The biographies of all members of the Board are set out in
Board of Directors.
Richard Peskin who was Managing Director until March 2000, was
Non-Executive Chairman of the Board until his retirement on 16
March 2009. Martin Scicluna, who was appointed to the Board on 1
October 2008, became Non-Executive Chairman of the Board on 16
March 2009, Toby Courtauld is Chief Executive and Kathleen
O’Donovan is the Senior Independent Director. Each of the
Non-Executive Directors is considered to be independent of the
executive management and free from any business or other
relationship which could materially interfere with the exercise of
their independent judgement.
To enable the Board to discharge its duties, all directors receive
appropriate and timely information, including briefing papers
distributed in advance of Board meetings and regular property
tours. All directors have access to the advice and services of the
Company Secretary, who is responsible to the Chairman on matters of
corporate governance. The directors may, at the Company’s expense,
take independent professional advice and are offered formal
training in specific areas relevant to either their speciality or
Committee roles or to the Board as a whole. On appointment, new
Non-Executive Directors, who are expected to provide a time
commitment to the Company of at least 24 days a year, are provided
with a detailed induction programme on the Company’s operations,
including social, ethical and environmental matters, and meet with
senior management as part of a guided tour of the Group’s main
properties. As part of his induction for becoming Chairman, Martin
Scicluna, as a Non-Executive Director, attended Audit Committee
meetings reviewing the half year results and the year end planning
and Remuneration Committee meetings reviewing bonuses, long- term
incentive awards and remuneration levels for the forthcoming
year.
Conflicts of interest
In line with the Companies Act 2006, the Company’s Articles of
Association were amended at the 2008 Annual General Meeting to
allow the Board to authorise potential conflicts of interest tha
tmay arise and to impose such limits or conditions as it thinks
fit. The decision to authorise a conflict of interest can only be
made by non-conflicted directors (those who have no interest in the
matter being considered) and in making such a decision the
directors must act in a way they consider in good faith will be
most likely to promote the Company’s success. The Company has
established a procedure whereby actual and potential conflicts of
interest are regularly reviewed by the Board and for proper
authorisation to be sought prior to the appointment of any new
director and the Board consider these procedures to be working
effectively.
(1) Appointed as a Non-Executive Director on 1 October 2008 and became Chairman on 16 March 2009.
(2) Phillip Rose missed an Audit Committee meeting due to illness.
(3) Jonathan Short was unable to attend a Remuneration Committee meeting due to a long standing commitment.
Where directors are unable to attend meetings, their comments, as appropriate, are provided to the Committee Chairman prior to
the meeting.
The Company maintains directors’ and officers’ liability insurance and pension trustee liability insurance, both of which are reviewed annually.
Board performance evaluation
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 covering: 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.
Committees of the Board
The Board has Nomination, Remuneration and Audit Committees which
deal with specific aspects of the Group’s affairs, each of which
has written terms of reference which are regularly reviewed and
which deal with their authorities and duties.
Nomination Committee
The Nomination Committee comprises Kathleen O’Donovan (Chairman),
Phillip Rose and Martin Scicluna who replaced Richard Peskin
following his retirement as Chairman on 16 March 2009. It
undertakes an annual review of succession planning for Senior
Executives and ensures that themembership and composition of the
Board, including the balance of the skills, continue to be
appropriate. In making recommendations to the Board of
Non-Executive Directors, it specifically considers the expected
time commitment of the proposed Non-Executive and other commitments
they already have. Agreement of the Chairman of the Company is also
required before a Non-Executive Director may accept any additional
commitments which could affect their time available to devote to
the Company.
Non-Executive Directors are not appointed for specified terms but
are subject to re-election by the shareholders at least every three
years. Under the Articles of Association, a director will retire
from office at the third annual general meeting following the
annual generalmeeting at which he was appointed or last reappointed
and all proposed reappointments to the Board are formally
considered by the Nomination Committee.
At the beginning of 2008, in anticipation of Richard Peskin
announcing his intention to retire fromthe Board in March 2009, the
Nomination Committeemet to consider the skill set required for the
role of Chairman and appointed external recruitment consultants.
Following the announcement in May 2008 confirming the Chairman’s
intention to retire, an interview and selection process was
undertaken and at the September 2008 Boardmeeting, the Nomination
Committee recommended the appointment from 1 October 2008, ofMartin
Scicluna as Non-Executive Director to become Chairman from16 March
2009. Martin Scicluna, who was Chairman of Deloitte LLP from1995 to
2007, head of Deloitte’s London Audit Division and formerly on the
firm’s Executive Committee, has extensive experience serving boards
and audit committees of FTSE 100 and 250 companies as Lead Partner
and is a Non-Executive Director of Lloyds Banking Group plc. The
Nomination Committee believes that the Board will benefit from the
appointment of Mr Scicluna as Non-Executive Chairman and is
satisfied that his appointment does not affect the independence of
Deloitte as the Group’s auditors.
Following six years on the Board, including five years as Senior
Independent Director, Kathleen O’Donovan intends to retire at the
2009 Annual General Meeting. On Miss O’Donovan’s retirement,
Charles Irby will be appointed Senior Independent Director and will
become a member of the Nomination Committee and Martin Scicluna
will become Chairman of the Nomination Committee. The selection
process, involving external recruitment consultants, for Miss
O’Donovan’s replacement as Chairman of the Audit Committee and
member of the Remuneration Committee, is at an advanced
stage.
