group plc 40

International Power plc 40

Intertek Group plc 40

Invensys plc 41

Investec plc 42

ITV plc 42

Jardine Lloyd Thompson Group plc 43

Johnson Matthey Plc 43

Kazakhmys PLC 43

Kingfisher plc 44

Ladbrokes PLC 44

Land Securities Group PLC 44

Legal & General Group Plc 45

Liberty International PLC 45

Lloyds Banking Group plc 45

Logica CMG plc 46

London Stock Exchange Group plc 46

Lonmin Plc 46

Man Group plc 47

Marks & Spencer Group plc 48

Meggitt PLC 48

Melrose plc 48

The Mercantile Investment Trust PLC 49

Michael Page International PLC 49

Micro Focus International plc 49

Millenium & Copthorne Hotels plc 49

Misys plc 49

Mitchells & Butler plc 50

Mondi PLC 50

Morrison Supermarkets PLC 51

National Express Group PLC 51

National Grid plc 51

Next PLC 52

Northumbrian Water Group plc 52

Old Mutual plc 52

Party Gaming Plc 53

Pearson plc 53

Pennon Group Plc 53

Persimmon Plc 54

Petrofac Limited 54

Petropavlovsk plc 54

Premier Oil plc 54

Provident Financial plc 55

Prudential plc 55

Contents


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PZ Cussons Plc 55

Qinetiq Group plc 56

Rangold Resources Limited 56

Reckitt Benckiser plc 56

Reed Elsevier PLC 57

Rentokil Initial plc 57

Resolution plc 57

Rexam PLC 57

Rio Tinto plc 58

RIT Capital Partners plc 58

Rolls-Royce Group plc 59

Rotork P.L.C. 59

The Royal Bank of Scotland Group plc 59

Royal Dutch Shell PLC 60

RSA Insurance Group plc 60

SAB Miller plc 61

The Sage Group plc 61

J Sainsbury plc 62

Schroders plc 62

Scottish & Southern Energy plc 62

Scottish Mortgage Investment Trust PLC 63

Segro plc 63

Serco Group plc 63

Severn Trent Plc 64

Shire Pharmaceuticals Group plc 64

Smith & Nephew plc 64

Smiths Group plc 65

Soco International plc 65

Spirax-Sarco Engineering plc 65

SSL International plc 65

St James’s Place Capital plc 66

Stagecoach Group plc 66

Standard Chartered PLC 66

Standard Life plc 67

Talvivaara Mining Company plc 67

Tate & Lyle PLC 68

Taylor Wimpey plc 68

Templeton Emerging Markets Trust PLC 69

Tesco PLC 69

Thomas Cook Group plc 69

3i plc 70

Tomkins plc 71

Travis Perkins plc 72

Tui Travel PLC 72

Tullow Oil plc 72

Ultra Electronics Holdings plc 73

Unilever PLC 73

United Business Media plc 73

United Utilities Group plc 74

Vedanta Resources PLC 74

Vodaphone Group PLC 75

VT Group plc 75

The Weir Group plc 76

Whitbread PLC 76

William Hill PLC 77

Witan Investment Trust plc 77

Wolseley plc 77

John Wood Group PLC 78

WPP Group plc 78

Xstrata plc 78

Yell Group plc 78

Contents


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IntroductionThe Institute of Chartered Secretaries and Administrators (ICSA) has again reviewed, for the 2009 reporting season, the manner in which the top 200 UK listed companies (as at the end of 2009) have chosen to undertake and report their annual evaluation of the performance of the board, the audit, nomination and remuneration committees and the individual members of the board in line with Principle A6 of the Combined Code.

ICSA acknowledges that it is an independent provider of board evaluation services, but it offers this review to promote greater interest in the virtues of well conducted evaluations of boards, committees and directors and in the belief that board evaluation is a key to developing better performing boards. It was stated in the introduction to last year’s report on the 2008 reporting season that ‘in the light of the financial crisis, ICSA believes profoundly that government, regulators, shareholders and boards of directors should be focusing on the value of objective and rigorous evaluations as a means of promoting better governance and achieving better performing boards in all business sectors.’ We believe that that statement of belief is just as relevant at the beginning of 2010.

The setting for this year’s report is the two major reports on governance; the final report of Sir David Walker ‘A review of corporate governance in UK banks and other financial entities’ published in November 2009 and the Financial Reporting Council’s ‘2009 Review of the Combined Code: Final Report’. Both reports discuss board evaluation.

The Walker Review proposes in Recommendation 12 that:

‘ The board should undertake a formal and rigorous evaluation of its performance, and that of committees of the board, with external facilitation of the process every second or third year. The evaluation statement should either be included as a dedicated section of the chairman’s statement or as a separate section of the annual report, signed by the chairman. Where an external facilitator is used, this should be indicated in the statement, together with their name and a clear indication of any other business relationships with the company and that the board is satisfied that any potential conflict given such other business relationship has been appropriately managed.’

Picking up on Sir David’s recommendation, the FRC report states:

3.38. In his report on the governance of banks and other financial institutions, Sir David Walker recommended that board evaluations should be externally facilitated at least every two or three years.

3.39. It is not entirely clear how many listed companies currently undertake externally facilitated evaluation on a rolling basis. Recent research suggests that approximately 20% of the larger companies involve external advisers each year. Anecdotally, the practice appears to be less frequent among smaller listed companies.

3.40. Most investors and other commentators, including many companies, considered that external facilitation can add a necessary degree of objectivity to board effectiveness reviews. Many of them supported extending Sir David’s recommendation to all listed companies through a new provision in the Code, although some considered that companies should continue to be free to decide whether to involve external advisers without having to comply or explain. Other commentators were concerned at the potential resource implications or were not persuaded that external involvement would add value to the process.

3.41. While acknowledging these concerns the FRC considers, on balance, that the potential benefits resulting from the greater objectivity that an external facilitator can bring to the evaluation process are such that a provision should be added to the Code recommending external facilitation of the board


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review at least every three years. Those companies that consider this to be unnecessary or undesirable will, of course, continue to be able to choose to explain rather than comply. Those companies that choose to comply will be free to decide what form of external involvement would be most beneficial to them.

The FRC went on to propose, on page 24 of its report, the following actions:

‘ A new provision should be added to the Code stating that board evaluation reviews should be externally facilitated at least every three years, and that any other connections with the reviewer should be disclosed (as is the case with remuneration consultants).

‘ The FRC will discuss with providers of board evaluation services and other interested parties what actions might be taken to address the quality of such services and concerns about conflicts of interest.

‘ Chairmen are encouraged to report personally in their annual statements how the principles in sections A and B of the new Code relating to the role and effectiveness of the board have been applied.’

These are encouraging developments and it is to be hoped that boards (especially the boards of smaller companies) will take account of the views of the FRC in determining their approach to board evaluation.

Additionally, ICSA and the Institute of Directors have launched a joint working group on board performance evaluation. The objective of the group is to develop ‘best practice’ guidance on the undertaking of externally facilitated board evaluations. It is hoped that the guidance will be published by late summer 2010.

As in previous years, we have reproduced from the annual reports of these companies the passages which address the conduct and outcomes of the evaluation processes adopted by each company’s board. We leave it to readers to form their own views on what each company has claimed to have done and chosen to disclose to its shareholders. However we offer the following observations:

1. There continues to be a disappointing level of repetitive, and largely uninformative, ‘boiler plate’ reporting. It is to be hoped that the beneficial influence of the ICSA/Hermes Transparency in Governance Awards will percolate into more companies’ drafting efforts in the next year or so.

2. A number of institutional investors in the top 200 companies seem to be wedded to internally facilitated evaluations. If investors are to take a lead in promoting better governance in their investee companies, it may be helpful if they consider an externally facilitated board evaluation in 2010.

3. A few companies say that they will consider externally facilitated evaluation when the board considers it appropriate. One is tempted to ask whether it will ever be ‘appropriate’ when the identical formula has been trotted out for three years!

4. Only 30 (or 15.0%) of the 200 companies covered by this report have elected to undertake some form of externally developed or managed evaluation process. Those companies were:

Anglo American Associated British Foods (also in 2008) AstraZeneca (also in 2008) Babcock International (also in 2008) BAE Systems (also in 2008) Barclays (also in 2006, 2007 and 2008) Barrett Developments


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BHP Billiton (also in 2008) BT Group Cable & Wireless Cadbury Schweppes (also in 2007 and 2008) Centrica (also in 2006, 2007 and 2008) Close Brothers Group Cobham Drax Group Eurasian Natural Resources Corporation G4S HSBC Holdings (also in 2008) IG Group Holdings Imperial Tobacco Group (also in 2006, 2007 and 2008) Kazakhmys Lloyds Banking Group (also in 2007 and 2008) Man Group Mitchells & Butler (also in 2008) National Express Group (also in 2008) Northumbrian Water Group Prudential (also in 2006, 2007 and 2008) Rotork Severn Trent (also in 2008) Smith & Nephew (also in 2006 and 2007) Wolseley

5. Some companies have engaged the services of a search consultant to undertake the evaluation. In view of the conflict of interest where the search firm has an extant and ongoing relationship with a company, it is submitted that one should at least consider whether the review was rigorous, within the meaning of Principle A6 of the Combined Code, and objective.

The fact that only 16% of companies covered by this review have elected to use an external facilitator for their effectiveness evaluation prompts ICSA to express again the hope that companies which have only ever employed an internally driven process will seek periodically to benchmark performance of the board and committees by engaging an external facilitator (of whom there are several) to undertake the performance evaluation process. The real concern is whether an internally driven evaluation process (particularly where it is limited to the use of questionnaires) has been objective and rigorous in every case.

6. Some of the reports are informative and reflect a desire to share helpful information and to improve (?) performance. Ultimately only shareholders can attempt to discover whether reviews have been genuinely rigorous. It is hoped that over time institutional shareholders in particular will begin to take more interest in how companies choose to apply Principle A.6 and its successor under the proposed UK Corporate Governance Code.


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Aberdeen Asset Management PLC page 52

The board has established a formal process, led by the chairman, for the annual evaluation of the performance of the board, its appointed committees and each director, to ensure that they continue to act effectively and efficiently and to fulfil their respective duties, and to identify any training requirements.

A tailored questionnaire, taking into account developments over the year and including specific references to the objectives of the board and its committees, was completed by each director. The responses were analysed and the results were subsequently discussed at meetings of the committees and of the board, as well as in individual discussions between the chairman and each director. Additionally, the non-executive directors held a meeting without the executive directors present at which executive directors’ performance was discussed.

The non-executive directors also met without the chairman present to discuss the results of the evaluation of the chairman’s performance, having taken into consideration the views of the executive directors, and the results of this meeting were subsequently discussed between the senior non-executive director and the chairman.

Admiral Group plc page 34

During the year the board carried out an evaluation of itself and its committees. The process was facilitated by the chairman and consisted of the completion of a questionnaire followed by one-to-one discussions between each director and the chairman where the board’s role and structure, process and relationships and any emerging issues were discussed. A final detailed report was circulated to the board and a number of recommendations agreed. The evaluation concluded that the board and its committees performed well during the year and are effective in meeting their objectives and fulfilling their obligations.

The chief executive, to whom they report, appraises the performance of the individual executive directors annually. The chairman, taking into account the views of the other directors, conducts the performance appraisal of the chief executive. The performance of the chairman is reviewed by the non-executive directors, led by the senior independent non-executive director (John Sussens), taking into account the views of the executive directors. John Sussens gave individual feedback to the chairman and was able to confirm that the performance of the chairman continues to be effective, and that the chairman continues to demonstrate commitment to his role.

Aegis Group plc page 26

The non-executives, led by the senior independent director, continued the process of meeting annually without the chairman being present to appraise the chairman’s performance. As a result of this the senior independent director meets with the chairman to discuss any particular issues where it is felt that improvements could be made. In the normal course of business an annual performance review of the board and its committees is undertaken in accordance with A.6.1 of the Code. However, following the change of chairman mid-way through the year and with the other changes in the board it was not considered appropriate to undertake the performance review of the board and its committees during 2008. It is expected that this process will be reintroduced either late in 2009 or early in 2010.


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Aggreko plc page 49

The board conducts an annual evaluation of its own performance. This involves the completion of assessment questionnaires by all directors covering the performance of the board and its committees. Other aspects that are reviewed include the effectiveness of the chairman, executive and non-executive directors, the monitoring of operational performance, and corporate governance, as well as leadership and culture. The board considered a summary of the conclusions from this year’s evaluation and appropriate actions were taken.

Alliance Trust PLC page 38

The board is committed to undertaking annual reviews of its own performance, and also the performance of its committees and individual directors. This can be facilitated either internally or, as was the case last year, with external assistance. This year this review was undertaken by way of questionnaires followed by interviews between the chairman and each of the directors, with the company secretary in attendance.

In each case the board and its committees were considered to be functioning effectively.

The senior independent director led the evaluation of the chairman’s performance, which was the subject of discussion at a meeting of the non-executive directors following completion by them of questionnaires which were devised to assess her performance against a series of key attributes for a chairman. The evaluation confirmed that the chairman was effective in her role.

AMEC plc page 75

An internal review of the effectiveness of the board and its committees was carried out during the year by the chairman by way of a review of questionnaires completed at his request by individual directors. Findings were considered by the board as part of its review of both collective and individual board member performance. No material changes were identified as being necessary as a result of this exercise.

The independent non-executive directors also met privately both with and without the chairman present and also with both the chairman and chief executive together to consider management performance and succession issues.

A formal process exists for the directors to take independent professional advice and receive appropriate training in the course of their duties at the company’s expense, organised by the company secretary.

Amlin plc page 130

Since the last annual report the board has both considered an interim progress report from the previous annual board evaluation and undertaken a fresh annual evaluation of the performance of the board, its committees and each director. The annual evaluations were initiated by a questionnaire completed by each director giving his assessment of both collective and individual performances. The results of the latest board evaluation were summarised by the chairman at its meeting in February 2009 and the board agreed its conclusions. Each board committee evaluated its performance in late 2008, and the conclusions were also reported to the board.

The chairman also discussed any issues arising from the evaluation of each individual director, including the performances of executive directors in respect of their boardroom as opposed to executive roles (which are evaluated as part of the


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group’s regular performance development review process), with the director concerned. The chief executive’s total performance is reviewed by the chairman.

The chairman’s own evaluation was conducted by the non-executive directors led by the senior independent director, taking into account the views of the executive directors. The senior independent director discussed and agreed the conclusions with the chairman.

Anglo American plc page 161

Evaluation of the performance of all board members and members of subcommittees is formally conducted annually by an independent third party, who confers with and assesses the board of directors and subcommittees based on a self-evaluation process, and specific questions and criteria. Each director is encouraged to focus on his or her personal perception of the board as a whole. (The process does not seek to evaluate individuals or their personalities.) Directors are also required to comment on the roles of the chairman and the company secretary. A comprehensive report and feedback are delivered to the board once the results of the assessments have been finalised. Feedback includes the assessor’s thoughts on changes or developments that might assist the board in becoming more effective and more efficient, with particular reference to future objective-setting, strategic thinking and prudent control. Board effectiveness assessments were conducted in 2009 by Thina Siwendu, a specialist in governance, corporate leadership, director development and strategic thinking.

Antofagasta plc page 61

The board periodically considers its performance and effectiveness. A performance evaluation of the board, its committees and its individual members was conducted during 2008 by Mr G S Menéndez, with the assistance of senior management. Mr C H Bailey, as the senior independent non-executive director was responsible for the evaluation of the chairman. The results were discussed with the chairman and considered by the board and were taken into account in the decision to recommend re-election of the retiring directors at the forthcoming Annual General Meeting during 2009. The board is satisfied that each director continues to contribute effectively and to demonstrate commitment to his role.

Aquarius Platinum Limited page 85

The board of Aquarius conducts a performance review of itself on an ongoing basis throughout the year. The size of the company and hands on management style requires an increased level of interaction between directors and executives throughout the year. Board members meet amongst themselves and with management both formally and informally. The board considers that the current approach that it has adopted with regard to the review of its performance and of its key executives, provides the best guidance and value to the group.

ARM Holdings plc page 22

The board undertakes an annual board evaluation. During 2008, this exercise was conducted internally with each director completing a questionnaire and was led by the chairman and facilitated by the company secretary. The evaluation covered board performance, processes, committees, composition, skills and director induction. The overall conclusion was that individual board members are satisfied that the board works well. They are also satisfied with the contribution made by their colleagues and that board committees operate properly and efficiently. Various recommendations resulted from the evaluation which have been discussed by the board and will be acted upon by the board in 2009, as appropriate. In particular, time is now allocated at board meetings and conference calls for discussions between the non-executive directors with and without the chairman present and the chairman will meet regularly with members of the executive


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committee in 2009. Further, the chief executive officer will meet each non-executive director individually at least once per year. It is intended that there will be a further board evaluation each year, involving external consultants as and when the board deems appropriate.

A full, formal induction programme is arranged for new directors, tailored to their specific requirements, the aim of which is to introduce them to key executives across the business and to enhance their knowledge and understanding of the group and its activities. The group has a commitment to training and all directors, executive or non-executive, are encouraged to attend suitable training courses at the group’s expense.

Arriva plc page 63

Each year the board undertakes an evaluation of its own performance. The performance evaluation for 2008, conducted in early 2009, was led by Steve Williams as the senior independent director and included a specific element concerning an assessment of the performance of the chairman

Ashmore Group plc page 29

The board has established a formal process, led by the chairman, for the annual evaluation of the performance of the board, its appointed committees and each director, to ensure that they continue to act effectively and efficiently and to fulfil their respective duties, and to identify any training requirements.

Meetings were held between the chairman and each individual director in which issues and developments over the year were discussed and performance was considered by reference to the objectives of the board and its committees. The responses were collated by the company secretary and the results and issues raised were subsequently discussed by the board. The board also evaluated the chairman’s performance.

Associated British Foods plc page 33

During the year, the board commissioned Egon Zehnder to carry out an independent evaluation of its performance. The review was conducted by way of a detailed questionnaire completed by each of the directors and the company secretary, followed by one-to-one interviews between each individual and the external consultant.

The review produced areas for consideration, in particular how the board could improve its deliberations. The issues identified have been discussed and changes to board practice 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 of time.

Astra Zeneca PLC page 87

Prior to the publication of this report, the board conducted its annual review and assessment of how it operates. This was facilitated through a series of web-based questionnaires as well as through interviews between each of the directors and an external facilitator. These interviews included consideration and discussion of the nature and level of its interaction with the company’s management; the quality, quantity and scope of information which flows to the board from management, and the way in which it flows; the content of and presentations to board meetings; the composition of the board; the practical arrangements for the work of the board; and the work and operation of the board’s committees. Overall, it was concluded that the board and its committees were operating in an effective and constructive manner.


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As part of the assessment process the external facilitator gave feedback to each non-executive director about his or her individual performance. The non-executive directors reviewed the performance of the chief executive officer and other executive directors in their absence. In addition, the board, under the chairmanship of the senior independent director, reviewed the performance of the chairman in his absence.

The board maintains and regularly reviews a full list of matters and decisions that are reserved to, and can only be approved by, the board. These include the appointment, termination and remuneration of any director; the annual budget; any item of fixed capital expenditure or any proposal for the acquisition or disposal of an investment or business which exceeds $150 million; raising of capital or loans by the company (subject to certain exceptions); any guarantee in respect of any borrowing of the company; and allotting shares of the company. The matters that have not been expressly reserved to the board are either delegated to its committees or to the chief executive officer.

Autonomy Corporation plc page 14

The members of the board evaluate the performance of the board, its committees and individual members at meetings, at the first meeting following the end of the year. The non-executive directors, led by the senior independent director, are responsible for the scope of the evaluation, taking into account the views of executive directors.

Aviva plc page 91

The effectiveness of the board is vital to the success of the group and the company undertakes a rigorous evaluation each year in order to assess how well the board, its committees, the directors and the chairman are performing. The aim is to improve the effectiveness of the board and its committees and the group’s performance. The process is led by the chairman and supported by the group company secretary. This year the evaluation was carried out by Boardroom Review, an independent consultancy, and interviews were conducted with each board member. All directors also completed a questionnaire evaluating the board and committees’ processes, their effectiveness and where improvements may be considered. Boardroom Review prepared a report based on the interviews with the directors and the questionnaire circulated and the overall results of the evaluation were presented to and reviewed by the board in January 2009.

The performance of the chairman is also included in the above process and takes into account the views of both the executive and non-executive directors. The chairman’s evaluation is managed by the senior independent director who provides feedback to the chairman. As part of the chairman’s evaluation the non-executive directors meet separately under the chairmanship of the senior independent director.

The board evaluation process assesses the executive directors in their capacities as directors of the company. They are evaluated in respect of their executive duties through a separate process whereby the chairman and the non-executive directors assess the group chief executive and the group chief executive assesses the executive directors.

Following this comprehensive review, the directors have concluded that the board and its committees operate effectively and agreed actions in respect of certain processes identified for improvement. Additionally, the chairman has concluded that each director contributes effectively and demonstrates full commitment to his/her duties.

Babcock International Group PLC page 43

During the year, a review of the performance of the board as a whole, its committees and individual directors was carried out. The company secretary, using as a starting point the results of an evaluation process carried out in the preceding financial year using an independent facilitator, conducted a series of individual confidential interviews with each board member in February 2009. The results of those interviews were reported to the chairman and made available to and


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discussed by the board. The review concluded that the board and its committees, and individual directors, continued to work well and effectively. It was agreed that strategy and succession planning should continue to be areas of particular board focus.

The chairman’s performance was evaluated by the remuneration committee and was within the scope of the confidential interview process described above.

BAE Systems plc page 66

The BAE Systems board has recently completed its annual performance evaluation. For the past four years we have engaged in the same process, using an external facilitator to undertake one-to-one interviews with all the directors. This provides a rich source of information not just on the board’s performance but also on that of individual directors and of myself as chairman.

Through the evaluation we try to ensure that as a board we are spending the right amount of time on the right things. Last year, the BAE Systems board held nine meetings plus a day spent conducting a strategy review. Looking back over the time we allocated to various matters at these meetings and analysing this under a few generic headings provides the following analysis:

Operational performance 32%Strategy/M&A 31%Governance 26%Training and awareness 8%Other 3%

This analysis is fairly basic but I think it fairly represents the work of the BAE Systems board last year and hopefully will provide some insight into how it operates. As you can see, most time was spent on operational performance and Strategy/Mergers and Acquisitions (M&A), with the rest of the time spent largely dealing with governance matters. The detail of what was included in these categories is discussed in more detail below.

