Report on Corporate Governance
The Board
The Board comprises three non-Executive Directors, including the Chairman, and three Executive Directors, providing an appropriate range of skill and experience. The biographical details of the Board members are set out on the Board page. The Board has six scheduled meetings each year and meets more frequently as required. It met on six occasions during the year under review and attendance at these meetings is set out in the chart opposite.
The non-Executive Directors are appointed for specified terms and the details of their respective appointments are set out in the Remuneration Report of the 2011 Annual Report.
The non-Executive Directors are determined by the Board to be independent in character and judgement and there are no relationships or circumstances which could affect, or appear to affect, a Director's judgement. The Chairman, John Rennocks was considered independent by the Board both at the time of his appointment as Director on 12 July 2002 and as Chairman on 7 January 2004 and in accordance with the Code, the ongoing test of independence for the Chairman is not appropriate. John Matthews is the Senior Independent Director.
All non-Executive Directors are advised of the likely time commitments at appointment. The ability of individual Directors to allocate sufficient time to the discharge of their responsibilities is considered as part of the Directors' annual evaluation process overseen by the Chairman. Any issues concerning the Chairman's time commitment are dealt with by the Nominations Committee, chaired for this purpose by the Senior Independent Director.
Non-Executive Directors are required to inform the Board of any changes to their other appointments.
There are three standing Committees of the Board to which various matters are delegated. Membership of the Committees is set out in the 2011 Annual Report and terms of reference of each the Committees are set out on the Company's website (www.diplomaplc.com). In order to ensure that undue reliance is not placed on particular individuals, the Board has decided that all its independent non-Executive Directors should serve on all Committees.
During the year the Chairman has also held meetings with the non-Executive Directors, without the Executive Directors present.
Appointments to the Board
The Board has established a Nomination Committee which leads the process for Board appointments and makes recommendations to the Board. The members of the Nomination Committee are John Rennocks, who is the Chairman, and the two non-Executive Directors. The Committee would be chaired by the Senior Independent Director on any matter concerning the chairmanship of the Company. The Company Secretary is the Secretary to the Committee.
The Nomination Committee has written terms of reference which are available on the Company's website, covering the authority delegated to it by the Board. In carrying out its duties, the Committee will:
- Take responsibility for identifying and nominating, for the approval of the Board, candidates to fill Board vacancies as and when they arise.
- Before making an appointment evaluate the balance of skills, knowledge and experience on the Board and in the light of this evaluation, prepare a description of the role and capabilities required for a particular appointment.
- In identifying suitable candidates, consider candidates on merit and against objective criteria and will take care that appointees have enough time available to devote to the position.
- Consider candidates from a range of backgrounds, both internally and externally and may use the services of external advisors to facilitate the search.
The Nomination Committee met once during the year under review at which proposals for development of the Board were discussed.
Information and professional development
An induction programme is agreed for all new directors aimed at ensuring that they are able to develop an understanding and awareness of the Company's core processes, its people and businesses. This process includes visits to various operating businesses. In addition to the induction programme that all directors undertake on joining the Board, a programme of director awareness of the businesses has been developed through periodic visits to the principal business locations and presentations by senior management of the businesses to the Board.
The Chairman, with the assistance of the Chief Executive and Company Secretary, is responsible for ensuring that Directors are supplied with information in a timely manner that is in a form and of a quality appropriate to enable them to discharge their duties. In the normal course of business, the Chief Executive makes an oral report to the Board at each meeting and information is provided and reported through formal Board Reports that include information on operational matters and strategic developments. There are also reports on the performance of Group operations, financial performance relative to the Budget, business development and investor relations.
The training needs of the Directors are periodically discussed at meetings with briefings as necessary on various elements of corporate governance and regulatory issues.
The Company Secretary acts as an advisor to the Board on matters concerning governance and regulatory issues and ensures compliance with Board procedures. All Directors have access to his advice and a procedure also exists for Directors to take independent professional advice at the Company's expense. No such advice was sought during the year. The appointment and removal of the Company Secretary and his remuneration are matters for the Board as a whole.
Historically, because of the relatively small size of the Company and to limit its costs, the Board has decided that the role of the Company Secretary should be combined with that of the Group Finance Director. As the Group continues to grow in both size and complexity, this appointment will be reviewed again by the Board in the new financial year.
Board evaluation
The Board's annual evaluations of effectiveness are completed internally using specifically designed evaluation forms and under the direction of the Chairman. This exercise encompasses an evaluation of the performance of the Board as a whole, as well as of the Committees and individuals. Feedback on Board performance is presented to a meeting of the Board which agrees actions and objectives for the following year.
Re-election
All Directors to the Board are subject to election by the shareholders at the first Annual General Meeting following their appointment by the Board. The Board has decided to adopt the provision of the new UK Corporate Governance Code, whereby all Directors will be subject to re-election annually, commencing from the Annual General Meeting on 18 January 2012.