Balfour Beatty plc page 13

Formal evaluation of the performance of the board and of the principal board committees, as well as individual assessments of the directors themselves, are normally carried out by an external consultant tri-annually, with internal assessments carried out in the intervening two years. The last external evaluation was completed in October 2007.

In the intervening years, an evaluation process is carried out by the company secretary, at the request of the chairman. This comprises an assessment questionnaire covering the effectiveness of the board and its committees including composition, arrangements for and content of meetings, access to information, and administrative procedures.

The findings are then reported back to the board by the chairman and an action plan addressing any areas of concern is established.

Following Steve Marshall’s appointment as chairman on 15 May 2008, an internal evaluation process commenced in January 2009. As a result of the feedback, the board has concluded that both it and the directors operate effectively.


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Barclays PLC page 141

The Code recommends that an evaluation of the effectiveness of the board and its committees is conducted annually. The evaluation in 2007 was independently facilitated by Egon Zehnder International. All directors were sent a questionnaire to complete and return to Egon Zehnder International and these were discussed in individual interviews, which included peer review. The following actions were agreed for 2008:

minor enhancements around the form and content of board papers and presentations, and refining the board calendar of business

The 2008 evaluation was again independently facilitated by Egon Zehnder International and took the form of detailed questionnaires, which were completed by each director, individual interviews and peer evaluation of fellow directors. As in previous years, the evaluation covered the following areas:

group performance strategy and performance objectives reporting to shareholders/stakeholders structure, people, succession planning and remuneration decision-making process information flows board structure and composition board roles and responsibilities board and management relationships board meetings, and board committees.

The results of the evaluation were presented to the board in December 2008. The results from the overall review showed a continuation of the five-year trend of improving scores and the board concluded that the board and the principal board committees continue to operate effectively in terms of communication, information flows and directors’ participation and engagement, particularly during the period of difficult market conditions in 2008. The directors recognised, however, and were disappointed, that group performance has not met shareholder expectations and acknowledged that they are accountable to shareholders for their stewardship of the group during the exceptional events of 2008.

From the results of the 2008 evaluation, action points and issues that were discussed included:

continued focus on the board’s calendar of business to ensure that non-critical items are removed or kept to a minimum, thereby ensuring that sufficient time can be allocated to items fundamental to the success of the group

refinements to the board’s calendar of business, including additional time to be spent on items such as compensation strategy and succession planning

the overall size and composition of the board, and refinements to the process for evaluating the performance of individual directors.

The board corporate governance and nominations committee has agreed an action plan to progress improvements in 2009.

In terms of individual director performance, the group chairman held private meetings with non-executive directors in early 2009 so that individual and general results could be discussed. Development plans relating to their own individual performance were agreed. The senior independent director met privately with the other non-executive directors and the group chief executive to discuss feedback he received on the group chairman’s performance. These results were then shared with the group chairman.


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Barratt Developments plc page 36

During the year, the board undertook a formal and structured process of evaluation of the performance of the board, its committees and individual directors. Last year the performance evaluation was carried out using independent external consultants, Independent Audit Limited. This year the board decided that it would be appropriate to carry out the performance evaluation internally using a questionnaire completed by all board members and the group general counsel and company secretary.

Central to the evaluation process are the board’s annual review of business strategy and the objectives and performance targets set by the board each year for itself, its committees and for the group chief executive, and through him for the executive Team, against which overall performance is measured. In this way the evaluation is undertaken within clear parameters linked to overall strategy, operational and financial performance and the role and contribution made by the board, its committees and individual directors in the attainment of agreed objectives and targets.

The results of the evaluation were presented to the board in July 2009, and it was agreed that the chairman would conduct one-to-one discussions with each board member in respect of the evaluation results. Following on from these meetings the chairman, together with the group general counsel and company secretary, will develop and submit an action plan to the board to implement the recommendations arising from the evaluation and the one-to-one discussions.

Bellway p.l.c. page 30

During the year the directors undertook an evaluation of the performance and effectiveness of the board, its committees and individual directors. The evaluation was performed using a self-assessment questionnaire. This involved the chairman, acting on behalf of the board, evaluating the performance of the other individual directors, and the non-executive directors, led by the senior independent non-executive director, assessing the performance of the chairman, taking into account the views of the executive directors. The board, led by the chairman, evaluated its own performance, and the committees, led by the chairman of each, evaluated their own performance. As part of the process of ensuring board effectiveness, the non-executive directors, led by the senior independent non-executive director, met without the chairman present. Additionally, the chairman held a meeting with the non-executive directors without the executives present. The chairman also had meetings with each of the executive directors. The board and its committees reviewed the results of these evaluations and are satisfied with the evidence they provided about the balance, effectiveness and performance of the board and its committees and the effectiveness and commitment of each director.

The Berkeley Group Holdings plc page 44

A review of the operation of the board, its committees and the skills of the directors was undertaken during the year. The process was led by the chairman. All directors completed the wide-ranging appraisal questionnaire and the results were reviewed by the board. The process confirmed the ongoing effectiveness of the board.

BG Group plc page 46

An evaluation of the performance of the board, its principal committees, the individual directors and the chairman, was conducted during the year. The board and committee evaluations were facilitated by the chairman and the chairmen of the board committees, and comprised a written questionnaire and a series of one-to-one interviews with board and committee members. The interviews covered a number of key areas including strategy, succession planning, board size and composition, risk management and the relationship between the board and management. The results of the reviews were then considered by the chairman and senior independent director and subsequently discussed collectively by the board as a whole.


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The performance of individual non-executive directors was evaluated by the chairman, with input from the committee chairmen and the executive directors. The evaluation of the chairman was led by Paul Collins, the outgoing senior independent director, and involved individual meetings with each of the executive directors, followed by a group review with the non-executive directors, excluding the chairman. The performance of the chief executive was evaluated by the chairman and non-executive directors. The performance of the chief financial officer was evaluated by the chief executive in consultation with the chairman and other non-executive directors. The directors have concluded that, following this evaluation, the board and its committees operate effectively and also consider that each director is contributing effectively and demonstrates commitment to the role.

BHP Billiton Limited page 134

The board is committed to transparency in determining board membership and in assessing the performance of directors. Contemporary performance measures are considered an important part of this process.

The board conducts regular evaluations of its performance, its committees, the chairman, individual directors and the governance processes that support board work. The evaluation of the board’s performance is conducted by focusing on individual directors in one year and the board as a whole in the following year. In addition, the board conducts evaluations of the performance of directors retiring and seeking re-election and uses the results of the evaluation when considering the re-election of directors. External independent advisers are engaged to assist these processes as necessary. It is thought that the involvement of an independent third party has assisted the evaluation processes to be both rigorous and fair. This year, there was an externally assisted evaluation of individual directors that started in the previous financial year. In addition, there was an internal review of the performance of the board as a whole (the previous board review was facilitated externally) and an internal review of each board committee to ensure they continue to satisfy their terms of reference. The review of the board as a whole indicated that the board is continuing to function effectively and in accordance with the terms of the board governance document.

The evaluation of individual directors focuses on the contribution of the director to the work of the board and the expectations of directors as specified in the group’s governance framework. The performance of individual directors is assessed against a range of criteria, including the ability of the director to:

consistently take the perspective of creating shareholder value contribute to the development of strategy understand the major risks affecting the business provide clear direction to management contribute to board cohesion commit the time required to fulfil the role listen to and respect the ideas of fellow directors and members of management.

The effectiveness of the board as a whole and of its committees is assessed against the accountabilities set down in the board governance document and each of the committees’ terms of reference. Matters considered in the assessment include:

the effectiveness of discussion and debate at board and committee meetings the effectiveness of the board’s and committees’ processes and relationship with management the quality and timeliness of meeting agendas, board and committee papers and secretariat support the composition of the board and each committee, focusing on the blend of skills and experience.

The process is managed by the chairman, but feedback on the chairman’s performance is provided to him by Dr Schubert.


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Black Rock World Mining Trust plc page 3

The board will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The nominating and governance committee will receive comments from all directors and report annually to the board with an assessment of the board’s performance. The assessment will focus on the board’s contribution to BlackRock and specifically focus on areas in which the board or management believes that the board could improve.

BP p.l.c. page 71

The principles stipulate that the performance and effectiveness of the board, including the work of its committees, should be evaluated annually. In 2008, this evaluation was undertaken internally with the use of a questionnaire. The questionnaire focused on areas including the conduct of meetings, activities of the board versus committees, monitoring and information and board support and built on the review of board operations and governance that had taken place in 2007. The main outcome of the evaluation was a requirement for a more systematic approach to ensure that the skills of the directors met the changing demands of the business and the environment in which it operates.

British Airways Plc page 57

During the year, each director privately met the senior independent director to review the performance of the board, its committees and the individual directors and chairman and the results were presented to, and considered by, the board. In addition, the chairman and non-executive members typically meet without any executives present at least twice each financial year.

British American Tobacco PLC page 85

The board conducts a critical evaluation of its activities on an annual basis. A questionnaire-based peer review of the performance of the chairman, the executive directors, the non-executive directors, the board and its committees is conducted by the company secretary. In 2008, this was followed by separate interviews between the company secretary and each director to allow a further opportunity to explore particular areas in more detail:

the results of the review of the committees and the board are discussed with the chairman and presented to the board

the results of the review of the individual performance of each director (excluding the chairman) are raised by the chairman with that director, as appropriate, and

the results of the review of the chairman’s performance are discussed by the non-executive directors without the chairman present and feedback is given by the senior independent director on a one-to-one basis.

The chairman also discusses the effectiveness and performance of directors immediately before they make themselves available for reappointment and, in addition, the remuneration committee evaluates the effectiveness of the chairman and the chief executive annually.

The process in 2008 confirmed that all directors considered the board to be working well, to be efficient and effective, and to have a good balance of the necessary skills required, although there was a general consensus that, with the forthcoming retirement of Thys Visser, a further non-executive director should be appointed in due course (this is currently being pursued – see above). The decision to split membership of the audit and CSR committees (see above) was also universally welcomed, and a review was suggested in 12 months’ time to see how the new structures are working. The


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non-executive directors were highly supportive of the executive team and expressed their appreciation of the culture of openness and transparency within the group. In particular, they welcomed their access to management below the level of the management board, most frequently at the regional audit and CSR committee meetings.

The notice for this year’s Annual General Meeting confirms that the performance of the directors being proposed for reappointment continues to be effective and that they continue to show commitment to their role.

British Sky Broadcasting Group plc page 55

During the year, the directors carried out a full evaluation of the performance of the board, its committees and individual directors. The evaluation consists of each director meeting individually with the chairman of the corporate governance and nominations committee. The evaluation confirmed that the board was satisfied with the board’s overall performance. The non-executive directors also meet separately without the chairman and executive directors present to evaluate the performance of the chairman.

BT Group plc page 56

The nominating committee considered options for an independent third party conducting the sixth formal evaluation in 2008, and, following board discussion, this was subsequently carried out by Egon Zehnder during February–April 2008 by way both of questionnaire and interview. The review focused on unlocking greater effectiveness rather than grading the past. Private sessions were held with each director and feedback was given to them individually.

The board considered the results of the review and agreed a number of recommendations. Progress has been made in implementing them; in particular, the membership of the nominating committee has been increased, the remuneration committee has simplified the structure of executive remuneration, customer segment strategies have continued to be discussed and more time has been set aside in board meetings for the discussion of customer service and the ‘right first time’ initiative. A further review was carried out by the chairman and secretary through a questionnaire and discussion with directors in April 2009. The results of the work are currently being considered and reviewed by the board and an action plan will be produced. The deputy chairman reviewed the performance of the chairman taking into account the views of the non-executive directors.

Separate questionnaires about audit committee effectiveness were also completed and the outcome of the review are (sic) in the report of the audit committee.

Bunzl plc page 5

The company has a formal performance evaluation process for the board, its committees and individual directors overseen by the chairman, Mr A J Habgood. This includes completion of self-assessment forms by, and individual discussions with, each director. Led by Mr J F Harris, the senior independent director, the non-executive directors also meet without the chairman present to appraise the chairman’s performance. These processes were carried out satisfactorily during the year. The chairman periodically holds meetings with the non-executive directors without the executive directors present. Finally, the chief executive, Mr M J Roney, annually presents a management succession plan which is discussed with the chairman and the non-executive directors.


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Burberry Group plc page 60

In each financial year since 2006/07, the board has undertaken a review of its performance and that of its committees and individual directors. In 2006/07, the evaluation was undertaken using an external facilitator and in 2007/08 and 2008/09 the process of evaluation was led by the chairman. The process for evaluation is reviewed on an annual basis.

In 2008/09, the evaluation was led by the chairman and involved holding a series of structured one-to-one interviews with each of the directors, together with the completion of a detailed questionnaire. The review considered the outcomes of previous evaluations, the current composition and responsibilities of the board and each of its committees, together with the frequency and structure of meetings. In addition, the review considered the contribution and effectiveness of the executive and non-executive directors.

Feedback from the review was considered and it was concluded that the board and its committees operate efficiently and effectively. As a result of this review, it was agreed that the board would dedicate more time to meeting with senior management worldwide to gain a more detailed understanding of the business.

The evaluation of the chairman, which was led by the senior independent director, was undertaken at a formal meeting of the non-executive directors

Cable & Wireless plc page 51

Since the last annual report, the board has undertaken its annual evaluation of performance including a review of the performance and membership of its principal committees. Unlike the previous year when an external facilitator was appointed, the board elected to undertake this year’s evaluation in-house, led by the chairman. The process included the completion of a detailed questionnaire by each board member together with private meetings as appropriate. The conclusions of the board evaluation, including a review of progress against points raised in previous years, were collated by the company secretary and then presented to, and considered by, the whole board.

During the year, the non-executive directors again met privately both with and without the chairman being present, to consider management performance and succession issues. The non-executive directors appraised the chairman’s performance and carefully reviewed the relationship between the chairman and the joint group managing directors to ensure that the board structure and relationships continued to promote the creation of shareholder value. As part of this evaluation the senior independent director met with executive directors to discuss their views.

Cadbury Schweppes plc page 61

During the year, with the assistance of an external consultant, Egon Zehnder, the board reviewed and evaluated its performance alongside those of its committees and individual directors. These reviews were conducted by way of detailed questionnaires that were completed by directors and followed by one to one interviews between directors and the external consultant. Feedback on individual directors was discussed with the chairman and this in turn was followed by private feedback meetings between the chairman and each of the directors. A report on the performance of the board as a whole and of the board committees was made to the board by the external consultant at a meeting in April 2008 and the issues arising debated and considered at length. A theme for development included the need to ensure continued board unity and effectiveness and to develop further the open and constructive lines of communication both within the board and between board and management that had proved successful during the year. Following these reviews the board and its committees concluded that they are operating effectively. Going forward, the board intends to continue to conduct evaluations annually employing the services of external consultants to assist the process where deemed appropriate.


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Cairn Energy PLC page 46

The board has a formal rigorous process of annual performance evaluation for the board, audit, nomination and remuneration committees and individual directors. The board reviews on an annual basis whether such performance evaluation should be conducted using an external resource. The board decided, however, that for 2008 there was value in conducting the process internally to develop an appropriately tailored approach and benefit first-hand from direct input from individual directors.

The performance evaluation of the board and the board committees was primarily based upon answers to a detailed questionnaire which had been updated since the previous year’s evaluation and which was prepared internally by the company secretary and chairman. The questionnaire was distributed to all board members and the company secretary. The areas covered in the questionnaire included the effectiveness of the board and board committees, performance against objectives, preparation for and performance at meetings and corporate governance matters. One particular area that the questionnaire addressed was the performance of those directors who are also non-executive directors of Cairn India in respect of the stewardship of that part of the group’s business. The questionnaire addressed all of the issues raised by the Higgs Review of the role and effectiveness of non-executive directors.

The review process carried out pursuant to the questionnaires can be summarised as follows:

Evaluators Chairman Executive directors Non-executive directors

Evaluating

Board Chairman Executive directors Non-executive directors Self-assessment

Once a questionnaire had been completed by each member of the board and the company secretary, the chairman held a meeting with each director and the company secretary individually, as appropriate to discuss their responses. The chairman then reported the results of the process to the board at a board meeting, which discussed the comments and implemented the conclusions. The board and board committees are satisfied that they are operating effectively.

The deputy chairman sought the views of the executive directors and met with each of the other non-executive directors, in the absence of the chairman, to discuss and assess the chairman’s performance. The results of this review were then discussed with the chairman. The board (not including the chairman) is satisfied that the chairman’s performance is effective and that he demonstrates continued commitment to the role.

The performance evaluation process indicated areas for improvement, which have been or are being implemented. Following the performance evaluations, the board believes that all of the directors’ performance (including those of Todd Hunt, Dr Mike Watts, Phil Tracy and Hamish Grossart, who are standing for re-election at the AGM) continues to be effective and that they demonstrate commitment to the role.

A performance evaluation of the board, the board committees and individual directors will continue to be conducted annually and the method for such review will continue to be reviewed by the board in order to optimise the process.


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The executive directors have their performance individually reviewed by the remuneration committee against objectives which are set annually. The bonuses payable to the executive directors under the company’s cash bonus scheme are linked directly to the results of these reviews.

Caledonia Investments plc page 62

The board conducts an annual formal evaluation of its performance and that of its committees and individual directors. For the year ended 31 March 2009, the evaluation of the board as a whole and of its committees was led by the chairman and was conducted by inviting individual board members to complete a questionnaire regarding the operation and effectiveness of the board as a whole and of its committees, the responses from which were collated by the company secretary and discussed. The evaluation of the performance of the chairman was led by the senior independent non-executive director and involved private discussion with other members of the board on his performance, the results of which were then considered at a meeting of the non-executive directors, without the chairman present, and also at a meeting of the governance committee.

The evaluation of the performance of the chief executive was undertaken by the chairman and the non-executive directors. The performance of the non-executive directors was reviewed by the chairman, the chief executive and the senior independent non-executive director, with the senior independent non-executive director absent in respect of his own performance appraisal. As part of this review, non-executive directors were invited to complete self-assessment questionnaires in relation to their own effectiveness. The performance of the executive directors, which included further consideration of that of the chief executive, was undertaken by the remuneration committee as part of the annual executive salary review process. The results of the evaluation of the board as a whole and of its committees for the year ended 31 March 2009 were presented in a report to the board.

The key actions that arose from the performance evaluation were that the board should be provided with more formal reporting on business risks, as well as financial risks, facing significant investee companies and that the governance committee should formally consider each year whether the influence of the Cayzer Concert Party on Caledonia’s board is in the general interest of the non-concert party shareholders and to confirm in the annual report that it has done so. The governance committee subsequently met to consider this issue and concluded that the Cayzer Concert Party’s influence on the board was in the general interest of the non-concert party shareholders.

The nomination committee reviewed the size, structure and composition of the board in the light of the report to the board.

Capita Group Plc page 65

An evaluation of board and committee effectiveness was conducted in 2008.The evaluation took the form of detailed questionnaires completed by each director in relation to the board and any committee of which they were a member at the time of the evaluation. The results of the evaluation were presented to the board in December 2008.The board concluded that the board and its committees continue to operate effectively.

The performance of individual executive directors is appraised annually by the chief executive, to whom they report. The performance of the chairman is reviewed by the non-executive directors, led by Martin Bolland, taking into account the views of the executive directors. The performance review of the chief executive is conducted by the non-executive chairman, taking into account the views of other directors. Non-executive directors’ performance is reviewed by the non-executive chairman, taking into account the views of other directors. The board considered, as it had in previous years, the merit of using an external body to manage the performance evaluation process. It concluded that it remained most appropriate for the company secretary and deputy company secretary to issue the questionnaires and collate and analyse the results.


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Carillion plc page 45

A detailed internal evaluation of the board’s corporate governance procedures and compliance was again conducted in 2008 by the chairman in conjunction with the company secretary. The internal evaluation took into account the views of each of the directors on:

(i) the role of directors(ii) the performance of the board, the chairman and the non-executive directors(iii) board committees(iv) leadership and culture(v) corporate governance(vi) directors’ remuneration(vii) relations with shareholders, and (viii) board accountability and audit.

The board at its meeting in November 2008 reviewed the results of the internal evaluation and, where required, issues were acted upon in order to further enhance the effectiveness of the board’s procedures and working practices.

This is the seventh year that this process has taken place and will be repeated annually as the board considers it satisfactory. In addition, reviews of the performance of each of the directors has taken place.

Carnival Corporation & plcNo information given.

The Carphone Warehouse Group PLC page 28

During the period the balance of skills, knowledge and experience of the directors was reviewed. The board, and each individual director, also undertook performance evaluations. Using the Higgs ‘Suggestions for Good Practice’ as guidance, the individual directors initially completed separate questionnaires. The results were collated for and analysed by the chairman, the senior independent director, the chief executive officer and the board as a whole. The areas covered included the roles of the executive and non-executive directors, the board, the board committees, the chairman of the company, preparation for and performance at meetings, the effectiveness of each director, leadership, culture and corporate governance. The results were then considered by the board as a specific item of business. The board intends that these exercises or similar ones continue to be carried out each year. Following such performance evaluation the chairman confirms that all those non-executive directors seeking re-election at the Annual General Meeting continue to be effective and demonstrate a commitment to the role, including having time to attend all necessary meetings and to carry out other appropriate duties.

The chairman meets regularly with all the independent non-executive directors usually in the evening prior to a board meeting. This provides the opportunity to raise any questions regarding the performance of the executive directors or in respect of any other matters.

The senior independent director also met with the non-executive directors, in the absence of the chairman, to assess the chairman’s effectiveness, having first reviewed the results of a performance evaluation questionnaire completed by all the directors apart from the chairman.

The board is of the opinion that the chairman had no other significant commitments during the period that would have affected his performance in his role.


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Catlin Group Limited page 72

The board is committed to ongoing improvement in its procedures and performance, and during 2008 implemented a variety of measures to achieve this. The board undertook a formal self-appraisal process involving a questionnaire, discussions and consideration of current governance best practice. The board also continued implementing recommendations adopted from previous performance evaluations and reviewed on an ongoing basis the quality, content and frequency of information being provided to it by the company. The self-appraisal process focused on the skill-sets of directors, the membership of the board and its committees, the level and quality of the board’s involvement in establishing group strategy, the board’s access to employees and information throughout the group, and the mechanisms to enable the board to monitor key performance indicators and achievement of the group business plan. Steps taken following the review included reconfiguration of the membership of the board committees, regular meetings of all non-executive directors in the absence of the executive directors, a rolling programme of presentations by executives on specific areas of risk and enhanced continuing professional development.

Other performance reviews undertaken during 2008 include:

a board review of the effectiveness of all board committees together with self-appraisals by each committee

performance appraisals of individual directors, and meetings between the senior independent director and the independent and non-executive directors, in

the absence of the chairman, to assess the chairman’s effectiveness.

The reviews were conducted through a combination of meetings and appraisal forms, and recommendations arising from these reviews were implemented during 2008. A similar process is being undertaken early in 2009. In November 2008, the board retained Independent Audit Limited, a third-party consultant, to conduct detailed performance assessments of the board and its committees. The output of that work will be considered – and to the extent deemed appropriate implemented – during 2009.

Centrica plc page 39

The board conducted a formal evaluation of its own performance and that of its committees and individual directors. The evaluation was carried out with the assistance of an independent external facilitator, Egon Zehnder International, in respect of the year ended 31 December 2008.

The 2008 board evaluation process followed up on the previous year’s effectiveness review and the board considered whether sufficient improvements had been made on the identified issues. The 2008 board evaluation focused on the following key themes:

board structure, organisation and dynamics efficiency and effectiveness strategic review and debate risk management and governance review of specific decisions made in 2008 business performance people, and key issues for 2009.

The facilitator carried out the evaluation process using a comprehensive questionnaire, which was considered and completed by each of the directors and the general counsel and company secretary. In addition, to this, the senior


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independent director chaired a meeting of the independent non-executive directors in the absence of the chairman to appraise the chairman’s individual performance.

A consolidated report of the output from the evaluation exercise was prepared by the facilitator and this was presented to the board for review and consideration.

The evaluation report concluded that the board and its committees continue to operate effectively although a small number of actions and improvements were identified. In particular, the board identified the following enhancements, which will be incorporated into the future board programme to ensure that the operation of the board and its committees continue to improve:

greater visibility of senior management by the board greater focus on global issues and succession in North America site visits, and post investment reviews.

The chief executive’s performance is reviewed regularly by the chairman and the chief executive reviews the performance of the other executive directors. In addition, the remuneration committee assesses the performance of the executive directors in connection with its determination of senior management remuneration levels as explained in the remuneration report.

The board and its committees will continue to review critically their procedures, effectiveness and development throughout the year ahead.

Charter plc page 46

Evaluation of the board and its principal committees is conducted by gathering feedback from the relevant members of the board and committees on a questionnaire prepared internally, the results of which are collated and presented to the board by the chairman. In addition, the chairman holds a number of meetings with individual directors to consider their comments and general impression of the performance of the board and the committees. The chairman is responsible for conducting the performance evaluation of the chief executive. The non-executive directors, led by the senior independent director, are responsible for evaluating the performance of the chairman and in doing so take account of the views of the executive directors. The chief executive conducts individual evaluations of the executive directors against a number of pre-agreed performance objectives.

The results of the questionnaires and the individual meetings were summarised in a paper submitted to the board by the chairman on 9 December 2008. This considered the areas that the directors identified for improvement and set out the manner in which these were to be addressed going forward. The board was unanimous in its agreement with the chairman’s assessment that the board, its committees and individuals continued to be effective.

Chemring Group PLC page 48

A full evaluation of the performance of the board and its committees was undertaken during the year. The process adopted involved each of the directors considering a structured questionnaire, the responses to which were discussed at a full board meeting. In addition, the chairman and the non-executive directors considered the individual performance of the chief executive and the finance director as part of the annual remuneration review. Similarly, the performance of the chairman was considered by the non-executive directors during the annual review of his remuneration, and the chairman and the chief executive reviewed the performance of the non-executive directors. No significant issues were identified but minor areas for improvement are being addressed.


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Close Brothers Group plc page 29

The board conducts a formal and rigorous performance evaluation each year to assess its own performance and that of its committees and individual directors. The process is led by the chairman, who is supported by the company secretary.

During the year, the board agreed that it would benefit from its first external board effectiveness review. Boardroom Review was appointed to carry out the independent evaluation following a selection process. Boardroom Review provides no other services to the board and/or the group.

The comprehensive nature of the review fulfilled the Combined Code requirements for the evaluation of the board, its committees and the individual directors and took the form of one-to-one meetings between the external assessor and each director plus the completion of a confidential questionnaire. Results from the evaluation were collated by the assessor and considered by the chairman and chief executive. Feedback was subsequently presented to the full board in July 2009 and discussed by the board as a whole.

Overall, the conclusions from the evaluation were positive and identified a number of board strengths. However, in order to ensure continuous improvement a number of action points were identified for implementation which included:

the introduction of a strategic away day to the board calendar increased informal board time and communication between scheduled meetings, and the introduction of a structured approach to board development including the development of a rolling

schedule of board training.

These initiatives will be developed during the course of this financial year and a board strategy away day is already being planned for Autumn 2009.

In addition, to the independent board evaluation process, the senior independent director led a separate performance review in respect of the chairman which involved a review with the non-executive directors (excluding the chairman) and separate consultation with the chief executive. The senior independent director subsequently provided feedback to the chairman on his appraisal.

Cobham plc page 38

The principal board committees and the board evaluated their own performance during 2008. In addition, the performance of individual directors was considered by the former chairman and the chief executive. The reviews involved the use of structured questionnaires, the results from which were discussed at a meeting of the board in June 2008. For the current year, the board has commissioned a thorough and objective evaluation of its own performance and that of individual directors and of the audit, remuneration and nomination committees using an external evaluator.

Colt Telecom page 37

The effectiveness of the board is vital to the success of COLT. During 2008 the board undertook its annual evaluation of its performance and that of its committees and their continuing ability to act as effective bodies. The process is managed by the chairman and the company secretary. The SID led an assessment of the chairman’s performance. A detailed online questionnaire was completed by all board members to facilitate the evaluation process. The results were collated by an external agency. The chairman and company secretary discussed individual responses with board members. The SID discussed the conclusions of the chairman’s appraisal with the board, then chairman. Summary results were presented to the board for discussion and to identify improvements for the future.


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Questions were both qualitative and quantitative designed to generate a detailed narrative response and to enable the board to measure trends. Comments were invited on a wide range of issues including the contribution of the board to strategy and risk management, management reporting, the decision making process, the logistics of board meetings, the composition and operation of the board and progress on issues raised in the previous year’s evaluation. Particular attention was paid to issues raised by shareholder activists relating to independence and the inclusion of fidelity-related directors. To supplement the formal annual evaluation the nomination committee conducted an assessment of skill sets and competencies as described on page 36. As recommended by the Combined Code the reviews of directors serving for more than six years were particularly rigorous. Following this comprehensive review the board has concluded that each director contributed effectively to the board and demonstrated full commitment to the role and that the board and each of the board committees were effective.

Compass Group PLC page 46

The chairman has addressed the developmental needs of the board as a whole, with a view to developing its effectiveness as a team and assists in the development of individual skills, knowledge and expertise. During 2008, the board conducted a detailed evaluation of its own performance and that of the audit, nomination and remuneration committees by means of a written questionnaire. The evaluation focused on several areas, including board structure, functionality, objectives, meetings (and their content), administration, risk management, access to management and governance. The results of the evaluation were considered and discussed by the board and the results have been used to re-assess effectiveness during the year. One specific requirement which was identified in 2008 was the need to widen the non-executive experience on the board with an individual who had suitable international and strategic experience. This led to the appointment of Don Robert in May 2009.

Performance evaluations, including the skills brought to the board and the contributions each director made to it, were carried out for each director. Executive directors’ performance has been assessed by the chairman and the group chief executive. The group chief executive’s performance was evaluated by the chairman and the non-executive directors. The senior independent non-executive director led the review of the chairman’s performance in consultation with the executive and non-executive directors. The non-executive directors’ performance was considered by the chairman and by the group chief executive, as well as by the board as a whole, which re-assessed the results of the questionnaires referred to above.

Croda International Plc page 35

The annual self evaluation exercise was carried out under the supervision of the chairman to arrive at an assessment of the effectiveness of the board, the chairman and each of the committees. The exercise employed a questionnaire completed by each board member. A summary of the results was then presented to the board for discussion. The chairman also discussed some comments separately with individual directors. The outcome will be continuing focus during 2009 on succession planning for, and the development of, senior personnel and a further review of the remuneration policy for senior executives.

Daily Mail & General Trust plc page 43

The board has undertaken its annual evaluation of its own performance and that of its individual directors. It reviewed its performance by reference to the schedule of matters reserved for it. The evaluation process took the form of a questionnaire sent to each director, seeking their views on progress made on vision and strategy; board meetings and communications; fellow directors; consideration of directors views; and has solicited other comments. The chairman reported the consensus view on performance to the board at its meeting in September, enabling it to conclude that it had been effective in the year under review. No changes to procedures were judged necessary.


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Dana Petroleum plc page 38

To comply with the provisions of the Combined Code and in an effort to strive for continual improvement in the effectiveness of the board, its committees, and the individual board members, the company has an evaluation process based on individual questionnaires.

De La Rue plc page 54

The board and each of the nomination, remuneration and audit committees carried out an evaluation of their performance during the year. The risk committee was evaluated by the board. The process involved completion of questionnaires which focused on process, structure, behaviours and key issues, such as strategy and succession, against delivery of the board’s objectives and addressing any issues identified during the previous review or which became relevant during the year.

The chairman and each committee chairman had discussions with each director or committee member based on the responses and each director’s own views regarding effectiveness of the board or committee as a whole and the individual director’s performance. The senior independent non-executive director was responsible for appraising the chairman’s performance in meetings or discussions with the non-executive directors in the absence of the chairman. The chairman and the non-executive directors also met in the absence of the executive directors. The results were discussed by the board and individual committees and the final report highlighting any areas for improvement agreed by the board in May 2009.

Debenhams plc page 44

A formal evaluation of the performance of the board, its committees, the individual directors and the chairman was conducted during the year in order to review past performance and to develop future performance. The performance of the internal and external auditors was also evaluated.

Use of an external body to manage the performance evaluation process was considered. However, the board concluded that the approach followed last year remained appropriate and cost efficient for the company. Consequently, as in previous years, a confidential questionnaire was completed by all directors in relation to the board and any committee of which they were a member. In addition, the chairman completed questionnaires on each individual director. The questionnaires seek to establish whether the group or individual was contributing effectively to their role and to also determine their commitment to the role. The senior independent director appraised the chairman’s performance.

The results of the evaluations were collated by the company secretary and analysed in detail by the chairman, the chairman of the relevant committee, the senior independent non-executive director and the company secretary. The chairman led the full board in a discussion about the results of the evaluation and a similar session took place in respect of each committee led by the committee chairman. The evaluation concluded that the board operates well and that the board committees operate effectively. In particular, the structure of the board is now more suitable for that of a public company. The discussions have led to further adjustments to the method of agenda setting, allocation of more time on the board agenda for non-operational matters and for a more structured follow up of action items arising from board meetings.


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Derwent London plc page 67

During 2008, the nominations committee carried out a formal appraisal of the performance of the board and its committees. The remuneration committee performed appraisals of each of the executive directors, as part of the salary review process. The performance of the chairman was evaluated by the non-executive directors under the chairmanship of the senior independent director. All of the appraisals were conducted internally using questionnaires based on the guidance contained in the Higgs Report.

Diageo plc page 87

During the year, the board, audit committee, nomination committee and remuneration committee each undertook a formal evaluation of its own performance and effectiveness and reviewed its terms of reference. Internally produced questionnaires were used for the performance evaluation process. The board questionnaire included: the extent to which the group’s strategy was clear, viable, understood and communicated; the effectiveness of the board in monitoring the implementation of the group’s strategy, and in assessing the operating and financial performance of the group; the structure/composition of the board and its committees in terms of mix of knowledge, experience and skills; the performance of the committees; how effectively the internal board relationships were working; how well the board related to the business; how well the board had responded to the unforeseen and rapid changes in the economic environment; the processes for formulating strategy and the effectiveness of the annual strategy conference; the effectiveness of board meetings; and how well informed the board was of business activity. The board concluded that appropriate actions had been identified to address areas that could be improved and that the board and its committees continued to operate effectively.

The performance of each director, who met individually with the chairman, was evaluated by the chairman based on input from the other directors. The chairman’s performance was evaluated by the directors, using an internally produced questionnaire which was completed and returned to the senior non-executive director, who discussed the feedback in a meeting with the non-executive directors and then privately with the chairman. A report on the individual performance evaluation process was given to the nomination committee. Following the performance evaluation of individual directors, the chairman has confirmed that the non-executive directors standing for re-election at this year’s AGM continue to perform effectively and demonstrate commitment to their roles. It is the board’s intention to continue to review annually its performance and that of its committees and individual directors. A decision is taken each year on the performance evaluation process to be used. In respect of the coming year’s evaluation process, no decision has yet been made whether to continue with the same method of internal evaluation or to engage an external facilitator.

During the year the remuneration committee commissioned an independent evaluation of its own effectiveness. This evaluation was carried out by Deloitte and covered the role of contributors, process, topics covered on the annual agenda, papers produced and the quality of decisions. The committee noted the areas highlighted and will keep them under review.

Dimension Data Holdings plc page 48

A formal performance evaluation of the board, its non-executive directors and committees is conducted annually by means of a series of self evaluation questionnaires based on the Combined Code, with the aim of evaluating and improving effectiveness of the board, its committees and individual contributions. Results of the evaluation identify potential knowledge and skills gaps on the board or its committees and provide a basis for continuous improvement of the board’s procedures and objectives for the following year. Non-executive directors review the leadership and performance of the chairman.


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Performance of the executive directors is evaluated annually using the performance management system implemented throughout the group, with the chief executive officer reviewing the executive directors’ performance and the chairman reviewing the chief executive officer’s performance. Based on the annual evaluations undertaken in September 2009, the board is satisfied that all directors are committed to their roles and that the board and its committees are effective.

Drax Group plc page 44

The effectiveness of the board is vital to the success of the group. During the year, the company undertook a review to assess the performance of the board and its committees. In addition, a review of individual director’s performance was facilitated by Corporate Partners, a consultancy specialising in providing assurance to listed companies on best practice in company regulation and corporate governance.

The directors and company secretary each completed questionnaires on the board and committee performance and on the performance of each individual. Summarised reports were presented to the board, and individual reports were presented to the chairman (with a report on the chairman presented to the senior independent director). Individual feedback sessions were later conducted by the chairman, and by the senior independent director in relation to the chairman. The conclusions were that the board and its committees were effective and performance compared well with that of other companies, and that each director continued to perform effectively in their role.

As stated in its report on pages 49 to 57, in February 2009, when deciding the executive directors’ bonuses for 2008, the remuneration committee also evaluated the performance of each of the executive directors, against both corporate targets and personal objectives. This evaluation was informed by the results of a confidential survey of senior managers’ opinions, which also covered the chairman. The results of this survey were fed back to relevant directors.

During the year, the chairman held meetings with the non-executive directors in the absence of the executive directors as required by provision A.1.3 of the Combined Code.

The board is committed to the development of all employees and directors and has reviewed and will periodically again review each individual director’s development requirements and make appropriate arrangements to address them. All new directors receive an induction, including information about the company and their responsibilities, meetings with key managers and visits to the company’s site. In addition, specific board training days are arranged involving presentations on relevant topics.

DSG International plc page 45

The board, with the assistance of the nominations committee, conducted an annual assessment of the board, committees and individual director performance between April and July 2008 and reviewed the performance of the non-executive directors, the board and its committees again later in the year. During both of these reviews, the board concluded that the balance of skills and experience of the board and its committees was appropriate for the requirements of the group. However, it was decided that to facilitate succession planning the board should undertake a search for an additional non-executive director in addition to the chairman designate. The new chairman plans to evaluate the performance of the executive directors in early 2010 once he has had an opportunity to work with the board for a period of time.

Easyjet plc page 41

During the year, the Interim chairman undertook a performance review of the board using an external evaluation tool provided by a corporate advisory company. The process involved a detailed questionnaire completed by each of the directors, one on one discussions with individual directors and a separate review of the outcome by the full board in a


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plenary session. The performance of the board (including the Interim chairman), the board’s committees and also that of the individual board directors was reviewed as part of the same process. The board considered that given the short period of time for which Sir David Michels had held the position of Interim chairman it would not be appropriate to have his performance reviewed as chairman by the senior independent non-executive director prior to 30 September 2009.

Eurasian Natural Resources Corporation PLC page 60

As 2008 was the first full year in which the board worked together, the decision was taken to appoint an external consultant to carry out the first annual board evaluation. This was facilitated by means of an in-depth structured interview with each director. Questions focused on the operation of the board and its committees, the contributions of individual directors and a review of the chairman’s performance. The results of the review were then considered with the chairman and subsequently discussed collectively by the board.

The board was satisfied that considerable advances had been made during the first year of working together but additional progress was to be expected over time. There will be additional follow-up meetings during the early part of 2009 to ensure that further improvements in effectiveness are implemented during the year and in 2010.

The non-executive directors, led by Sir Richard Sykes as senior independent director, carried out an evaluation of the chairman.

Experian plc page 52

The effectiveness of the board and its committees is vital to the success of the group and the company undertakes an evaluation each year in order to assess how well the board, its committees, the directors and the chairman are performing.

Following the independent review last year, this year’s board and committee reviews were conducted ‘in-house’ and were led by the chairman with the support of the company secretary. All directors completed an online questionnaire evaluating board processes, effectiveness and where improvements may be considered. The questionnaire contained a range of questions and included free text boxes for additional comments. A report on the findings was presented to the board and the board and the nomination committee discussed the feedback received which included suggestions relating to board composition and induction and training. Positive comments were made around the progress that the board has made since the company’s listing in October 2006, the effectiveness of the board and the relationship that exists between the board and senior management. The principal board committees also undertook an evaluation exercise which was similar in structure to the board evaluation. The feedback from those evaluations was discussed at the respective meetings of the principal committees.

The performance of the chairman was also reviewed and took into account the views of both the executive and non-executive directors. The chairman’s evaluation was managed by the senior independent director who provided feedback to the chairman. As part of the chairman’s evaluation, the non-executive directors met separately under the chairmanship of the senior independent director.

The executive directors were evaluated in respect of their duties through a separate process whereby the chairman assessed all of the directors, having obtained feedback from the other directors.

Following the reviews, the directors have concluded that the board and its committees operate effectively. Additionally, the chairman has concluded that each director contributes effectively and demonstrates full commitment to his/her duties.


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Ferrexpo plc page 39

A process of evaluation of the board and its audit and remuneration committees has been conducted by the chairmen of these bodies. All directors and committee members completed a questionnaire and the results have been analysed and discussed by those concerned. The senior independent director and the other non-executive directors have evaluated, and will continue to monitor, the performance of the chairman.

First Group plc page 31

During the course of the year, the board undertook an evaluation of its performance. The chairman led the process, assisted by the company secretary. The objectives of this exercise were to ensure that the board, its committees and each individual director continued to act effectively and to fulfil the duties and responsibilities expected of them, and also to identify any additional training requirements. A tailored questionnaire was developed, which each director completed. The responses were analysed and discussed at a meeting of the board. The senior independent non-executive director led a process of evaluation of the performance of the chairman. No significant issues were raised in the course of the evaluation process.

F & C Asset Management plc page 39

A comprehensive and rigorous evaluation of the performance of the board, its principal committees and the chairman was conducted during the year. The board evaluation was carried out with the assistance of the company secretary and was led by the chairman. The procedure adopted was for each director to complete a detailed questionnaire, on a non-attributable basis, on their perception of the composition, operation and effectiveness of the board and its committees. Each director was then interviewed by the chairman in order to explore certain issues in greater depth and to identify areas requiring improvement.

The results of the review were then considered during one-to-one discussions with the chairman and collectively at a board meeting as well as at the relevant committee meetings.

This process confirmed that areas of weakness highlighted in the prior year had been satisfactorily addressed and that the board was functioning effectively. One significant area identified for improvement in the year ahead is strengthened executive director succession planning. The aim is to ensure continuous improvement in board processes and procedures. The non-executive directors also met separately, under the chairmanship of the senior independent director, to discuss the performance of the chairman and provide him with collective feedback.

During the year the chairman, in consultation with the nomination committee, performed an evaluation of the skills each board member brings to the board and created a skills matrix that was presented to the nomination committee and the board for use in identifying professional development requirements and succession planning.

Fresnillo plcCode Provision A.6.1: Board evaluation has not yet been undertaken. Most of the directors were only appointed between April and July 2008 and, in view of this, the board believes that a meaningful evaluation can only take place once the new board has had a reasonable amount of time to work together. A board evaluation process will be developed and implemented during the second half of 2009.


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G4S plc page 34

An external consultancy was appointed by the board to conduct an evaluation of the performance of the board as a whole, each of the directors individually and the board’s committees. Reports from the consultancy have been considered by the board, the chairman and by each committee and a number of areas for improvement have been identified and actions agreed. As a result the remuneration committee has scheduled an extra meeting, both the board and the audit committee will have greater contact with senior managers from around the group and the board will increase its focus on a number of matters including, amongst other things, oversight of risk management and executive succession management. The chairman held meetings with the non-executive directors without the executives present and a review of the performance of the chairman by the non-executive directors, without the chairman present, was led by the senior independent director.

GKN PLC page 55

The board has undertaken its annual formal evaluation of its own performance and that of its committees. The process involved each director, as well as other attendees of board committee meetings, completing a detailed questionnaire covering issues such as board remit and objectives; composition, training and resources; corporate governance; stakeholder engagement; board meetings, visits, procedures and administration; committee terms of reference and other specific committee-related questions. The results of the evaluation and recommendations for improvements were reported to the relevant committees before the board as a whole agreed appropriate changes. These were minor and included changes to the modus operandi of the chairman’s committee and procedural matters relating to board meetings. It was also agreed to review annually the quanta of delegated authorities.

The individual performance of the directors was also evaluated through one-to-one interviews with the chairman. To assist this process, a number of assessment areas were identified in advance and used as a framework for conducting the appraisal interviews. Sir Peter Williams, as senior independent director, led the review by the non-executive directors of the chairman’s performance, which took into account the views of the executive directors. Similarly, the views of the other directors were taken into account by the chairman in his review of the chief executive’s performance. No actions were considered necessary as a result of any of these evaluations.

GlaxoSmithKline PLC page 68

In previous years the evaluation of the performance of the chairman, the board, its committees and directors has been undertaken by the SID, in collaboration with the committee chairmen. In 2008, the board engaged Dr Long of Boardroom Review to act as an independent facilitator for the board evaluation process.

The process included a tailored questionnaire, a one-to-one interview with each director and the company secretary, observation of the board and committee meetings held in December 2008 and a review of associated papers. The questions covered a variety of aspects associated with board effectiveness including board and committee roles and responsibilities, culture and dynamics, processes and support and individual effectiveness. Feedback from the review was provided in the form of a written report and presentation to the board, which then discussed its findings.

The review concluded that the chairman, the board and its committees were operating effectively to a high level. The board agreed the following actions to generate more inclusive engagement with the executive management team and further improve its collective decision making process:

identify how to utilise the time spent in board and committee meetings more effectively and facilitate further contribution by non-executive directors on a broader range of issues


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seek to enhance further the non-executive directors’ continuing education process beyond their initial induction

provide greater visibility to the board of GSK’s executive talent and the management succession planning process

The board members also met separately, without the chairman being present, to discuss the chairman’s performance and contribution. It was agreed during this meeting that the chairman was performing well and had the unanimous and unequivocal support of the other directors, both executive and non-executive.

Great Portland Estates plc page 51

The board undertakes a formal internal evaluation conducted by the senior independent director of its own performance and that of its committees and individual directors annually, alternated with an evaluation, at least every fourth year, conducted by external consultants. This year, the performance evaluation was undertaken internally and involved each director, including the chairman, completing a comprehensive questionnaire and then having one-to-one interviews with Kathleen O’Donovan as the senior independent director assisted by Desna Martin as the company secretary. The process covered board, committee and personal performance and the output: the results of the questionnaire; a summary of the interviews; and the recommendations and actions required, was reviewed at the 1 April 2009 board meeting as part of a wider corporate governance review. Overall, it was concluded that the board and its committees continued to operate effectively with appropriate procedures put in place for minor areas identified for improvement.

Greene King plc page 83

The board believes it is appropriate to undertake a regular performance evaluation of the board, its committees and individual directors. It has determined that an internal process of evaluation is most appropriate, to enable first-hand input from individual directors to be obtained. The last evaluation exercise was undertaken in March 2008 and it is the board’s intention to conduct such reviews approximately every 18 months. No formal evaluation exercise was therefore undertaken during the 2008/9 financial year. The board is, however, satisfied that an open dialogue exists between all board members enabling issues to be raised and dealt with as they occur rather than waiting for the next formal evaluation process, and accordingly believes that it and its committees are operating effectively.

The performance of the executive directors is reviewed annually by the remuneration committee in conjunction with their annual pay review and the payment of bonuses. The performance of Tim Bridge, chairman, was reviewed by the non-executive directors, led by Norman Murray, the senior independent non-executive director, taking into account the views of the executive directors.

Halma p.l.c page 48 The board evaluates its performance and that of the remuneration, audit and nomination committees at least annually. Each year, we consult the board to determine whether an external facilitator would enhance our process. To date, we have concluded that the current, open climate that the board enjoys ensures a full and frank discussion of all matters, so an external facilitator is unnecessary. For 2008/09 the evaluation commenced with an updated self-assessment questionnaire, the results of which were compiled by the company secretary and discussed by the board at the February 2009 board meeting. The board also met in February 2009, separate from any scheduled meeting, for a general discussion on board effectiveness followed by a meeting of the executive directors with the chairman, a meeting of the chairman and non-executive directors, and then a meeting of the non-executive directors without the chairman present. The outcomes of these meetings were then fed back to individuals by the chairman, senior independent director or chief executive, as appropriate. Overall, our process confirms that the blend of behaviours and skills around the Halma board table are well suited to the task and consistent with group values. With a board that is free to openly express concerns comes more considered outcomes emphasising collective responsibility, transparency, clarity and sustainable conduct.


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Hammerson Plc page 36

The effectiveness of the board and its committees is vital to the success of the company and they therefore monitor and evaluate their own performance and the contribution made by individuals. In particular, the contribution of John Clare, who retires having been a director for more than ten years and who seeks re-election at the Annual General Meeting has been fully considered by the board. The board has concluded that he remains independent and makes an effective contribution to the board as senior independent director and to the committees on which he serves and that he continues to demonstrate commitment to these roles. His commercial experience has been particularly valued.

An external evaluation of the board’s effectiveness and procedures, and those of its committees, was undertaken in 2007. During 2008, a further evaluation was undertaken by the company secretary. This evaluation concluded that the board and its committees were operating effectively.

The chairman meets as necessary, but at least once each year, with the non-executive directors without executive directors present. The senior independent director, having first sought the views of executive directors, chairs an annual meeting of non-executive directors without the chairman in order to appraise his performance and to provide an opportunity to address any other matters which the non-executive directors might wish to raise.

Hargreaves Lansdown Plc page 24

Individual appraisal of each director’s performance is undertaken either by the chief executive or chairman each year and involves meetings with each director on a one-to one basis. The non-executive directors, led by the senior independent director, carry out an appraisal of the performance of the chairman.

Hays plc page 47

An external review of the board’s effectiveness and the effectiveness of its committees was undertaken in 2007 by Egon Zehnder. In 2008 and 2009, the board conducted its own reviews. The findings of the 2009 review have been considered by the board and certain actions will be implemented as a result. The chairman has met with the non-executive directors individually, without the executive directors being present, to consider the findings of the review. The senior independent director has also met with the other non-executive directors to review the chairman’s performance, having consulted with the executive directors. This has enabled constructive feedback to be given to each director. As part of the review, the effectiveness of the remuneration, audit and nomination committees was also considered. The audit committee also undertook its own separate review reported on page 53. Following the review, the chairman is satisfied that each of the directors being put forward for re-election at the forthcoming Annual General Meeting continues to be effective, that their ongoing commitment to the role is undiminished and that each non-executive director being put forward for re-election continues to be independent.

Henderson Group plc page 17

The directors conducted a formal evaluation of the performance of the board, board committees and individual directors (including the chairman) during the period from September to November 2008. As Roger Yates had given notice of his resignation on 28 August 2008, and was succeeded by Andrew Formica as the company’s chief executive on 5 November 2008, neither of these directors took part in this exercise. Furthermore, Tim How joined the board after the evaluation exercise had been completed.

The evaluation exercise regarding the board and board committees involved directors completing a questionnaire about board composition, board process, group strategy and shareholders; a similar approach was followed for each committee.


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The results of the evaluation were collated and presented to the board, which then decided what changes it would make to the way it operates, including an assessment of the changes which have been implemented to ensure that the company continues to be tax-resident in the Republic of Ireland.

With regard to the evaluation of individual directors, the chairman held a formal evaluation meeting with each of the other non-executive directors and the chief financial officer, taking into account the views of the directors who had completed a questionnaire about the skills and experience of the members of the board. The chairman’s own performance evaluation was led by the senior independent director. This involved the directors completing a questionnaire, which focused upon the chairman’s performance. In addition, the chairman conducted a self-evaluation which was disclosed to the senior independent director. After taking account of the results of these questionnaires, the senior independent director then met with each director (excluding the chairman) and evaluated the chairman’s performance. The senior independent director later agreed his findings at a meeting with only other non-executive directors present (excluding the chairman) and then met with the chairman to discuss the outcome of the evaluation.

As a separate exercise, the performances of Roger Yates and Andrew Formica, as the chief executives of Old Henderson Group plc and the company respectively in 2008, were evaluated by the chairman and the remuneration committee. The evaluation of the senior executives reporting to the chief executive was undertaken by the chief executive and the remuneration committee. The performance evaluations were conducted in accordance with the process disclosed on the company’s website.

To ensure that the directors continually update their skills and their knowledge of the company, all directors receive regular presentations on different aspects of the company’s business and on financial, legal and regulatory issues. For example, during the year, the board received regular presentations on what Henderson has done to embed the principle of ‘treating customers fairly’ into its business, together with detailed legal briefings in respect of directors’ responsibilities regarding the prospectus (dated 4 September 2008), the duties and responsibilities of being a director of a Jersey company, as well as a refresher briefing on the duties and responsibilities of being a director of a listed company. In addition, Andrew Formica and Tim How, as newly appointed directors, have each received further training as part of their induction. As a result, the directors have concluded that the board and its committees operate effectively and that each director contributes to promoting the overall success of the group.

Heritage Oil Limited page 36

Board evaluation has not yet been undertaken due to the short time elapsed since listing. The board believes that a meaningful evaluation can only take place once the board has had a reasonable amount of time to work together. A board evaluation process will be developed and implemented during the next year

Hikma Pharmaceuticals PLC page 73

As required by the Combined Code, a formal evaluation of the performance of the board, the chairman, the committee chairmen and the individual non-executive directors was undertaken during the period under review.

The evaluation process was led by the senior independent director, who met with each of the directors and the committee chairmen to undertake a formal appraisal of the performance of the board, its committees and each of the individual directors. These discussions focused on board and committee performance, membership, timetabling, internal and external support, the quality and timely availability of relevant board information and the contribution of, preparation for and performance by individual directors at board and committee meetings. The results of the evaluation process and feedback were reviewed with the chairman and formed part of his appraisal of the overall effectiveness of the board and its members. Overall the review concluded that the board functions well, with good communication, and with issues raised in good time to allow for consultation, debate and effective decision-making.


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In addition, to the matters set out above in respect of all directors, the senior independent director met with the non-executive directors to undertake a formal appraisal of the performance of the chairman. This review also addressed the effectiveness of his leadership, the setting of the board agenda, communication with shareholders, internal communication and board efficiency.

Hiscox Limited page 34

During the year, the chairman led a review of the performance of the board as a whole. The non-executive directors met with the chairman to discuss a wide range of issues, including the performance of the executive directors. In addition, the non-executives met without the chairman and the executive directors during the year. The performance of the executive directors and the chairman was discussed. No major issues regarding the performance of the board were raised in these discussions.

The chief executive held one-to-one meetings with each of the executive directors to discuss their performance over the year and to set targets for the year ahead.

Hochschild Mining plc page 47

As the board undertook a process to evaluate its performance, the performance of its directors and of its committees in the latter part of 2007, it was not considered necessary for an evaluation of similar scope to be conducted in 2008. Accordingly, an evaluation focusing on the workings of the board was carried out during the year under review.

In keeping with the previous year, the evaluation was conducted through the use of questionnaires which were designed to gauge the board’s view on, amongst other things, the composition and workings of the board. Directors were also given the opportunity to suggest how current practice could be amended to allow the board to function more effectively. The findings were considered by the chairman and the senior independent director and a number of recommendations arising from the process were considered and approved by the board. The recommendations principally relate to board composition, contingency planning in respect of the chairmanship and implementation of the group’s strategic plan.

As the board did not consider that a detailed evaluation of individual directors’ performance was necessary, an evaluation of the chairman’s performance was not carried out during the year.

Home Retail Group plc page 55

A formal evaluation of the performance of the board and its committees was conducted during the year. The functioning of the board, board processes and interaction with management were discussed and opportunities for improvement were considered. In addition, the audit and remuneration committees conducted internal reviews of their effectiveness, taking into account the views of senior management working with these committees. Individual appraisals of directors have been undertaken by the chairman. Under the leadership of the senior independent director, the non-executive directors met without the chairman present to appraise the chairman’s performance, taking account of any views expressed by the executive directors.

Homeserve PLC page 45

The board has implemented a formal process for reviewing its own effectiveness, that of its remuneration and audit committees and its individual members. In addition, it continued to ensure that regular meetings of the non-executive directors were held without the executive directors, and at least once a year, without the chairman present, in order to


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evaluate his performance. The evaluation process, which was conducted by the chairman and company secretary, was concluded in March 2008. Directors completed evaluation questionnaires, and attended one-to-one meetings with the chairman and company secretary to discuss the existing and future needs of the board, its composition and the skills of its members. A formal written report summarising their views and containing recommendations to further improve the effectiveness of the board and its committees was prepared by the company secretary and reviewed by the whole board in March 2008. The board concluded that it and the committees reviewed operate effectively, although a number of recommendations for further improvement were approved. Meetings with the chairman to discuss feedback relating to the effectiveness of individual directors took place in April 2008. Following this, a further informal review was undertaken in summer 2009 by an external consultant to explore in more detail certain aspects of the feedback. The results of this external review were considered by the board in January 2009.

HSBC Holdings PLC page 293

In November 2008, ICSA Board Evaluation Ltd was commissioned to assist S K Green, group chairman, in conducting an evaluation of the effectiveness of the board. This followed ICSA’s evaluation of the board in 2007. His evaluation investigated the performance of the board as a whole and, in that context, the main board committees and individual directors. The evaluation examined whether eight key areas met the board’s needs and expectations: board role and responsibilities; oversight; board meetings; information received; support for the board; board composition; working together; and outcome and achievements. The report on the evaluation has been reviewed by the board and has been used by the non-executive directors, led by the senior independent non-executive director, in their evaluation of the performance of the group chairman. The review concluded that the board and its committees were functioning effectively. It is the intention of the board of HSBC Holdings to continue to review its performance and that of its directors annually.

Icap plc page 48

During the year the board evaluated its performance and that of its committees and individual directors. This was done by way of a questionnaire which was completed by each director to evaluate effectiveness and accountability and by individual meetings with the chairman. The collective results were then discussed by the board with actions agreed.

The board has considered and agreed that each of Michael Spencer and Mark Yallop, who are standing for re-election at the Annual General Meeting, continue to perform effectively and to demonstrate commitment to his role.

IG Group Holdings plc page 29

The board recently commissioned the board evaluation team of the Institute of Chartered Secretaries and Administrators (‘ICSA’) to carry out a thorough evaluation of the performance of the board. ICSA’s board evaluation report (the ‘report’) has found that the performance of the board is towards the upper quartile of public company boards generally. It acknowledged that ‘the group has a board whose members appear well qualified and appropriate to manage the shareholders’ interests’, and the team recognised the value of having experienced non-executives on the board during times of turbulent economic and market conditions.

Nevertheless the report also recommended that the board take heed of institutional investors who were concerned with the group’s non-compliance with A3.2 of the Combined Code by appointing an additional independent non-executive director. Notwithstanding the board’s stance that the three independent non-executive directors are of sufficient calibre and number that their views carry significant weight in the board’s decision making, the board has decided to recruit an additional independent director later in the financial year after first seeking a replacement for Sir Alan Budd, who has indicated to the board his intention to retire.


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IMI plc page 44

An internal evaluation of the board, its committees and individual directors, was commenced in 2008 and the chairman reported on it to the board in March 2009. This process included questionnaires and interviews and appropriate follow up discussions involving the chairman and group human resources director.

In addition, the non-executive directors met with the senior independent non-executive director regarding the performance of the chairman and the chairman met individually with each of the directors to canvass their views. The board received the findings of the evaluation in March 2009 and the directors confirmed that the board is fulfilling its responsibilities appropriately.

In addition, it was agreed that the strategic review process undertaken in 2008 should be continued on an annual basis and additional time should be spent on succession and organisation development matters. The evaluation concluded that the board and its committees were effective and that each director demonstrated a valuable contribution. The contribution and performance of individual directors standing for election or re-election is commented on in the notice of the Annual General Meeting issued to shareholders with this annual report.

Imperial Tobacco Group PLC page 43

During the year, with the assistance of an external consultant, our board formally reviewed and valuated its performance, together with the performance of its committees and individual directors. Feedback from each director was obtained through detailed questionnaires which were used as the basis for the overall evaluation of the board and its committees and feedback discussions between each director and the chairman. The results were discussed by the board at its meeting in September 2009.

Our senior independent director met with the non-executive directors and the board, without the chairman present, to consider the performance of the chairman. After taking account of the results of the chairman’s formal performance evaluation our senior independent director provided feedback to the chairman on a one-to-one basis.

Inchcape plc page 47

The board undertook a formal evaluation of its own and each board committee’s performance, roles and terms of reference. The board considers that an evaluation of its performance is key to ensuring an effective board, which in turn is vital to the success of the company. The board reviewed the process in November 2008 and determined that an external facilitation was not necessary. The decision was based on the fact that the composition of the board had not changed significantly during 2008 and the board had successfully implemented recommended changes from the 2006 external evaluation and the 2007 evaluation.

Led by the chairman and supported by the group company secretary, a performance evaluation questionnaire was used for the performance evaluation process. This questionnaire covered the effectiveness of the board, each committee’s performance against objectives, preparation for and performance at meetings and corporate governance matters. It addressed the issues raised by the Higgs Review on the role and effectiveness of non-executive directors published in January 2003. Following the evaluation, the board members concluded that appropriate actions have been identified to address areas that could be improved and that, overall, the board and committees continued to perform effectively.

The chairman evaluates the performance of the non-executive directors and met with each individually to discuss performance. The non-executive directors, chaired by the senior independent non-executive director, met without the presence of the chairman to evaluate the chairman’s performance.


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Following the performance evaluation process, the chairman has confirmed that the non-executive directors standing for re-election at this year’s AGM continue to perform effectively and demonstrate commitment to their roles. The board will continue to review performance annually.

Informa PLC page 26

The board utilises a formal and rigorous process, led by the chairman, for the annual evaluation of the performance of the board, its principal committees and individual directors, with particular attention to those who are due for re-appointment. On appointment the directors are made aware that their performance will be subject to evaluation.

For 2008 the evaluation was performed by the chairman who conducted a series of focused interviews with each member of the board in his or her capacity as a director and, where applicable, as a member or chairman of a principal committee. The findings and recommendations of the review were presented to the board as a whole, with a view to implementing any recommendations made to improve the overall effectiveness of the board during 2009. The non-executive directors, led by the senior independent director, also met without the chairman present to conduct an evaluation of the chairman’s performance.

At the beginning of 2008 due to the then non-compliant structure of the board in having an executive chairman, the board had thought it appropriate for an external board evaluation to be carried out at the end of 2008. However, as the board composition reverted to a conventional structure with a non-executive chairman in March 2008, the board has decided that it is appropriate for the new non-executive chairman to lead the company’s board evaluation process in 2009.

Inmarsat PLC page 34

The effectiveness of the board is an essential element of the company’s effective and efficient performance. During 2008, the board and each of the audit, remuneration and nominations committees undertook performance evaluations. The main elements in the evaluation process were:

individual directors and committee members completed separate evaluation questionnaires regarding the processes of the board and its committees, their effectiveness and where improvements could be considered. They also undertook a peer review in which they assessed their fellow directors’ performance

the non-executive directors had a discussion with the company secretary the results were compiled and analysed by the company secretary and circulated to the full board; and the board considered the results of the evaluation process as a specific item of business.

The evaluation process concluded that the board and its main committees had functioned efficiently and effectively during the year and that the individual directors had also met the standards expected of them, with each making a significant contribution at meetings. The issues identified during the evaluation, such as the incorporation of technical presentations as part of the board documentation, have been discussed and changes to board practice implemented.

A performance evaluation of the board will continue to be conducted annually and the process for such evaluation will be reviewed by the board. The board considers at this time that there remains value in continuing to conduct the performance evaluation process internally, refining the approach and questionnaires each year.


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InterContinental Hotels Group PLC page 42

Performance evaluations of the board and the directors were undertaken for 2009. An independent third-party facilitator assists in the performance evaluation in alternate years. The 2009 evaluation involved such external assistance. The 2009 board evaluation, including that of the chairman and the executive directors, involved completion of questionnaires and the chairman having discussions with each director individually.The board received feedback through a presentation at a meeting of the full board, and the findings were discussed. It was concluded that the board was operating in an effective manner and areas where more emphasis could be considered were identified and tabled for further action.

With regard to the performance of individual directors, as part of the evaluation process, the chairman held meetings with each director and it was concluded that they continue to make an effective contribution to the work of the board. All directors are well prepared and informed concerning items to be considered by the board, have a good understanding of the group’s business and retain a strong commitment to their roles.

During the year, the non-executive directors met together without the chairman present, under the chairmanship of the senior independent director, to appraise the chairman’s performance. The outcome of this appraisal was positive. The work and effectiveness during the year of the audit, remuneration and nomination committees were also evaluated. These reviews concluded that each committee was operating in an effective manner.

Intermediate Capital Group plc page 55

In line with the requirements of the Combined Code, the board reviews its own performance annually using a predetermined template designed as a tool to facilitate the evaluation process. The assessment covers the functioning of the board as a whole and includes a review of the effectiveness of the board committees. The board considers the results of the performance evaluation when making its recommendations regarding the re election of directors. The board does not consider it necessary to employ the services of an external third party to conduct the evaluation process. A review was performed in July 2008 and the board concluded that its performance and that of its committees, chairman and directors were satisfactory.

International Power plc page 78 In 2008, the effectiveness of the board was underpinned by a balance between executive and non-executive directors. The board believes that it has the skills and experience necessary to provide effective leadership and control of the company.

The structure of the board is not in strict compliance with the Combined Code in that the number of non-executive directors is less than the number of executive directors. However, the directors consider that the board currently works effectively and that the non-executive directors have a sufficiently strong and independent presence at board meetings to provide an effective counter balance to the executive directors. The size and structure of the board is kept under review annually.

Intertek Group plc page 39

A stringent performance evaluation process led by the chairman is applied to each director, committee and the board as a whole. This comprises a series of detailed questionnaires which provide a framework for the evaluation process, and provides the chairman with a means of making year-on-year comparisons. There are questionnaires for each of the following: the board; each individual director; and the remuneration, nomination and audit and risk committees.


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This annual evaluation of the effectiveness of the board and its committees ensures that the performance of each individual director and the functioning and constitution of the board and each committee are properly measured and debated.

The chairman assesses the individual performance of each director, taking into account discussions with other directors. The senior independent director has discussions with the other executive and non-executive directors, without the chairman being present, in order to appraise the chairman’s performance during the year. For the year under review these assessments concluded that the performance of the board and each director was, and is, effective, and that all directors demonstrate full commitment in their respective roles to the company evidenced, inter alia, by the board and committee attendance records set out in this report. The evaluations further demonstrate that the board has an appropriate set of skills, that all the directors add value to the overall effectiveness and success of the group, and that no substantial issues have arisen out of the evaluation process.

After a rigorous review of performance and in view of their continued robust contribution and commitment to the board, Christopher Knight and Debra Rade are to continue in their roles on the board for a further three-year term subject to re-election at the AGM in accordance with the articles of association.

The remuneration, nomination, and audit and risk committees also each held an evaluation of their work and effectiveness during the year, the results of which were reported to the board by the group company secretary. The reviews concluded that each committee was operating in an efficient and effective manner.

The board will continue to develop the evaluation process in order to ensure that it can properly review, on an annual basis, its performance and that of its individual members and committees. In doing so, consideration is given to succession planning requirements and the board will act accordingly with the assistance of the nominations committee.

Invensys plc page 46

The board has a formal review process with discrete components covering the evaluation of the board’s collective performance, the appraisal of the performance of individual directors, including the chairman, and each of the board’s committees.

Evaluation of executive directors is conducted by the chairman and non-executive directors. Appraisal of the non-executive directors is led by the chairman in consultation with all directors. Additionally, each non-executive director is asked to assess themselves. The evaluation of the chairman is led by the senior independent director in consultation with the other non-executive directors, taking into account the views of the executive directors. Individual feedback is provided by the chairman to each of the non-executive directors and by the senior independent director to the chairman.

In relation to the evaluation of the board and its committees, an internal questionnaire based on the Combined Code provisions is used for this process. The evaluation process involves assessment by reference to the relevant roles and responsibilities under review, the current terms of reference of the committees and best practice. The results of the evaluation provide the basis for continuous improvement in the board’s procedures and the board’s action plans and objectives for the following year.

The board remains satisfied that each ongoing director remains committed to his role and that the board and each of its committees remains effective.


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Investec plc page 153

The board and directors’ performance is evaluated annually based on recognised codes of corporate governance and covers areas of the board’s processes and responsibilities, according to leading practice.

The performance evaluation process takes place both informally through personal observations and discussions and regularly in the form of a detailed questionnaire. The results, including additional comments in such questionnaires, are incorporated into a matrix which is considered and discussed by the board.

The chairman holds regular one-on-one meetings with each director to discuss the results of the formal and informal evaluations, and in particular to seek comments on strengths and developmental areas of the members, the chairman and the board as a whole. Individual training and development needs are discussed with each board member and any requests for training are communicated with the company secretary for implementation.

The chairman reports the results of these evaluations to the boards and matters identified during the course of the review are scheduled for appropriate action and later reviewed to ensure implementation.

ITV plc page 93

The board has established a formal process for the annual evaluation of the performance of the board, its committees, and individual directors (with particular attention given to those who are due for re-election) in accordance with the requirements of the Combined Code. The directors are made aware, on appointment, that their performance will be subject to an annual evaluation.

Some of the actions taken during the year resulting from the 2007 evaluation included:

scheduling meetings to allow more time for the directors to meet informally, including without the executive directors present

presentations to the board on the competitive marketplace and developing trends and technologies formal performance and development reviews of senior management presented to the board on a regular

basis, and implementing an escalation procedure in the enterprise-wide risk management process.

An internal evaluation of the effectiveness of the board and its committees, individual directors and the executive chairman was carried out in 2008, led by the senior independent director.

The evaluation process included a written questionnaire and an interview with each director. The questions covered a range of issues such as board processes, board roles and responsibilities, board agendas, committee processes, individual effectiveness, training and continuing professional development.

Feedback from the evaluation process was provided to the board in the form of a presentation at a board meeting and a written report. The review made the following suggestions, amongst others, for enhanced effectiveness:

to simplify board reporting to encourage non-executive directors to input additional items into the board programme for the year, and to offer non-executive directors more opportunities to attend industry conferences.

The board and its committees were found to be operating effectively and the board has accepted the recommendations made as a result of the review process and will make changes to reflect them.


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Jardine Lloyd Thompson Group plc page 28

During the past twelve months, a formal evaluation of the board, its committees and individual directors has been undertaken. The board performance evaluation was undertaken by means of individual questionnaires that were summarised and debated by the board or the relevant committee. The non-executive directors, led by the senior independent director, also carried out a performance evaluation of the chairman during this period.

Johnson Matthey Plc page 40

The board has undertaken a formal evaluation of its performance and the performance of its committees and the individual directors. Questionnaires, prepared by the chairman with the assistance of the company secretary, were completed by all directors. The questionnaires focused on the operation of the board and its committees and on individual directors’ contributions. In addition, the chairman and the senior independent director held a series of one-to-one discussions with every director, which provided each director with the opportunity both to expand on their questionnaire responses and to raise any broader issues relating to the company’s strategy and governance. A summary of the responses was prepared by the company secretary and discussed at a board meeting.

One area covered by the board evaluation related to the training needs of the executive and non-executive directors. Regular business presentations from senior managers at board meetings assist the non-executive directors in familiarising themselves with the group’s businesses. The board also usually holds at least one board meeting per year at one of the group’s operational sites and takes the opportunity to tour the site and discuss issues with local senior and middle management. Individual non-executive directors also undertake site visits. Such presentations, meetings and site visits help to give a balanced overview of the company. They enable the non-executive directors to build an understanding of the company’s businesses, the markets in which the company operates and its main relationships and to build a link with the company’s employees. This is important in helping the non-executive directors to continually develop and refresh their knowledge and skills to ensure that their contribution to the board remains informed and relevant.

Led by the senior independent director, the non-executive directors met without the chairman present to consider evaluation of the chairman’s performance.

Kazakhmys PLC page 55

A full board performance evaluation process was undertaken in late 2008, facilitated by an external consultant, with fully documented results being presented to the January 2009 board meeting. The process was carefully structured but pragmatic, tailored to bring about a genuine debate of issues that are relevant and assisted in identifying any potential for improvement in the company’s processes. It entailed initial and sign-off meetings with the senior independent director and the company secretary, individual interviews between each director (excluding Daulet Yergozhin who was appointed a director on 19 November 2008 and James Rutland who ceased to be a director on 5 December 2008) and the external consultant on the performance of the board, its committees, on individual directors and the preparation of a composite report. Although the report concluded that the board and the committees are operating and performing effectively and there remains a high degree of board unity, the board is considering the recommendations contained in the report to ensure the continued smooth operation of the board and its committees, including, for example, succession planning for the executive team and enhanced internal communication of the company’s aims and strategies. Furthermore, the board is also satisfied that each of the current non-executive directors had sufficient time and commitment to contribute effectively to the board and its committees.

During the year the chairman held a number of meetings with non-executive directors without executive directors being present. The senior independent director also led the non-executive directors in evaluating the performance of the chairman.


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Kingfisher plc page 35

Performance evaluation of the board, its committees and individual directors takes place on an annual basis and is conducted within the terms of reference of the nomination committee with the aim of improving individual contributions, the effectiveness of the board and its committees and the group’s performance. In recent years, the evaluation has been internally facilitated.

The board undertook a formal self-evaluation of its own performance during the 2008/09 financial year. The process was led by the chairman and facilitated by the company secretary and involved the use of an online questionnaire with company-specific questions. The same process was used to evaluate the performance of each of the board committees. The board will continue to review its procedures, effectiveness and development in the year ahead and the new chairman will use the output of the most recent evaluation as the basis of his initial individual meetings with directors.

The chairman leads the assessment of the group chief executive and the non-executive directors, the group chief executive undertakes the performance reviews for executive directors and the senior independent director conducts the review of the performance of the chairman.

The evaluations found the performance of each director to be effective and concluded that the board provides the effective leadership and control required for a listed company. The board confirmed that the contributions made by the directors offering themselves for re-election at the AGM on 3 June 2009 continued to be effective and that the company should support their re-election.

Ladbrokes PLC page 31

The chairman conducts an appraisal with each director. The senior independent director, having consulted with the other directors, conducts an appraisal interview with the chairman. Each director completes a questionnaire on the effectiveness and processes of the board and its committees. The results are considered by the board and the individual committees.

Whilst all directors are expected to bring an independent judgement to bear on issues of strategy, performance, resources (including key appointments) and standards of conduct, the independent non-executive directors were selected and appointed for this purpose.

Land Securities Group PLC page 65

The formal annual evaluation of the performance of the board, its committees and individual directors was undertaken in early 2009. This consisted of an internally run exercise led by the chairman with the assistance of the company secretary, although the board will consider using external facilitation from time to time in the future.

The appraisal questionnaire was wide-ranging and based on the process and questions outlined in the Code, covering board and committee performance. The appraisal output is used to highlight strengths and weaknesses and revealed that the board and its committees were judged to be operating effectively. It identified a number of opportunities to develop board processes in the future. In addition, individual performance as board directors is appraised each year, based on one-to-one interviews with the chairman, or in the case of the chairman, with the senior independent director.


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Legal & General Group Plc page 51

The board and its directors participate in an evaluation process, the aim of which is to assess the effectiveness of the board’s collective performance as well as the contributions of individual directors.

The board is currently undertaking an evaluation for the current year which will be completed by April 2009. Following the previous evaluation the board agreed an action plan. As part of the action plan, consideration was given to the balance and composition of the board with a view to ensure an appropriate balance and a good mix of skills and experience that would facilitate the achievement of the company’s strategy. A separate evaluation is carried out to assess the effectiveness of the audit committee. This was concluded in May 2008 and feedback provided by the chairman of the audit committee to the members of the committee. Executive directors are subject to an annual appraisal and to regular review of their performance by the group chief executive. The chairman conducts the annual appraisal, and regularly reviews the performance of the group chief executive. In the case of the chairman, feedback was delivered by the senior independent director.

Liberty International PLC page 81

The terms of reference of the nomination and review committee are reviewed annually. The committee is responsible for carrying out an annual performance evaluation of the board, its committees and individual directors, as well as making recommendations to the board on appointments to the board and to subsidiary boards and on succession planning. In 2008, the established practice of a comprehensive performance evaluation of the board, its committees and individual directors was carried out by way of detailed questionnaires followed by discussion, the results of which were considered early in 2009 by the members of the nomination and review committee, the board, and the relevant board committees. In addition, the senior independent director carries out an annual evaluation of the chairman.

The responses to all questions relating to the performance of the board and its committees were generally highly positive and showed a continued high level of satisfaction with the performance of the board and its committees.

Lloyds Banking Group plc page 100

In Autumn 2009, the board, supported by JCA Group, conducted a rigorous process of evaluating its effectiveness, and the effectiveness of its principal committees. The process included confidential, unattributable, one-on-one interviews with every board member and with UKFI and the group’s external auditors. The review covered corporate governance, board effectiveness, strategy development, risk management and board and committee organisation, composition, operation and dynamics. In addition, although early in his tenure, the review also considered the performance of the chairman, including the effectiveness of his relationships with the group chief executive and other members of the board. The outcomes of the review were subsequently discussed by the board as a whole.

The review was conducted during a period of significant change for the board with several members leaving and a number of relatively new members.

The board members individually and collectively considered that the board is working as an effective whole. After the significant challenges faced by the group and the board in 2009, the review highlighted the importance of returning to a more normal operating mode by focusing on delivering the integration, developing the future strategy, and reviewing the operations and risk management for the group as a whole and within each of the key areas. In addition, the review encouraged continued vigorous debate in the board and committees and emphasised the importance of succession plans for the management team and non-executive directors. An action plan has been developed to ensure that the chief conclusions of the review are addressed in a timely manner. As part of this, it has been agreed that issues of risk, liquidity and funding should receive particularly high attention in 2010.


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Logica CMG plc page 46

The board is subject to an annual performance review which covers the effectiveness of the board, its committees and individual members and takes into account factors such as composition, expertise, information flows, roles, responsibilities and procedures. A full review has been conducted in line with this process. Each director completed a comprehensive questionnaire, following which one-to one interviews were conducted by the chairman with each director. The information from the questionnaires and interviews were compiled into a report which was presented to the board by the chairman early in 2009.

As part of this process, any director who has served on the board for a period in excess of six years is subject to a particularly rigorous review.

The performance of the chairman was assessed by the non-executive directors. The process for this was led by the senior independent director with all directors providing feedback on the chairman’s performance. The results were discussed with the chairman by the senior independent director.

During 2008, Andy Green, chief executive officer, held one-to-one meetings with each of the executive directors to discuss their performance and to set targets for the year ahead. Each executive director received a set of objectives for the coming year which included objectives linked to delivery of the group’s Programme for Growth.

There are regular meetings between the chairman and the non-executive directors to discuss the performance of the company, together with any matters of relevance or concern at that time. Where appropriate, action is taken to address any concerns of the directors.

Following the results of the 2007 board evaluation process, the actions implemented in 2008 included:

the appointment of two new non-executive directors from continental Europe with experience of the IT services Industry

holding two board meetings outside the UK to allow more interaction between directors and management increasing the opportunities for informal communication between board members.

London Stock Exchange Group plc page 37

The annual performance evaluation of the board and its committees was undertaken in 2009 and was conducted by the group company secretary using a detailed questionnaire. The results of the review are used to highlight areas of strength and weakness, assist in consideration of the future development of the board and its committees and further improve their performance. The review also included an assessment of the chairman’s performance.

The results were discussed by the board and actions agreed where appropriate. The evaluation concluded that the board and its committees were working effectively. Actions identified included facilitating more contact between non-executives and management both inside and outside the boardroom to gain a better understanding of the business and succession planning to be considered by the whole board on a more regular basis.

Lonmin Plc page 56

The company has previously implemented a board performance evaluation process which is designed to identify whether the board possesses the relevant skills, knowledge and experience to fulfil its mandate, so enabling it to manage succession issues.


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The review in May 2008 had identified two areas where improvements could be made. These were addressed during the year as follows:

Issue Resolution

Improve the degree of interaction between board members and key executives and senior managers.

Site visits, lunches and dinners during the two board visits to South Africa were designed to provide informal opportunities to meet a wide range of managers. Working meetings with the executive committee were held during the September 2009 board visit, and members of the executive committee attended part of the board meeting.

Create additional opportunities for informal discussion of key business issues between board members.

A number of dinners were held during the year at which the directors could debate business issues informally.

The board recognises that externally facilitated evaluations can provide a useful and impartial feedback mechanism.However, since both the chairman and the chief executive have only been in post for a matter of months, the board decided that it would not be appropriate to have such a review at this time. Instead, Mr Phillimore held individual discussions with each of the directors to assess their views on a wide range of issues, including the effectiveness of the board committees, using set questions to structure the debate.

Feedback from each of those discussions was provided to the board. The most material conclusion was that executive management should be based in South Africa, close to the mining operations with the aim of enhancing day-to-day management and communications, as well as enabling the company to engage more effectively with its South African stakeholders. It was also decided to add a third day to each of the bi-annual board visits to South Africa in order to afford more time with local senior managers.

The board is considering the appointment of an external facilitator during the course of 2010.

In September 2009, under the chairmanship of the senior independent director and without the chairman being present, the board also assessed the effectiveness of the chairman. The unanimous conclusion was that the chairman was effective in the role, in large part because of his length of tenure and intimate knowledge of the business.

Man Group plc page 49

An external evaluation of the effectiveness of the board was carried out earlier this year. This was led by an independent third party who engaged all board members in a detailed review of board governance, processes and culture supported by a structured questionnaire. There was a similar though less detailed review of the operation of the principal board committees. A report on the key findings was presented to the board for discussion and agreement on future actions. This year’s evaluation also involved a confidential peer review of individual directors, feedback from which was discussed by the chairman with each director individually. Feedback on the chairman was discussed with him by the senior independent director.

The evaluation revealed a number of key areas for focus during the coming year. These included a renewed emphasis on strategy review against the background of severe economic downturn, the continuing need for the board to deepen their understanding of the marketplace in which the group operates, increased oversight of executive director succession and senior management resource, a review of board committee membership and the improvement of certain board support functions.


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Marks and Spencer Group plc page 52

In June 2008 we published our Governance Framework containing individual profiles for board members and terms of reference for the board and its committees, against which performance could be measured. In November 2008, the board agreed that external review of its performance would not be good use of funds at this time, given our own internal resource, but that an external review of our internal process would help us to make sure that our approach to the annual assessment is thorough.

Sir David Michels, deputy chairman, led the 2008/09 board review, assisted by Alison Houston, our head of board performance. In December 2008 each director had a one to one discussion with the deputy chairman, enabling him to highlight particular issues or themes to be reviewed.

In February 2009 each director completed a questionnaire electronically to rate performance across the highlighted areas. An unattributed executive summary was then distributed to all directors and discussed at the board meeting in March 2009.

The 2008/09 review has confirmed that:

whilst the board had committed additional time to strategic development and brought forward its deliberations to respond to the changing economic climate, the balance of time spent on strategic and operational issues still needed to be monitored

succession planning and leadership development required sustained focus to identify and develop leaders of tomorrow. The appointment of Jan du Plessis as a non-executive director had enhanced the independence, skills and experience on the board, and

information presented to the board on wider stakeholders was helpful. This included regular presentations on customer sentiment and the competition which gave a valuable insight into the market and behaviours using independent analysis.

Meggitt PLC page 42

In January 2009 the board conducted a self-evaluation assessment. The chairman led a review and discussion to consider the board’s performance against some high level objectives and its own terms of reference and its performance against these. The board was satisfied with its effectiveness. The audit and remuneration committees have also considered their own performance during the year. The performance of individual directors has been considered by the chairman and chief executive in discussion with other non-executive directors. The non-executive directors have considered the performance of the chairman, taking into account the views of the executive directors.

Melrose PLC page 32

A process of annually evaluating the performance of the board and each committee is in place. The chairman has held meetings with the directors, including the senior independent non-executive director, Mr Miles Templeman, to discuss the performance of the executive directors and the board as a whole. It was considered that the individual directors and the board as a whole were operating effectively. In addition, each of the directors completed an evaluation questionnaire during the year designed to identify any failures in the performance of the board and each of its committees in order to determine any development requirements. The findings of the evaluations were reviewed by the company secretary and feedback was provided to the board.


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The Mercantile Investment Trust PLC page 21

The board has evaluated the performance of the manager and confirms that it is satisfied that the continuing appointment of the manager on the terms agreed is in the interests of shareholders as a whole. In arriving at this view, the board considered the investment strategy and process of the investment managers, noting consistent out performance of the benchmark over the long term and the support that the company receives from JPMAM.

Michael Page International PLC page 36

The board, as part of its commitment to ensuring effectiveness and evaluating its performance together with that of its directors and committees, conducted an internal review comprising a questionnaire concerning all aspects of procedure and effectiveness.

Following completion of the questionnaires, the chairman met with the individual directors to discuss their views and to give feedback on their performance. The results of the evaluation were reported to the board and where areas of improvement have been identified, actions have been agreed upon and training will be provided where required.Stephen Box, as the senior independent director, led a meeting of the non-executive directors to appraise the performance of the chairman. The meeting took into account any comments made by the executive directors. This evaluation is carried out annually.

Micro Focus International plc page 39

The board has undertaken a formal and rigorous process for the evaluation of its own performance and that of its committees and individual directors (including the chairman), as required by Combined Code provision A6.1. This evaluation has been conducted by JCA Group Ltd and has taken the form of personal interviews with the directors and observations of board and committee meetings. The chairman holds meetings with non-executive directors without the presence of executive directors.

Millenium and Copthorne Hotels plc page 50

The board evaluation process has been conducted by the directors completing on-line questionnaires which solicit views on the board governance processes, the operation of standing committees and a self assessment of individual directors’ performances. Feedback from the evaluation process is compiled by the company secretary and a report is prepared for consideration by the board. In addition, the performance of executive and non-executive directors is assessed annually by the chairman. During the year, the chairman and independent non-executive directors met without the executive directors in attendance. Evaluation of the chairman is conducted by the independent non-executive directors led by the senior independent non-executive director.

Misys plc page 50

During the second half of the year the directors conducted, by way of a detailed questionnaire and discussion, an evaluation of the performance of the board collectively, of its four principal committees (audit, nomination, remuneration and executive), of the chairman, of the chief executive, and of individual directors. As part of this latter evaluation, the chairman makes himself available to discuss any issues regarding individual performance or any areas of concern. The former EVP general counsel and company secretary provided initial feedback to the chairman and the senior independent director. The board received and reviewed the overall average scores. These results formed one of the bases for further


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discussion by the board collectively, and by the nonexecutive directors in respect of the evaluation of the committees, the performance of the chairman and the chief executive. The review identified a few areas requiring improvement and a plan of action to address the concerns raised has been adopted.

Mitchells & Butler plc page 49

This year the board carried out a formal board governance assessment including a review of the membership and effectiveness of its principal committees and of the performance of individual directors with the assistance of Professor Goffee of the London Business School.

The process included the completion of a detailed questionnaire by each board member and included an opportunity to make comments. The areas covered were the board’s role and its organisation, the board dynamic and relationships, quality of information flows and decision-making, board committees, performance monitoring and board priority tasks.

The output was compiled into a report prepared by Professor Goffee which he presented to the board and which was considered by the nomination committee. The chairman subsequently discussed this output with the chief executive and the non-executive directors and the chief executive discussed it with the executive directors.

The evaluations concluded that the board and its committees continued to be effective and that all directors had a good range of experience, contributed effectively to board discussions and retained a high level of commitment to their roles.

During the year the non-executive directors met without the executive directors present, and the non-executive directors also met without the chairman present, led by Sara Weller, to appraise the chairman’s performance. The outcome of this appraisal was positive and confirmed that he remained committed to, and devoted sufficient time to, his role.

Mondi PLC page 36

Following a review, it was agreed that an internally facilitated performance evaluation of the boards, principal committees and individual directors remained appropriate for 2008. The evaluations were led by the joint chairmen and supported by the company secretaries and comprised a questionnaire completed by each director regarding various aspects of the performance of the boards. The questionnaire was expanded over that used in 2007 to test more effectively the operation of the boards and to pick up on the actions that arose from the previous evaluation. In addition, questionnaires were completed by each member of the principal DLC committees relating to the activities of each committee. The joint chairmen interviewed each director on a one-to-one basis, Sir John Parker interviewing the non-South African based directors and Cyril Ramaphosa interviewing those based in South Africa. Further input for these interviews was obtained through the use of an additional questionnaire completed by each director providing their views of their fellow directors in a number of areas such as preparedness for, and contribution at, meetings.

The results of the questionnaires and interviews remained positive. The boards were considered to be operating well, with non-executive board members investing appropriate time to develop a good understanding of the group’s businesses and structure and the industry sector. The main areas highlighted in the recent review included:

succession planning for the non-executive directors as they had all been appointed at the time of the demerger of Mondi from Anglo American plc

a request for the brokers to brief the boards after presentation of the half-yearly results; and the desire to test the views of the senior management teams on the effectiveness of communication from the boards.

Other matters raised were more of a procedural nature. Action plans to address the matters raised in the review have been formulated and agreed with the boards.


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The performance of the joint chairmen was reviewed at a meeting of the non-executive directors. It was concluded that the leadership and combined business knowledge of the joint chairmen was invaluable to Mondi.

Morrison Supermarkets PLC page 30

The performance of the board, its committees and its directors is assessed and appraised throughout the year. The chairman is responsible for the monitoring of the performance of the executive directors. In January 2009, the chairman conducted an evaluation, without external assistance, of the performance of the board and the results were shared with the other directors. The board was satisfied with its performance and it agreed to act on those areas for which it believed improved processes could be implemented.

National Express Group PLC page 46

During the year a formal evaluation of the board’s performance was carried out using external consultants. The external consultants received evaluation questionnaires from each of the directors and the company secretary. The questionnaires covered the performance of the board as a whole and individual board members. As a follow-up to the questionnaires individual meetings were held by the consultants with each board member at which the answers to the questionnaires were explored further and additional matters raised. The responses to all questionnaires were discussed with the chairman of the board and the consultants then made a presentation to the board as a whole, drawing out the general themes arising from the questionnaires. Subsequently the board agreed a series of actions to improve its performance and increase its effectiveness.

National Grid plc page 92

Directors are encouraged to challenge board and committee processes and procedures as part of the continual development of best practice. As part of this process, in each financial year since 2003/04, the board has undertaken a formal evaluation of its performance and that of its committees and individual directors. The board considers annually whether to use an external body to manage the performance evaluation process. It concluded this year that the approach used by the company remained appropriate and robust.

Accordingly, the chairman, assisted by the company secretary and general counsel, led the evaluation process, which was in the form of a confidential survey completed by all directors in relation to the board and any committee of which they were a member. In addition, meetings were held between the chairman and each director. Regular attendees at specific committee meetings were also asked to complete surveys in relation to the relevant committee.

The company secretary and general counsel collated the evaluation results and these were considered by the board and each committee. Comparison was made to the prior year’s report as a result of which a number of actions had been implemented including: a review of the rolling business agenda to include a greater emphasis on strategic external factors such as climate change; increasing the number of informal meetings of board members; and consideration of the interaction between committees. In accordance with established practice, the board and each of the committees separately review the matters highlighted by the evaluation and a formal response and action plan is produced as appropriate and approved by the board.

Overall the results showed an improvement from the previous year indicating that the directors considered that no major changes were required to board and committee processes and procedures. The chairman’s performance was reviewed and his leadership and performance were considered to have been of a high standard. Areas highlighted by the board and committees for consideration following the latest review included:


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to review the agendas to include, for example, inclusion and diversity issues and strategic business trends analysis

to consider further development of the use of video conferencing for committee meetings, and to provide a brief overview (including career history) of each presenter to the board.

In addition, the meeting held by the non-executive directors further suggested:

receipt of board and committee papers normally five business days in advance of the meeting in order to enable more opportunity for discussions with executive directors prior to the meeting

arranging for potential successors to the executive directors to receive sufficient visibility by the board, and holding an additional meeting annually for non-executive directors chaired by the senior independent

director with the chairman and chief executive to attend by invitation.

Next PLC page 25

The performance of the board, its non-executive directors and committees was formally evaluated during the year. The evaluation was conducted by directors completing a detailed questionnaire, the results of which were compiled by the company secretary for review by the chairman and the board as a whole. The senior independent non-executive director appraises the performance of the chairman through discussions with all the directors individually and, together with the chairman, appraises the performance of the chief executive. The performance of the executive directors is monitored throughout the year by the chief executive and the chairman.

Northumbrian Water Group plc page 50

A full evaluation of the performance of the board, the NWL board and the committees was conducted during the year by an external consultant with significant relevant experience. Each director completed a detailed questionnaire prior to a one to one meeting with the consultant. The questionnaire was designed to address the dynamics of the board and the effectiveness of its approach to strategic, operational and financial matters, as well as the contributions of the directors. The consultant observed the NWG and NWL board meetings in November 2008 and delivered a report to both boards in February 2009. The results of the evaluation were generally very positive and a number of actions were agreed, with a view to consolidating the performance of the boards.

The chairman has also appraised the performance of each NWG and NWL director by means of one to one meetings. The chairman’s comments on the performance of the directors seeking re-appointment at the AGM are provided in the notice of meeting.

Old Mutual plc page 102

The board conducts an annual self-assessment exercise to evaluate the effectiveness of its procedures. In 2008, this process was carried out through a detailed questionnaire, with returns being submitted to the company secretary, who collated a report for the chairman and the board. The chairman took these into account in one-to-one meetings with the other directors, to ensure that any concerns about board processes or capabilities were aired. Various action points were identified, and the board has agreed processes to address and track progress against these during 2009.


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PartyGaming Plc page 86

The directors have undertaken a formal and rigorous evaluation of their performance for the year ended 31 December 2008, utilising the services of a third-party corporate governance consultancy, Lintstock Limited, which advises many FTSE 100 and 250 companies. The evaluation has focused on the effectiveness of the chairman, non-executive directors, executive directors, the board and its committees and has been conducted using a confidential questionnaire. The results have been reviewed by the board led by the chairman and discussed with individual directors, except that the performance of the chairman has been reviewed by the non-executive directors, led by the senior independent director, without the chairman being present.

Pearson plc page 28

Following the chairman’s review of the effectiveness of our board and of the board committees, as described last year, the board identified four areas where it could most effectively contribute to the company’s success: strategy, governance, operating effectiveness and management succession.

The board cycle was adapted to ensure that at least one board meeting per year is primarily devoted to each of these themes, with significant time for thorough review and discussion.

In addition, the chairman asked the deputy secretary to meet with each of the directors to gather their views on the level of support they felt they were receiving as board directors. The deputy secretary duly met with each of the directors and asked for feedback on a number of matters, including the Pearson induction programme, their ongoing training needs, the logistical support they receive and their thoughts on the process for board and committee meetings. Following this review a paper was tabled at a subsequent board meeting which set out the findings from these one to one sessions and detailed what the company planned to do to address some of the concerns that were expressed. As a result of this review a number of actions have been taken, including making changes to the balance of board meetings held outside of the UK and deciding on the process for the next board evaluation.

In early 2008 the chairman asked the directors to complete an evaluation questionnaire on the board and each of its committees.

Responses will be gathered and communicated to the board at a forthcoming meeting.

During the course of the year the executive directors were evaluated by the chief executive on their performance against personal objectives under the company’s standard appraisal mechanism. The chairman leads the assessment of the chief executive and the senior independent director conducts a review of the chairman’s performance.

Pennon Group Plc page 50

The board has an internal procedure to evaluate the performance of the whole board, each committee, the chairman, each individual director and the group general counsel and company secretary. This evaluation procedure was administered for the year by the group general counsel and company secretary seeking all participants’ views on a range of questions which are reviewed each year and are designed to ensure objective evaluation of performance. The participants’ responses were then summarised and evaluated by the group general counsel and company secretary for the board to consider and determine whether any changes were necessary for the board to be more effective. Overall performance was considered to be satisfactory but a number of minor issues were identified where changes could be made to improve performance including, for example, reducing through delegation the number of administrative type matters that need to be addressed by the board to enable the board to concentrate more on strategic matters. The chairman’s performance was evaluated


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separately by the non-executive directors, led by the senior independent non-executive director. The chairman’s other significant commitments outside the group have not changed during the year and the board is satisfied that such commitments do not prejudice the chairman’s performance in relation to his group role.

Persimmon Plc page 35

The board and the audit committee undertake a written self-evaluation of their performance. A verbal evaluation of the performance of the remuneration and nomination committees are undertaken by the committees. The non-executive directors undertake a verbal annual performance evaluation of the chairman, taking into account the views of the executive directors. The chairman undertakes a verbal evaluation of the executive directors’ performance. As a result of the evaluations, a number of procedural and other changes have been implemented during 2008; for example the board are provided with additional executive management reports and management accounts to ensure they have detailed knowledge of the company’s progress in the current challenging market conditions.

Petrofac Limited page 62

Having used an external facilitator to help evaluate the board, its committees and directors in 2006, the board decided that it would undertake internal reviews in 2007 and 2008. During the year, the chairman and secretary to the board periodically followed up on action points identified during the 2007 evaluation process. Most action points were discharged during the year but a small number remained either partially or wholly unresolved at the year end. In the last quarter of 2008, each director completed an extensive questionnaire prepared by reference to the Combined Code and the secretary to the board collated the results. The chairman subsequently led a formal discussion of all directors as a consequence of which a list of actions, including those that remained undischarged from 2007, were agreed for the forthcoming year. The chairman will review the board evaluation process in 2009. Michael Press, the senior independent director, led a separate evaluation of the chairman through a series of questionnaire led interviews with other members of the board and senior management before providing feedback to the chairman in a one-to-one appraisal. Board evaluation will continue on an annual basis.

Petropavlovsk plc page 26

The remuneration committee is responsible for the performance review of each director and the independent non-executive directors are responsible for the performance evaluation of the chairman.

The board has adopted a formal performance evaluation procedure for the board as a whole and for the committees, whereby the directors complete questionnaires which are reviewed by the board, which will consider and review the findings of the process.

Premier Oil plc page 23

The board and its directors are subject to regular appraisal. The aim is to improve both individual contributions and group achievement.

The board carried out a questionnaire-based evaluation process in 2007, using an external facilitator. In addition, to completing the questionnaire, the directors were offered the opportunity to meet the facilitator in order to expand upon their answers or to raise other issues. While it is not a fixed policy, the current view of the board is that alternation between internal and external reviews has significant merits, not least in keeping the exercise fresh amongst board members.


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The results of the evaluation were reviewed by the chairman and discussed in detail by the board, at a special meeting attended by the facilitator. The results in general were extremely positive, although there were one or two issues of a minor administrative nature that needed to be addressed and they are receiving attention.

Provident Financial plc page 57

In November 2008, the board completed the sixth evaluation of its performance and that of its committees and individual directors. The chairman was primarily responsible for this evaluation and submitted a questionnaire to all directors. This contained questions on different aspects of the operation of the board and its committees and the performance of individual directors. The senior independent director was responsible for collating comments on the chairman’s performance. A summary of the evaluation was presented to the board on 11 December 2008 which showed that the board, its committees and individual directors were working effectively. The results of the evaluation and proposals to take account of any matters arising were agreed.

Prudential plc page 87

Prudential continued its programme of annual evaluations of the performance of the board and its committees in respect of 2008, in line with the requirements of the Combined Code. The aim was to improve the effectiveness of the board and its committees, and enhance the group’s performance.

In 2008, the evaluation of the board as a whole was carried out by an independent consultant, following a briefing by the chairman, the chairman Designate and the senior independent director. Each director and the members of the group executive committee completed a questionnaire and were interviewed by the independent consultant. The questions asked were based on the Combined Code and on previously identified matters, and sought views on the effectiveness of the board as a whole. The review was carried out at the end of 2008, during the last month of Sir David Clementi’s chairmanship of the board. Ordinarily, the effectiveness of the chairman would also be reviewed as part of this process, however, given that a new chairman was appointed with effect from 1 January 2009, it was not considered necessary to carry out a review of the performance of the outgoing chairman for 2008.

The independent consultant prepared a report based on the various discussions held and presented and discussed the overall results of the evaluation with the board in March 2009. The use of external providers for this purpose is kept under review.

In addition, the performance of the non-executive directors and the group chief executive was evaluated by the chairman in individual meetings. The group chief executive individually appraised the performance of each of the executive directors.

PZ Cussons Plc page 50

Reviews of the board and board committee performance are carried out annually, with the assistance of external advisors where considered appropriate, and the review results are discussed and any appropriate actions taken.

The chairman’s performance is reviewed by the non-executive directors led by the senior independent director and takes into account the views of the executive directors. The performance of the non-executive directors is evaluated by the chairman, in consultation with the executive directors. The remuneration committee reviews executive directors’ performance with guidance from the chairman and the chief executive except in the case of the chief executive’s performance where it is reviewed by the chairman and the remuneration committee.

The review process in 2009 concluded that all directors continue to contribute effectively and with proper commitment, devoting adequate time to carry out their duties.


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QinetiQ Group plc page 53

During the financial year ended 31 March 2008, the board repeated the self-assessment process first used in the previous year to evaluate the performance of the board, its committees and individual directors. This evaluation process was based on a detailed questionnaire, covering issues ranging from ‘value creation’ and ‘strategic planning’ through to the operation of the board/its committees and ‘risk management’. The evaluation process was led by the chairman, who supplemented the detailed responses derived from the self-assessment questionnaire with a series of meetings held individually with each of the directors, at which the performance of the board as a whole, as well as the committees and individual board members were discussed. In addition, Sir David Lees, in his capacity as the senior independent non-executive director, met with individual members of the board to evaluate the performance of the chairman. The evaluation process revealed that, in virtually all areas, the operation of the board and its committees had improved in the past 12 months. The board concluded from the evaluation exercise that its business is conducted in a positive and open manner, with the board possessing the requisite skills and diversity necessary to fulfil its leadership role and having a detailed understanding of its stewardship responsibilities. The board agreed that in the financial year ending 31 March 2009, and once every three years thereafter, it would conduct the evaluation process through an external facilitator.

As a separate exercise, the chairman has held various meetings with the non-executive directors in the last financial year, without the executive directors present, in order to review both the operation of the board and the performance of the executive directors. In addition, the executive directors were appraised as part of the annual salary review process, which was overseen by the remuneration committee.

Randgold Resources Limited page 64

The board’s evaluation procedure operates through a structured self assessment system allowing each director to rate the performance of the board and its committees and focuses on a number of key areas. The individual assessments are then scored and the results were tabled at the November 2008 board meeting for discussion. The board continues to believe that the exercise is beneficial. It was agreed at the November 2009 meeting that the next board assessment would involve a formal 360° process. A formal session of the directors also assessed the chairman’s performance.

Reckitt Benckiser plc page 25

During the year the board has carried out a formal evaluation of its performance and that of its committees and individual directors in accordance with Code Provision A.6.1.

The board analysed responses from all board members to a detailed questionnaire. Graham Mackay, as the senior independent non-executive director, conducted an evaluation of the chairman’s performance in conjunction with his non-executive director colleagues with input from both executive directors. The nomination committee has primary responsibility for reviewing the performance of individual directors and in addition to this review process, the chairman carried out an evaluation of the performance of individual directors by face-to-face, one-on-one interviews. The board is of the view that it is best placed to carry out such evaluations, without the need to employ the services of an outside consultancy, and that this is an appropriate and cost-effective procedure. The performance of the CEO, and of other members of the executive committee, is regularly reviewed by the remuneration committee of the board.


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Reed Elsevier PLC page 59

During the year the corporate governance committee assessed the performance of individual directors and, led by the senior independent director, also assessed the performance of the chairman. Using questionnaires completed by all directors, the committee reviewed the functioning and constitution of the boards and their committees. Based on these assessments and on the board effectiveness review, the committee believes that the performance of each director continues to be effective and that they demonstrate commitment to their respective roles in Reed Elsevier.

Rentokil Initial plc page 35

The board has undertaken a formal evaluation of its own performance and that of its principal committees and individual directors. Directors completed appraisals on matters relevant to board, committee and director performance. A report was presented to and reviewed by the board. The board concluded that the evaluation exercise had confirmed that the directors had the appropriate range of skills and experience and constituted an effective and unified board. The review was led internally by the chairman with the assistance of the company secretary, utilising a framework provided by external specialists which covers the establishment and role of the board, its membership, skills, experience, training, meeting arrangements, leadership, procedures and communications.

Individual director evaluation showed that each director (including those seeking re-election at the Annual General Meeting in 2009) continued to demonstrate commitment to the role. The non-executive directors, led by the senior independent director, carried out a performance evaluation of the chairman after taking account of the views of the executive directors. The board intends to carry out further performance evaluations but will keep under review the method and frequency.

Resolution plc page 11

The board intends to carry out an evaluation of the performance of the board, its committees and the directors during the next 12 months.

Rexam PLC page 45

All directors, including the chairman, receive a formal performance evaluation to which all other members of the board have an opportunity to contribute. The evaluations are led as indicated below.

Board member Evaluation led by

Chairman Senior independent director

Senior independent director and other non-executive directors

Chairman

Chief executive officer Chairman

Executive directors Chief executive officer

The chairman and chief executive officer meet twice a year with the non-executive directors to discuss the evaluation of the board and individual director’s performance and succession plans. The chairman and chief executive officer absent themselves when their own performance is being assessed. Discussions are led by the chairman (except in relation to his own performance and succession when the senior independent director takes the chair) and feedback is provided.


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In addition, to the regular evaluations, an evaluation of the effectiveness of the board and its principal committees took place in 2008. The directors were asked to complete questionnaires and provide comments on board and committee procedures and effectiveness. The results of the evaluations were reviewed by the chairman and the company secretary, prior to being presented to the board. The collective view of the directors was that the board and its committees were operating effectively. Nonetheless, some areas for development were raised. It was agreed that the chief executive officer would put forward proposals for the enhancement of the board’s involvement with the strategic planning process, group risks and succession planning.

A full performance evaluation of the board will continue to be conducted annually.

Rio Tinto plc page 158

The board completes a formal annual process to evaluate its effectiveness and that of the board committees and individual directors. Each non-executive director’s performance is appraised personally by the chairman and, in a meeting chaired by the senior independent non-executive director, the non-executive directors assess the chairman’s performance, taking into consideration the views of executive colleagues.

The evaluation process completed in 2008 was overseen by the chairman and chairmen of the board committees with the support of the company secretary. For the board it took the form of a detailed questionnaire circulated to all directors for a response and inviting comments on a number of areas, including board dynamics, board capability, board process, board structure, corporate governance, strategic clarity and alignment, and the performance of individual committees and directors. For the board committees, a similar, detailed questionnaire was produced and circulated to each committee member and regular attendees for a response. This questionnaire invited comments on a number of areas, including the role and responsibilities of the committee, its organisation and effectiveness and the qualifications of its members. The results of the questionnaires were collated and presented for discussion and debate at a board meeting, at meetings of the audit and remuneration committees and the committee on social and environmental accountability. Actions were agreed from this process, for example, the provision of further training for non-executive directors in the areas of risk management and resources and reserves booking procedures, are in the course of being implemented.

During 2008, taking into account the views of other board members, the senior independent director led the review of the performance of the chairman. The review concluded that the chairman was continuing to demonstrate strong leadership of the board and was making a significant contribution to Rio Tinto, in particular during the BHP Billiton pre-conditional offer for the group.

The directors believe that, through this evaluation process, they comply with the requirements of Clause A.6 of the Code, Principle 2 of the ASX Principles, and the NYSE Standards.

RIT Capital Partners plc page 30

The Code requires the company to report on the means by which performance evaluation of the board, its committees and its individual directors has been conducted. The board has determined that the completion of a confidential questionnaire by each of the directors covering the processes, efficiency and composition of each of the board, its committees and the directors, followed by discussion of the summarised responses is the most appropriate for the company’s circumstances. This exercise was conducted between February and March 2008, when the responses were evaluated and considered by the board and separately by the non-executive directors in a meeting without any executive directors being present.


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Rolls-Royce Group plc page 68

The chairman and the non-executive directors meet at least once a year without the executive directors present, in order to review the operation of the board.

The chairman has an annual meeting with each non-executive director to review his or her contribution to the board. The senior independent director chairs an annual meeting with the non-executive directors to review the performance of the chairman, the outcome of which is reported back to him.

Each year, the chairman reviews the performance of the chief executive as part of the annual salary review process overseen by the remuneration committee. The chief executive reviews the performance of the other executive directors in the same way.

In 2008, the annual process to enable the board to evaluate the effectiveness of its performance involved the completion of a written questionnaire by the directors and a series of meetings between the chairman and each individual director. The board reviewed the results of this exercise in February 2009.

The review covered all aspects of corporate governance, including board and committee structure, board dynamics, the conduct and frequency of board meetings, the consideration of strategic issues by the board and the information provided to directors. The board considered that it was operating effectively. The review identified the need for improvements in some areas, including revising the format of the board strategy sessions and improving the consistency of board papers. The board agreed to encourage greater interaction between the board and management, for example, by arranging board visits to company facilities. The board has also asked to receive more regular reports on succession planning for executives. These improvements will be implemented in 2009. The audit, remuneration and nominations committees have separately undertaken reviews of their terms of reference and effectiveness during 2008.

Rotork P.L.C. page 34

A formal process for performance evaluation of the board, its committees and individual directors takes place annually. For 2008, the evaluation took the form of a questionnaire prepared in conjunction with external consultants covering a wide range of board related matters. This questionnaire was developed and enhanced following feedback in previous evaluations to focus on those matters that the chairman considered were of most interest to board members. The results and analysis including the main findings of the evaluation were reported to the board. Appropriate action will be taken on the findings during the following year and then re-evaluated at the next annual evaluation.

The Royal Bank of Scotland Group plc page 154

The board has undertaken a formal and rigorous evaluation of its own performance and that of its committees and individual directors.

In 2008, this was conducted internally using detailed questionnaires and individual meetings with each director. Amongst the areas reviewed were the role of the board and committees, composition, meetings and processes, performance and reporting, and external relationships. The board has considered and discussed reports on the outcomes of the evaluations and is satisfied with the way in which the evaluations have been conducted.

A number of initiatives are already underway aimed at improving the overall performance and effectiveness of the board, including further board appointments, restructuring board agendas and allowing more time at board meetings to consider strategic issues. In addition, a number of actions have already been taken to enhance reporting to the board and audit committee on risk matters, liquidity and funding.


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In addition, the former chairman evaluated the individual performance of each director. The former senior independent director canvassed the views of the executive directors and met with the non-executive directors as a group without the former chairman present to consider his performance.

Royal Dutch Shell PLC page 26

The board carried out a performance evaluation of the board, the board committees, the chairman and each of the directors. As in previous years, this was an internal exercise led by the nomination and succession committee. The board agreed to conduct the exercise by way of structured interviews on a one-to-one basis in accordance with the table on page 27. This was followed by a discussion by the full board of the results of the evaluation of the board and board committees, while the results of the evaluation of the chairman, the chief executive and executive directors were discussed by the non-executive directors.

The outcome of this evaluation process showed that directors were generally positive about the performance, processes and effectiveness of the board and board committees. Directors agreed on a number of steps to improve continuously the effectiveness of the board, in order to meet the strategic and operational challenges the company faces over the coming years in the light of the current global financial crisis.

Performance evaluations

Evaluation of the Interview arrangement

Board Chairman to interview non-executive directorsChairman to interview chief executiveDeputy chairman to interview chairmanChief executive to interview executive directors

Board committees Committee chairman to interview committee members

Chairman Deputy chairman to interview all directors

Non-executive directors Chairman to interview each non-executive director

Chief executive Chairman to interview chief executive

Executive directors Chief executive to interview executive directors

RSA Insurance Group plc page 42 In 2008, the board undertook an annual evaluation of its performance to assess how well the board, its committees and the directors were performing. The review included the use of a comprehensive questionnaire. Responses from the questionnaire were collated and subsequently discussed by the board. Some of the outcomes achieved in 2008 following the review included:

A continued commitment to site visits and on the non-executive directors meeting emerging talent from the business

Continued improvement of agenda management for board meetings to ensure that adequate time is made for the debate and exchange of ideas, and

A programme of regular investment updates for the whole board, in addition to continued comprehensive reviews at the Investment committee.


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The non-executive directors are responsible for the evaluation of the chairman’s performance and take into account the views of the executive directors in their evaluation. As part of the ongoing performance evaluation process the chairman has regular one to one meetings with all the non-executive directors.

SABMiller plc page 36

A formal evaluation of the performance and effectiveness of the board and of the audit, remuneration, nomination and corporate accountability and risk assurance committees is carried out each year, led by the chairman, with input from the senior independent director and in consultation with other directors and the company secretary. The performance of the chief executive is reviewed by the remuneration committee and this review is shared with and considered by the board. The performance of the chief financial officer is reviewed by the chief executive and the remuneration committee, and reported to the board by the remuneration committee. Each non-executive director’s performance is evaluated by the chairman, in consultation with the senior independent director, who in turn consults with the executive directors and the company secretary. The chairman’s performance is evaluated against the same criteria by the senior independent director, the non-executive directors and the company secretary, taking into account the views of the executive directors.

In considering the contribution of individual directors for the year under review, performance was assessed against the company’s selected criteria of strategy, expertise in their field, governance factors, commitment, profile, knowledge of the industry and team contribution, culminating in an overall contribution rating. The importance of the different roles played by individual directors in bringing a balanced overall view to the board was recognised for the year under review, the chairman has assessed that all directors continue to make an effective contribution to the board.

In reviewing the performance of the board and its committees, the chairman and the senior independent director were aligned in their conclusion that measured against the principal duties expected of it, the board (including by extension its standing and ad hoc sub-committees) continued to operate effectively and to meet in full its obligations to support management, to monitor performance across a wide area, and to maintain its strategic oversight.

In a meeting of the chairman, the senior independent director, the committee chairmen and the company secretary, the results of the performance and effectiveness evaluations conducted in respect of the board, each of the directors, the chairman, the senior independent director and each of the board’s four standing committees were reviewed. Regarding the board committees, each of the committee chairmen expressed their views regarding the operation of his committee against its terms of reference and the performance and effectiveness of that committee. These views were discussed in an open and constructive manner with recommendations arising from the discussions being brought forward to the board and the respective committees.

The results of the performance and effectiveness evaluation process were also reviewed by the chairman, the senior independent director, the chief executive and the company secretary, all of whom concluded that the board and its committees were operating effectively.

The Sage Group plc page 43

The members of the board have evaluated the performance of the board, its committees and individual members at meetings and also through the completion of detailed questionnaires. The questionnaires cover a range of issues relating to the board’s role and its responsibilities, the conduct of board meetings and the structures in place to ensure that the board has the opportunity to debate fully areas of concern, the leadership and culture of the group. The questionnaires also consider board communications, governance and the performance of the committees and their members. The completed questionnaires are reviewed and considered by the chairman and by the board as a whole. The chairman follows this review with meetings with individual directors. The company secretary also raises the areas covered by the questionnaires for discussion with key executives who support the board and the committees and key advisors and reports their views to the chairman. This year’s review identified new themes and topics for inclusion in the board agenda for next year; and a need to increase the time available for board meetings.


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J Sainsbury plc page 30

The board agreed that this year’s evaluation exercise should be conducted by Tim Fallowfield, the company secretary. Having agreed the key objectives with the chairman, he prepared a detailed questionnaire and then met with each director separately to discuss the board’s role and structure, process and relationships, and any emerging issues. The performance of the board committees was also reviewed. He then presented the findings to the board, identifying what was working well and areas which could be improved or approached differently. The board concluded that the action plan from the 2008 review had been implemented and it was satisfied with the progress that it had made during the year and that it was working effectively. An action plan was agreed to address the themes which emerged from this year’s exercise; for instance the continuing training programme for the non-executive directors will be updated.

The senior independent director reviewed the chairman‘s performance and subsequently met with him to provide feedback to him. The chairman separately reviewed the contribution of each of the directors with them.

Schroders plc page 24

The board, led by the chairman, reviewed the effectiveness of the board and the principal board committees. The board considered alternative evaluation methods and agreed that internal evaluation, using a Schroders specific questionnaire complemented by interviews between the chairman and individual directors where required, was appropriate. The performance of the board committees and individual directors was considered as part of this evaluation process. The responses to the questionnaires were analysed and discussed with the chairman. A report was prepared on the findings of the evaluation process and this was considered by the whole board at its meeting in February 2009.

The performance of the chief executive was considered by the chairman’s committee against his objectives for the year which had been agreed with the chairman. The outcome was discussed by the chairman with the chief executive.

A meeting of the chairman’s committee, led by Sir Peter Job in his role as senior independent director, also assessed the performance of the chairman with input from the whole board. Sir Peter discussed with the chairman the outcome of this review.

Scottish & Southern Energy plc page 57

The board, the board committees and the individual directors undergo an annual process of performance evaluation. Senior management also participates in a performance evaluation programme.

During the year the chairman conducted the performance evaluation of the board. Each director completed a detailed questionnaire. The questionnaires covered the board and committee processes, their effectiveness and where improvements could be made. Reports were produced on the key findings and the chairman of the board and the committee chairmen reported these findings to the board meeting in January 2009 for discussion. Directors also participated in detailed reviews of individual performance which were carried out in one-to-one meetings with the chairman. The process for evaluating the chairman was managed by the senior independent director/which involved a separate meeting of the non-executive directors chaired by the senior independent director.

The review concluded that the board and its committees were operating effectively, continued to set clear objectives and focused on the correct areas. Each of the directors continued to make an effective contribution to the work of the board and its committees, was well informed and demonstrated full commitment to his or her duties. Some further areas were identified including a renewed focus on the future resource requirements of the group as it continues to grow. These will be taken forward in 2009. The new board meeting arrangements were considered to be a significant improvement.


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The board was satisfied that the performance evaluation process was a worthwhile exercise and the directors had participated in an open and frank basis.

Scottish Mortgage Investment Trust PLC page 23

The nomination committee met to assess the performance of the chairman, each director, the board as a whole and its committees, after inviting each director and the chairman to consider and respond to a set of questions. The appraisal of the chairman was led by Mr G A Ball.

The appraisals considered, amongst other criteria, the balance of skills of the board, the contribution of individual directors and the overall effectiveness of the board and its committees. Following the process it was concluded that the performance of each director, the chairman, the board and its committees continues to be effective and each director and the chairman remains committed to the company.

A review of the chairman’s and other directors’ commitments was carried out and the nomination committee is satisfied that they are capable of devoting sufficient time to the company. There were no significant changes to the chairman’s other commitments during the year.

Segro plc page 50

The board undertakes a formal evaluation of its own performance. The chairman, assisted by the company secretary, leads this process. The performance evaluation consists of each director completing a wide ranging appraisal questionnaire which is based on the process and questions outlined in the Code. The questionnaire provides a forum for giving feedback on the running of the board, any weaknesses which need to be addressed and where the board is performing well. The responses to the questionnaire are reviewed by the chairman and the board.

As a result of the 2007 review, the chairman recommended the following changes: a more frequent review of strategy in difficult times; the commissioning of a review as to how the company adds value; suggestions as to the content of board agendas; and the provision of audit and remuneration committee questionnaires constructed on a similar basis to those used for the board performance evaluation. It has been agreed that the 2008 board performance review will be conducted by a third party.

The senior non-executive director chaired a meeting of the non-executive directors in the absence of the chairman to appraise the chairman’s performance taking into account the views of the executive directors. A similar review of the chief executive took place with the chairman present. The chairman and the non-executive directors met during the year with the chief executive and director of human resources to discuss succession planning.

Serco Group plc page 53

The group recognises the importance of a comprehensive evaluation process for the board and ensures that comments and recommendations are considered carefully and implemented where appropriate to ensure its continued development. A rigorous evaluation of the board and its committees was undertaken in November 2008. This included the completion of an evaluation questionnaire, one-to-one meetings for all directors held with the chairman plus an evaluation of the chairman’s performance led by the senior independent director (taking into account the views of both the non-executive and executive directors). The outcomes from the board’s appraisal were discussed fully at the following board meeting, and recommendations from the evaluation will be implemented as soon as reasonably practicable.


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All directors feel that the board and company are open, professional and enjoyable to be a part of and that appropriate information is provided to the board in the furtherance of its responsibilities. Its diversity, strong sense of value and good governance are also considered to be key strengths. While the areas for further development were few, it was noted that the balance and structure of the board should be kept under review, particularly in light of the growing geographic and technical diversity of the group.

In carrying out the performance evaluation process, the use of an independent evaluator was considered but the board once again concluded that its own process was sufficiently rigorous.

Severn Trent Plc page 26 During the last financial year the board participated in a formal evaluation of its own performance and that of individual directors. To ensure independence and objectivity the review was undertaken by Praesta Partners LLP.

The three core conclusions from the formal independent review were that:

(1) the board is effective across key aspects of its role and supporting processes (2) the directors wish to continue to move the emphasis of the board’s attention from detailed operational

issues to long term strategic issues, and (3) the board want to structure the future corporate meetings calendars and content of the agendas to

support the move in emphasis.

Collectively, the board is satisfied that the actions undertaken during 2008/09 have aided it in achieving its objective. The board is also satisfied that it has all of the necessary skills, experience and qualities to lead the company.

Shire Pharmaceuticals Group plc page 46

The company conducted evaluations of the performance of the board, its committees and its directors in 2008. The 2008 evaluations were undertaken by way of a formal review chaired, respectively, by the chairman of the board and the chair of each board committee. Mr Emmens met with each board member to discuss their views on a broad range of topics relating to the operation and effectiveness of the board. The output of those meetings was discussed with the board in plenary session. The evaluation of the remuneration committee was facilitated by external consultants. Members of the audit, compliance and risk committee completed performance evaluation questionnaires before that committee’s review meeting. The non-attributable aggregated responses from these questionnaires formed the basis of the review. The evaluation of the nomination committee was by way of discussion. All the reviews covered a wide range of matters including adequacy of the composition of the board and its committees, performance of directors and the adequacy of information provided. The board and its committees noted that the improvement to operating procedures identified in the previous year had been implemented. Following discussions in 2008, further improvements were identified for implementation in 2009

Smith & Nephew plc page 55

In 2008, Consilium Associates conducted an external review which confirmed the board’s high level of effectiveness. While there were some opportunities for improvement, the board operated within a sound governance framework with practices compliant with the Combined Code. Individual evaluation of the directors is carried out by the nominations committee with particular emphasis on the evaluation of those directors standing for re-appointment at the AGM. The non-executive directors, led by the senior independent director, evaluate the performance of the chairman.


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Smiths Group plc page 61

The board undertakes a formal and rigorous annual evaluation of its own performance and that of its committees and the individual directors. In 2008, this process was facilitated by Professor Goffee of the London Business School. The evaluation process formed the basis of a review by the whole board, led by the chairman. The performance evaluation of the chairman was led by the senior independent director who obtained the views of both the executive and non-executive directors.

Soco International plc page 32

The nominations committee led the board in evaluating its own performance and that of its committees and individual directors. The company secretary facilitated compilation of the results. The senior independent director facilitated relevant discussions regarding the role of the chairman. The process was undertaken for the purpose of adding value to the quality of the board and its procedures through identifying and addressing strengths and weaknesses. Additionally, it was utilised to assess director effectiveness and the time commitments of non-executive directors. Actions for improvement were undertaken as deemed appropriate. The committee performed a review of its TOR and of its own performance as part of this process.

After giving consideration to board structure and composition, evaluations, time commitments, length of service, individual contributions and the requirements of the board, the committee recommended that each of the directors retiring by rotation be proposed by the board for reappointment at the forthcoming AGM.

Spirax-Sarco Engineering plc page 34

Utilising a format created with the advice of Towers Perrin, the board again carried out a rigorous evaluation of board performance in accordance with the Combined Code requirements which confirmed the effective operation of the board and reflected the importance of strategic matters. The evaluation process comprises a review conducted by the company secretary and reported to the chairman of all directors’ views on the operation of the board and the performance of the chairman, the chairman’s and chief executive’s review of the board performance of each director, the chairman’s review of the non-executive directors and the review by committee members and attendees of the operations of the audit, nomination and remuneration committees and the performance of the chairman of each of those committees. The evaluation confirmed a continued high rating for the board’s operations and encompassed board constitution, board meetings, board functionality, communication and knowledge management, company secretariat performance, assessment of the chairman’s performance and the effectiveness of the board’s committees.

SSL International plc page 36

During the year, the board reviewed the process for the evaluation of the performance of the board, its committees and the individual directors. Previous evaluations have been conducted internally and led by the chairman, whilst the SID conducted the evaluation of the chairman. The board concluded that this process remained appropriate. All directors were required to complete a detailed questionnaire, which each director then discussed with the chairman and with the SID, in relation to responses about the chairman. The results of the evaluation were presented to the board. The board considers the annual evaluation to be a valuable process, which has contributed to fostering an environment within the board that is challenging but supportive, encourages focus on the main issues facing the group and further enhances the board’s procedures and working practices.


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St James’s Place Capital plc page 48

During the year, the chairman met each non-executive director on a one-to-one basis and held meetings with the non-executive directors collectively. Issues discussed included topics for pre-board presentations, training requirements for non-executive directors and results of the performance evaluation of the board. The non-executive directors, led by the senior independent director, also met without the chairman present to appraise the chairman’s performance and to discuss other topical issues such as succession plans and the overall performance of the board. The senior independent director carried out a formal appraisal of the chairman’s performance.

The board carried out an annual evaluation of its own performance, including its committees and individual directors. The board evaluation was carried out by the company secretary, who conducted interviews with each member of the board. The findings were presented to the board and a number of improvements made such as ensuring more information is provided in board packs on competitor activity, stress testing and scenario planning.

Stagecoach Group plc page 27

The board assesses its own performance and the performance of each individual board member; this assessment is co-ordinated and directed by the chairman with the support of the company secretary. The senior independent non-executive director co-ordinates the board’s assessment of the performance of the chairman. As part of the assessment process, the non-executive directors meet without the executive directors being present. The non-executive directors also meet without the chairman being present. The chairman obtains feedback from each individual director on the performance of the board and other board members – this involves the completion of a questionnaire and a follow-up discussion. In the same way, the senior independent non-executive director obtains feedback from each individual director on the performance of the chairman. A similar process is undertaken to assess the performance of each of the board’s committees.

The directors have reviewed the effectiveness of the board as a whole and its committees. Each director has assessed the effectiveness of the board and each committee of which he or she is a member.

The assessment of effectiveness included consideration of:

the effectiveness of the formal board and committee meetings the nature and extent of the board’s interaction with the management of the group the timeliness, relevance and accuracy of the information provided to the board and its committees the allocation of the board’s time between differing priorities including the time spent on strategic

considerations relative to other matters, and the composition of the board and its committees.

The board has considered the results of these assessments and has concluded that overall the board and its committees continue to operate in an effective and constructive manner.

Standard Chartered PLC page 74

An effective board is crucial to the success of the group. To assess the performance of the board, its principal committees and individual directors, the company conducts a rigorous performance evaluation each year. The process is led by the chairman and supported by the group company secretary. In 2008, the directors completed an online qualitative questionnaire devised in conjunction with external professional input. As part of the evaluation, the directors performed a self-evaluation which was used by the chairman in performance conversations. The evaluation of the chairman, led by the senior independent director, formed part of the overall board effectiveness review.


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The board has discussed the outcome of the evaluation. The conclusion was that the board operated effectively, was highly engaged and that communication was of a high standard. It was acknowledged that the time commitment associated with the directors’ role, particularly in light of the current economic environment, had increased significantly. It was agreed that a review of the arrangements in respect of the directors would be undertaken during 2009.

Standard Life plc page 83

As the board’s effectiveness is key to the group’s success, the board has, through the nomination and governance committee, developed a formal annual review process to assess how well the board, its committees and directors are performing collectively and individually, and how their respective performances might be improved. The process requires each director to complete a confidential questionnaire on the board and each committee of which the director is a member. The questionnaire is updated each year to reflect learning points from the previous year’s review. This is followed up by individual interviews with all board members, based on their responses to the questionnaire, to gather their views on areas where the board or committee has performed well and areas for improvement. The questionnaires cover subjects such as the board’s input to the setting of strategy, the quality of information presented to the board and the processes that support the board’s activities. The results are considered in detail by the nomination and governance committee before being formally reported to the board. As well as reporting progress on the action plan from the previous year’s review, the report summarises the board’s key successes and development points, and includes an action plan based on the current year’s recommendations. Progress against this plan is monitored and reported back to the nomination and governance committee. The board effectiveness review is undertaken with internal support from the group company secretary and general counsel’s office. Each year, the nomination and governance committee and the board consider whether this process remains the most effective approach.

Following the review covering the period 1 July 2007 to 30 June 2008, the board concluded that it had performed effectively, and agreed actions in respect of certain areas identified for improvement. These included strengthening the board’s process to review and challenge the group’s strategy and planning work.

The review of the chairman’s performance is led by the senior independent director and involves obtaining formal feedback via confidential questionnaires from each of the other directors. The feedback is summarised into a themed report, which is distributed to all members of the board, other than the chairman. The directors, led by Lord Blackwell and without the chairman being present, met during the year to consider the report on the chairman’s performance and concluded that he had performed effectively. Lord Blackwell is responsible for passing the feedback arising from the review to the chairman.

The process of reviewing the performance of individual directors is led by the chairman, who held one-to-one meetings with each of the directors to assess their individual performance and contribution against performance objectives set out in the board charter. Prior to these meetings, the directors self assessed their performance by completing a confidential questionnaire. The meetings were designed to ensure that each director was contributing effectively to the board and each board committee and continued to have sufficient time to commit to the role. In addition, the chairman and the non-executive directors met formally and informally without the executive directors present to discuss various issues including the executive succession planning processes.

Talvivaara Mining Company plc page 50

The board of directors recognizes the importance of a formal and rigorous annual performance evaluation of the board members. Taking into consideration the size and stage of development of the company, the board of directors has determined that no formal performance evaluation will be conducted at this stage. However, the board of directors intends to draw up a plan for the performance evaluation of the board members during 2009.


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Tate & Lyle PLC page 65

During the year, the chairman led an exercise to evaluate the effectiveness of the board and its committees.

As part of the process, the chairman held one-to-one meetings with each director and the company secretary. The main themes and observations on the board’s effectiveness were summarised in a report to the board. It concluded that the board continued to operate in an effective manner but made a number of recommendations for improvements such as the timing of committee meetings and further enhancements to the format and content of board papers. Actions are being or will be taken to address the matters raised by the evaluation with progress monitored by the company secretary.

With regards to the performance of individual directors, the chairman concluded that all directors continue to make an effective contribution to the board’s work, are well prepared and informed about issues they need to consider and that their commitment remains strong.

During the year, the non-executive directors met together without the chairman, under the chairmanship of the senior independent director, to appraise the chairman’s performance (the senior independent director having first sought the views of the executive directors). In addition, the chairman held a private meeting with the non-executive directors to appraise the chief executive’s performance and to address any other matters the non-executive directors wished to raise.

The audit, nominations and remuneration committees also undertook an evaluation of their work and effectiveness during the year, the results of which were reported to the board by the respective committee chairmen. The reviews concluded that each committee was operating effectively.

Taylor Wimpey plc page 40

In line with the Combined Code, a formal annual evaluation of the performance and effectiveness of the board and its committees and of individual directors was carried out. The evaluation was carried out by the chairman and the group company secretary. The process consisted of a bespoke questionnaire which was sent by the group company secretary to all directors for completion. The questionnaire focused on the performance of: the board, the four board committees, the performance of each director (by way of self assessment plus a confidential evaluation by the chairman of each director) and the performance of the chairman. This year, the evaluation also specifically focused on a rigorous assessment of each of the three directors who have served on the board for more than six years (taking into account where applicable, past service on the George Wimpey Plc board). The secretary collated all of the responses and produced a summary in respect of each performance area. The chairman and the secretary then reviewed the summaries that had been prepared in respect of the board, each board committee and each director (other than the chairman) and formally presented the findings to the board on a non-attributable basis for discussion. Following this, a set of actions was agreed which were designed to increase further the overall effectiveness of the board.

A number of points came out of the performance evaluation designed to increase the effectiveness of the board which will be implemented during 2009. A specific action item coming out of the evaluation is that directors should receive health and safety training in order that they are more aligned to the key operational priority of the group. This action item has already been largely addressed.

The non-executive directors, led by the senior independent director, undertook the evaluation of the chairman’s performance. The evaluation was based on the non-attributable summary prepared by the secretary of the feedback from the non-executive and executive directors. The summary was reviewed by the non-executive directors in the absence of the chairman, following which David Williams in his capacity as the senior independent director provided feedback direct to the chairman.


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As part of the appraisal process the chairman has also met on a one to one basis with each director. Last year, it was reported that a specific action item would be to arrange for non-executive directors to make additional visits to operations across the group.

This action item has been comprehensively addressed: the non-executive directors made several visits to the businesses around the UK and in North America, to discuss with local management teams the challenges currently facing their businesses, the situation in local markets and the initiatives being taken to counter or mitigate their effects.

In line with the Combined Code, the chairman also holds meetings with the non-executive directors without the executive directors present. The senior non-executive director also holds and leads meetings with only the non-executive directors present.

Templeton Emerging Markets Trust PLC page 30

The board has undertaken a formal evaluation of its own performance and that of its committees and individual directors including the chairman. The board has also considered the independence of each director. The evaluation of the board, of its committees, and the performance of individual directors, was carried out through questionnaires and discussions between the chairman and each director. The chairman has been evaluated by his fellow directors, led by Sir Peter Burt, the senior independent director and such evaluations shall continue to take place at least annually. Thereafter the board meets as a group to review the findings. The performance and cost of service providers are considered as regular items annually on the board’s agenda.

Tesco PLC page 47

The performance of the board is a fundamental component of the group’s success. The board regularly reviews its own performance. During the year ended 28 February 2009, the board assessed its own performance. This assessment was co-ordinated and directed by the chairman with the support of the company secretary. A questionnaire covering the main areas of evaluation was prepared by the chairman and the company secretary and formed the basis of in-depth interviews with each director. The results of the evaluation were considered by the board, and confirmed the strength of the strategic and entrepreneurial leadership of the company, a sound governance framework and practices compliant with the Combined Code.

The chief executive reviews the performance of each executive director. The chairman reviews the performance of the chief executive and each non-executive director. During the year, the chairman met with the non-executive directors, without the executive directors present, to discuss board issues and how to build the best possible team. The senior independent non-executive director met with the non-executive directors in the absence of the chairman, to assess the chairman’s performance.

Thomas Cook Group PLC page 46

A thorough evaluation of the board and its committees was conducted during the year. This was facilitated by the group company secretary under the direction of the then deputy chairman and senior independent director. The process involved each of the directors completing a comprehensive questionnaire, which was structured to encourage both graded responses and narrative feedback in respect of a range of questions that focused on the following areas:

board and committee composition, knowledge and dynamics time management support


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strategic development and oversight delegation of authority risk management corporate responsibility human resource management executive remuneration mergers and acquisition transactions performance of executive and non-executive directors committee structure and performance, and priorities for change.

Upon receipt of the completed forms, the group company secretary compiled a report, drawing out the key themes and issues that were raised and formulated a number of recommendations to further enhance the overall effectiveness of the board and its committees. This report was developed and agreed with the then deputy chairman and senior independent director and circulated to the board for debate at the September 2009 board meeting. The results of the evaluation concluded that the operation of the board and its committees had improved during the year but highlighted a small number of areas where further improvement could be made as part of the natural evolution of a board that was formed two years previously upon the merger of Thomas Cook AG and MyTravel Group plc. Areas for further improvement included: a requirement for more regular reviews of executive and senior management succession plans; the need for additional non-executive directors to strengthen the board to ensure a pool of candidates for succession to the positions of the chairman and, more immediately, the senior independent director; an increase in the frequency and time allocated to the review of strategy and risk; increased exposure to members of the group executive board and other senior managers; and the fine tuning of certain regular board reports. The board debated the above and agreed the recommended actions and a forward agenda of additional key issues for review. The board and committee evaluation to be carried out in the current financial year will cover the same areas as listed above and will be designed to track progress against the agreed actions set in 2009.

The independent non-executive directors did not conduct a performance review of the chairman, Karl-Gerhard Eick, due to the short period of time that he had been in office. The independent non-executive directors and the executive directors did evaluate the performance of the deputy chairman and senior independent director as part of the board evaluation process shortly before appointing him as chairman of the company. As part of the company’s performance management system that applies to management at all levels across the group, the performance of the group chief executive officer and the group chief financial officer is reviewed by the management development and remuneration committee.

3i plc page 75

During the year, the board conducted its annual evaluation of its own performance and that of its committees and individual directors. The chairman led the process, meeting with each of the directors to ascertain their views and discuss their answers to a questionnaire developed with the aid of external consultants. The chairman subsequently reported formally to the nominations committee and the board and also gave feedback to individual directors. In the course of this process, the board decided that it should make a change in the executive leadership of the company, and appoint a successor to Mr Yea as chief executive to manage the company through a deep recession, delivering actions to strengthen the company’s financial position. In considering possible candidates, the board unanimously took the view that Mr Queen’s experience as finance director, his stewardship of growth capital, his success in launching and managing 3i’s infrastructure business, the respect in which he was held within 3i and his deep knowledge of private equity made him the outstanding choice.

The board performance evaluation included consideration of the overall functioning of the board including strategic planning, risk management processes, board balance and succession issues, meeting management and the work of the board’s committees, and agreed on a number of changes designed to maintain focus on the challenges facing the


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company in turbulent economic times. It was agreed that it was helpful to continue to hold additional ad-hoc board meetings where circumstances warranted this, and the board continued to identify areas where its working practices could be developed further.

The board reviewed its non-executive membership and agreed to commence processes to recruit directors to replace those likely to leave the board in the next two years. It further decided to appoint Mr Robert Swannell as senior independent director in 2009–10, succeeding Mr Oliver Stocken, who would by then have been on the board for nine years. Mr Stocken remained deputy chairman. In his role as senior independent director during 2008–09 Mr Stocken led a review by the directors of the performance of the chairman and subsequently reported back to the board. In view of the change in executive leadership, the board asked the chairman to delay her retirement from the board for an appropriate period.

Tomkins plc page 45

Under the direction of the senior independent director, Richard Gillingwater, evaluations of the effectiveness of the board, its committees and chairman were conducted during the year. The evaluation processes followed the same approach as the previous year which drew on the experiences of the previous evaluations of the board and its committees and concentrated on six key elements:

the optimum mix of skills and knowledge amongst the directors clarity of goals and processes tailoring the evaluation to the specific circumstances of Tomkins the culture of candour that encourages constructive evaluation regular reviews of assessment criteria, and full disclosure of procedures and criteria to the board.

Board and committeesA board performance evaluation took place during the year, and a report was prepared and considered by the board. The vast majority of questions were answered with positive comments and with scores indicating a high degree of satisfaction with the board, committees and chairman and there was a very strong conclusion that we have a well-functioning board and committees.

There were some suggestions for improvement, including the allocation of more time on the company’s longer-term objectives and planning, with particular reference to the sufficiency of the number of board meetings in the current macroeconomic climate. Executive and senior management succession planning and talent development within the company was another area which came under scrutiny, with particular reference to the positions of the chairman, and the CEO and his immediate reports. Other areas considered were the effectiveness of board activities in terms of considering certain financial and structural issues in a proactive way and improvement of budgetary control. In relation to strategic planning and objectives, there were suggestions for improvement in simple KPIs to measure business performance as well as financial performance, KPIs for CSR matters being of particular use. Suggestions for improving specific non-executive director contributions to the board included more location visits.

In relation to the committees, the scores were high. It was noted that the audit committee is well served by staff functions and it was thought that both internal and external audit had worked well, though there was a request for more discussion and understanding of the principal risks and uncertainties faced by the company and mitigation actions. In relation to the remuneration committee, it was suggested that more work on major remuneration developments was needed. The strong commitment to the CSR initiative was commended, together with the quality of review and effectiveness of the process and it was recommended that the CSR committee continue to support the environmental and community aspects of the CSR initiative.


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ChairmanFor the evaluation of the chairman, the questionnaire sought views across a broad range of his responsibilities. There was considerable positive feedback from directors on the role of the chairman and his effective leadership of the board, his interaction with the CEO, his excellent relationship with members of the board, the high regard in which he is held by senior management and, in particular, his efforts to ensure a clear distinction between the role of the board and that of management.

The senior independent director discussed various matters raised with the chairman and the non-executive directors as appropriate and arrangements were made to address the matters raised by the respective evaluations.

Travis Perkins PLC page 43

During the year, the board undertook an evaluation of its performance and the performance of its committees and the individual directors. This consisted of interviews by the chairman with each other director and the company secretary separately, focusing on the operation of the board and, its committees and in particular on those matters identified in 2007 where measures were taken to enhance performance. These interviews formed the basis of a report by the chairman that was the subject of a discussion by the board, which was satisfied that the process showed that the board and its committees worked effectively. However, it agreed a number of measures, in particular relating to the presentation of board business, aimed at further enhancing its performance. A board evaluation process will be carried out in 2009.

Tui Travel PLC page 49 An assessment of the performance of the board and its individual directors was commenced during the year. The board’s effectiveness was assessed by means of a detailed questionnaire which was designed by the company secretary and completed by each director. The questionnaire covers 16 areas including the processes for setting the strategy of the company, monitoring business performance, corporate governance and the effectiveness of the executive directors, non-executive directors (including the chairman) and the board’s committees. The results were fed back to the chairman and a full debate is scheduled to take place in the board before the end of 2009

Tullow Oil plc page 51

Given the number of changes to the board in 2008, the directors agreed that the annual board performance evaluation, and that of its committees and individual directors for 2008, should be conducted by way of an internal review. The review commenced with the directors noting the matters highlighted in the previous year’s external evaluation report, the consequential objectives set by the board for itself for 2008 and the level to which such objectives had been achieved. This was followed by a series of discussions of the issues arising and which took the form of one-to-one interviews with the chairman; a facilitated discussion among the executives; various separate discussions among the non-executives and a full board discussion of the issues. In summary, the board considered that good progress had been made towards achieving the board objectives set for 2008. In particular, the board was re-balanced in favour of the non-executives following the retirement of Matt O’Donoghue and the addition of Ann Grant as an additional non-executive director, while improvements were made in the areas of board induction, training and administration.

However, the board also recognised that in certain areas there was room for improvement. For example, the review concluded that given the extraordinary growth and success of the group and the resultant challenges, more time at board meetings could have been devoted to strategic planning rather than routine business and that the visibility of all directors across the group’s operations should continue to be increased. The view was also taken that while the nominations committee had been very successful in its role in the appointments made to the board in 2008, more focus needed to be given to board level succession planning issues. Each of the areas which were identified for improvement has now


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been incorporated in a revised set of objectives for the board for 2009. The review concluded that the board continues to operate effectively and that its functioning had not been adversely affected by the various changes to the board in 2008.board meetings continue to be conducted in a manner that encourages open and honest discussion. The internal review also confirmed that board committees continue to function effectively within clear terms of reference although two areas were identified for particular consideration in 2009. Firstly, whether it continues to be appropriate for all non-executive directors to participate in each committee, and secondly, to establish a better mechanism for the fuller and timely reporting to the board of the deliberations of committee meetings. In that regard, and to facilitate better circulation of board papers, the board agreed to investigate the suitability for Tullow of a web-based meeting administration system.

The chairman has held discussions with each of the directors on his or her individual performance and separately the non-executive directors have reviewed the performance of the chairman with input from the executive directors. The board is of the view that each non-executive director commits sufficient time to discharge his or her duties effectively.

Ultra Electronics Holdings plc page 36

Following the recommendations of the Code, the board operates an evaluation process in which the effectiveness of the board, its sub-committees and each individual director are assessed over a rolling two-year period. The chairman is responsible, on behalf of the board, for overseeing this process, which is facilitated by an independent external consultant. He is supported in this regard by the company secretary. In 2007, the contribution of each individual director was assessed by the rest of the board. This involved a questionnaire that was completed independently by each individual director. The results of this survey were processed and fed back separately to each individual and in total to the chairman. In 2008, the main board and its subcommittees were reviewed, again using a questionnaire that was completed independently by all members of the board. The scope of the review covered the board structure, processes and administration, together with the distribution of information. Its results were communicated to the directors in a written report, considered at a subsequent meeting in a discussion facilitated by the external consultant, and a number of actions were agreed as a result. This review cycle is repeated every two years.

Unilever PLC page 45

The evaluation process of our boards consists of an internal three-year cycle with an independent third-party evaluation carried out if the boards consider appropriate. The last time an independent third-party evaluation was carried out was in 2006. In 2007 and 2008, the chairman, in conjunction with the senior independent director, conducted the internal evaluation process. An extensive questionnaire for all board members formed part of the evaluation process. In addition, the chairman conducted a process of evaluating the performance of each individual board member, including an interview with each. The evaluation of the performance of the chairman was led by the senior independent director.

Committees of the boards evaluate themselves under supervision of their respective chairmen taking into account the views of respective committee members and the boards.

The results of the various evaluations were discussed by the boards and changes were made in respect of board practices and processes where considered necessary.

United Business Media plc page 55

Following the formal review of board and committee performance and effectiveness in 2007 which was conducted by external consultants, it was decided to revert to an internal process for the 2008 review. This was carried out by means of confidential questionnaires which were completed by all board directors and the results collated by the company secretary. A separate questionnaire was completed in respect of the chairman’s performance and the results collated by the senior independent director.


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Areas covered by the review included the roles and processes of the board and its main committees; board and committee dynamics and culture; succession planning; corporate governance; and risk management and control. The review concluded that the board and its committees continue to operate effectively.

Evaluation of the performance of individual non-executive directors is carried out by the chairman with input from the senior independent director and chief executive; the chief executive’s performance is evaluated by the chairman and the deputy chief executive and chief financial officer’s performance is evaluated by the chief executive.

The non-executive directors met without executives present to discuss board processes and management succession.

United Utilities Group plc page 27

During the year, the board conducted an evaluation of its own performance and that of its committees and individual directors. The process involved the completion by each director of a confidential questionnaire in a form consistent with previous years and which was modelled on the ‘chairman’s guide to the board performance review’ published by the chairman’s forum. Each director was required to score the board’s performance (and that of the principal committees) on 40 topics, including: contribution to strategy; risk management; financial and operational reporting; matters reserved for the board; communication; company and board advisers; relations with the group’s regulators and investors; and board procedures.

The company secretary analysed the completed questionnaires and summarised the findings in a report for the chairman, which highlighted and prioritised the key areas of feedback and provided a comparison with the previous year’s evaluation. The chairman subsequently conducted one-to-one discussions with each of the board members based upon the summary report about the board’s performance and their own as directors, after which he reported back to the whole board on the evaluation process. The responses to the questionnaires demonstrated a high degree of consistency and the evaluation process affirmed the board’s confidence in the group’s system of corporate governance. Nevertheless there is always room for improvement and, arising from the 2008/09 exercise, the board has asked that the structure of the strategic review process be enhanced. The members of the audit, nomination and remuneration committees, together with the managers and advisers who attend those committees, completed separate confidential questionnaires upon the effectiveness of the principal committees. Similarly, the chairs of those committees undertake evaluation based upon the feedback that is received.

As part of good governance, the chairman holds meetings with the non-executive directors without the executive directors present. In turn, led by the senior independent director, the non-executive directors meet without the chairman present at least annually to appraise the chairman’s performance. The chief executive officer conducts annual appraisals with executive directors and the other members of his senior management team and has one-to-one discussions about their performance with them, as does the chairman with the chief executive officer.

Vedanta Resources PLC page 40

During the year, the performance of the board, its main committees and the individual directors were formally and rigorously evaluated under the leadership and direction of the chairman. A questionnaire was circulated to directors concerning their individual performance and that of the board as a whole and its main committees. Responses were collated and summarised, open and frank board discussions held concerning the results and issues raised were addressed.

The evaluation process concluded that the board as a whole provided strong leadership within a sound framework of controls. The main committees had functioned effectively during the year and individuals had also performed well, with each member making a significant contribution to the company. The mix of skills and experience on the board was felt to be appropriate. The main area of weakness identified was the need to give greater time to discussing strategic and environmental issues. This has been noted and actions put in place as a result.


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As in previous years, the non-executive directors, led by the senior independent director, considered as part of the evaluation process the performance of the chairman and provided him with feedback.

Vodafone Group PLC page 66

Performance evaluation of the board, its committees and individual directors takes place on an annual basis and is conducted within the terms of reference of the nominations and governance committee with the aim of improving individual contributions, the effectiveness of the board and its committees and the group’s performance.

The board undertakes a formal self-evaluation of its own performance. This process involves the chairman:

sending a questionnaire to each board member for completion undertaking individual meetings with each board member on board performance, and producing a report on board performance, using the completed questionnaire and notes from the

individual meetings, which is sent to and considered by the nominations and governance committee before being discussed with board members at the following board meeting.

The evaluation is designed to determine whether the board continues to be capable of providing the high level judgement required and whether, as a board, the directors are informed and up to date with the business and its goals and understand the context within which it operates. The evaluation also includes a review of the administration of the board covering the operation of the board, its agenda and the reports and information produced for the board’s consideration. The board will continue to review its procedures, its effectiveness and development in the financial year ahead.

The chairman leads the assessment of the chief executive and the non-executive directors, the chief executive undertakes the performance reviews for the executive directors and the senior independent director conducts the review of the performance of the chairman by having a meeting with all the non-executive directors together and individual meetings with the executive directors and the company secretary. Following this process, the senior independent director produces a written report which is discussed with the chairman.

The evaluation of each of the board committees is undertaken using an online questionnaire that each member of the committees and others who attend committee meetings or interact with committee members are required to complete. The results of the questionnaires are discussed with the chairman of the board and the members of the committees.The evaluations undertaken in the 2009 financial year found the performance of each director to be effective and concluded that the board provides the effective leadership and control required for a listed company. The nominations and governance committee confirmed to the board that the contributions made by the directors offering themselves for re-election at the AGM in July 2009 continue to be effective and that the company should support their re-election.

VT Group plc page 51

The Code requires the board to undertake annually a formal and rigorous evaluation of its own performance and that of its committees and the directors.

This year, the board considered the merit of using an external body or facilitator to manage the performance evaluation process. The board concluded that it remained appropriate to evaluate its own performance this year, but will keep under review whether to use external resources in future years.

This year’s evaluation was conducted by means of detailed questionnaires which were completed by each director. Comments were invited on a wide range of issues including:


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The board’s role and culture Risk management Board and committee processes

Strategy Knowledge and skills Compliance

Performance Board structure Matters raised in last year’s review

Dialogue with investors Succession planning Deputy chairman to interview all directors

The chairman has discussed the results and sought further feedback during one-to-one meetings with each member of the board. In addition, the performance of the chairman has been subject to appraisal by the board, led by the senior independent director.

Overall, the board has concluded that it is operating effectively. However, a number of areas for further improvement were identified as a result of the evaluation exercise and an action plan is being developed. Next year’s review will monitor progress in these areas.

The Weir Group plc page 28

A formal process for evaluating the performance of the board is undertaken annually. This process is conducted internally based on a detailed questionnaire completed by each director and individual and collective discussions.

The evaluation examines the balance of skills of the directors, the operation of the board in practice including its corporate governance and the operation and content of board meetings. The findings are used to assist the board in its consideration of the opportunities for improvement in the performance of the board and its directors.

During 2008, the board also conducted an internal review of the effectiveness of the audit, nomination and remuneration committees incorporating a questionnaire covering such matters as the role and organisation of each committee, meeting arrangements, information provision and effectiveness. Following completion of these questionnaires by the members of each committee, the chairman met with the respective chairmen of the audit and remuneration committees to discuss the feedback. The results of this evaluation were reported to the board and, where areas for improvement had been identified, actions were agreed.

Additionally, a one-to-one appraisal of all board members is undertaken annually, including the chairman, whose appraisal is carried out by the senior independent director, with input from other board members.

Whitbread PLC page 7

During the year the performance of the board, and individual directors’ contributions to the board, are appraised by the chairman. This year:

each director completed a formal questionnaire on the board’s performance the chairman met or spoke to each director on a one-to-one basis the results of the review were discussed by the board and an appropriate action plan was agreed.

The performance of the board’s committees was reviewed during the year in line with their terms of reference.

The performance of the chairman is evaluated during the year by the senior independent director who discusses the chairman’s performance with each of the directors.


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William Hill PLC page 40

A process of performance evaluation of the board, its committees and directors is undertaken on an annual basis and the process undertaken for 2008 involved the following:

the four board committees conducting a review of their terms of reference and continuing to assess committee performance

one-to-one meetings being held between the chairman and each director to assess individual director performance and to allow any other issues to be raised; and an assessment by the board of its own performance, with feedback to the board from the chairman of each committee and the board, and the approval of action to address issues raised.

The senior independent non-executive director leads the process for the evaluation of the chairman’s performance, involving discussions with each other director, a meeting with the other independent non-executive directors and feedback to the chairman.

Witan Investment Trust plc page 33

The board has established a process to evaluate its performance on an annual basis. This process is based on open discussion and seeks to assess the strengths and weaknesses of the board and its committees. The chairman leads on applying the conclusions of the evaluation. The chairman reviews with each director his or her individual performance, contribution and commitment to the company. The senior independent director leads the annual evaluation of the chairman and reviews the conclusions with him. The board’s remuneration committee oversees this process.

Wolseley plc page 53

During the year, the board conducted a full evaluation of its own performance and that of its committees and individual directors, with the assistance of an external facilitator. The evaluation was carried out to assess the quality of the board’s decision-making, its overall contribution and value to the long-term benefit of the company, and to its preparation for future challenges.

The facilitator carried out the evaluation process using a combination of comprehensive questionnaires, one-to-one interviews, observation of board proceedings and a review of relevant board and committee papers. A consolidated report detailing the outcome of the evaluation exercise was prepared by the facilitator and presented to the board for review and consideration. The evaluation report concluded that the board, in comparison with other FTSE companies, rates highly in its effectiveness and in its engagement with and contribution to the business. A number of actions and improvements were identified for the medium to long term, including a recommendation to continue to address internal and external changes which could affect the business.

The board and its committees will continue to critically review their procedures, effectiveness and development throughout the year ahead and the chairman has reiterated that should any director have any concerns or observations which they wished to raise, these should be notified to him directly or to the company secretary, to be addressed appropriately.

As part of their ongoing development, the executive directors are encouraged to take up an external non-executive position on the board of a non-competitor company, for which they may retain payments received in respect of such appointment. In order to avoid any conflict of interest, all appointments are subject to the board’s approval and, generally, outside appointments for executive directors are limited to one company board. The board monitors the extent of directors’ other interests to ensure that the effectiveness of the board is not compromised.


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John Wood Group PLC page 45

In 2008, the board completed a formal evaluation of its own performance and of its committees, individual directors, and of the chairman. This involved directors completing detailed questionnaires, the results of which were analysed by the company secretary. A presentation of the results was made to the full board. The results were discussed both at a full board meeting and separate meetings between each director and the chairman. The non-executive directors, led by the senior independent director, are responsible for the performance evaluation of the chairman, taking into account the views of the executive directors.

WPP Group plc page 109

As to the board’s own performance, as well as the contributions of individual directors, board committees, and the chairman, we undertook, once again in 2008, a rigorous self-evaluation. All directors completed a confidential questionnaire in this regard and identified opportunities for improvement. Separate conversations were then held between each director and either the chairman or the senior independent director, who also led the non-executive directors’ assessment of my performance as chairman. Based on this process, we continued our tradition of implementing changes to enhance the board’s performance of its responsibilities.

Xstrata plc page 92

The board undertook an evaluation of its own performance and that of its committees and of its individual directors in accordance with the Code. The process was devised and conducted internally under the direction of the senior independent director, following the previous year’s external process. In general, directors were very satisfied with the board’s performance and the board is considered to be fit for purpose. Medium-term succession planning was identified as an area of some concern, whilst there was agreement on the group’s long-term strategy. It was agreed that board evaluations, which are conducted annually, will be conducted by external evaluators every three years.

Yell Group plc page 33

In Spring 2009, our board conducted a formal evaluation of its overall effectiveness. The evaluation focused on the collective performance of our board as well as on the performance of individual directors, our chairman and our company secretary. The exercise was conducted by means of a survey completed by each director and a one-to-one discussion between each director and our chairman. Following the survey the non-executive directors also met, with and without our chairman present, to discuss the performance of the board and of the chairman.

Documents

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