Remuneration Committee
The Remuneration Committee, which comprises Charles Irby
(Chairman), Jonathan Short and Kathleen O’Donovan, has
responsibility for determining the remuneration, bonuses,
long-termincentive arrangements, contract terms and other benefits
in respect of the Executive Directors, and the remuneration of the
Chairman. It also reviews the framework for the remuneration of all
other employees and has access to professional advice outside the
Company, as required.
Audit Committee
The Audit Committee comprises Kathleen O’Donovan (Chairman),
Charles Irby, Phillip Rose and Jonathan Short.Miss O’Donovan is
also Chairman of the Audit Committee of Prudential plc and
TrinityMirror plc and a member of the Audit Committee of Arm
Holdings plc. The Audit Committee provides a forum for reporting by
the Group’s external auditors and meetings are also attended by
certain Senior Executives, by invitation. During the year, the
Committee was responsible for reviewing, and reporting to the Board
on, a range of matters including:
- the interim management statements, the half year and annual
financial statements and significant reporting judgements and key
assumptions therein;
- meetings with the Company auditors and property valuers;
- developments in accounting and reporting requirements;
- the review of the Company’s internal control and risk
management systems;
- the scope, effectiveness, independence and objectivity of the
external audit;
- the external auditors’management letter;
- the level of fees paid to the external auditors;
- the potential need for an internal audit function; and
- the Company’s whistleblowing policy.
The Audit Committee advises the Board on the appointment of the
external auditors, their remuneration for audit and non-audit work,
and their cost effectiveness, independence and objectivity, and
discusses the nature, scope and results of the audit with the
external auditors.
As part of the review of the effectiveness of the auditors, a
formal evaluation process incorporating feedback from the Audit
Committee and relevant members of management is provided to the
auditors.
The auditors are responsible for the annual audit and other
services which the Audit Committee believe they are best placed to
undertake due to their position as auditors. During the year these
included compliance reporting for transactions, debentures, bonus
plans and the long term incentive
plans.
Deloitte LLP have confirmed to the Audit Committee that they remain
independent and have maintained internal safeguards to ensure their
objectivity.
Due to its size and structure, the Group does not have an internal
audit function, a matter which is kept under review by the
Committee. Although there is no formal internal audit function, a
rolling programme of review of key controls is conducted through a
combination of the external audit process or through reviews by
members of the finance team and/or external advisers as
appropriate.
Internal controls
The Board recognises that it is responsible for the Group’s system
of internal control and for reviewing its effectiveness, at least
annually. Such a system can only provide reasonable, and not
absolute, assurance against material misstatement or loss, as it is
designed to manage rather
than eliminate the risk of failure to achieve business
objectives.
There are ongoing processes and procedures for identifying,
evaluating and managing the principal risks faced by the Group;
these processes and procedures were in place throughout the year
under review and up to the date of the approval of the Annual
Report, and accord with the Turnbull guidance “Internal Control –
Guidance for Directors on the Combined Code”.
Key features of the system of internal control include:
- a comprehensive system of financial reporting and business
planning;
- a defined schedule ofmatters for decision by the Board;
- an organisational structure with clearly defined levels of
authority and division of responsibilities;
- formal documentation procedures;
- the close involvement of the Executive Directors in all aspects
of day-to-day operations, including regular meetings with senior
management to review all operational aspects of the business and
risk management systems;
- the Board reviewing Group strategy and progress on developments
at each scheduled Board meeting; and
- a formal whistleblowing policy.
Three times a year, the Audit Committee carries out a review of the
framework of how the Group’s risks are managed through operational
management procedures/authorisations, ongoing review by the
Executive Committee, and Board review and oversight. The Committee
formally considers the scope and effectiveness of the Group’s
system of internal control and reporting to the Board. This
involves the identification of risks specific to the areas of
property and financial markets which impact on the Group’s
objectives, together with the controls and reporting procedures
designed to minimise those risks, which are reviewed, formalised
and updated throughout the year, as appropriate. These include
business risks, financial controls, social, ethical and
environmental issues and policy, and the regulatory environment.
Key risks to the business and the processes in place by which the
Company aims to manage those risks are included in
Risk Management.
Relations with shareholders
Communication with shareholders is given a high priority and the
Company undertakes a regular dialogue with shareholders and fund
managers. Visits are also arranged to properties of particular
interest or significance, particularly in relation to developments,
to assist investors’ understanding of the Company’s business. The
Executive Directors are the Company’s principal representatives
with investors, analysts, fund managers, press and other interested
parties, and independent feedback on presentations by the Executive
Directors to all major shareholders is provided to the
Non-Executive Directors on a regular basis. Martin Scicluna, as
Chairman, will aim to meet with major shareholders, as appropriate,
during the course of the coming year. Presentations to analysts and
the accompanying script are simultaneously posted on the Company’s
website. As Chairman and Senior Independent Director, respectively,
Martin Scicluna and Kathleen O’Donovan are each available, as
appropriate, as a contact for shareholders.
The Annual General Meeting provides the Board with an opportunity
to communicate with, and answer questions from, private and
institutional shareholders and the whole Board is available before
the meeting, in particular, for shareholders to meet new directors.
The Chairman of each of the Audit, Nomination and Remuneration
Committees is available at the Annual General Meeting to answer
questions. Details of the resolutions to be proposed at the Annual
General Meeting on 9 July 2009 can be found in the Notice of
Meeting . Details of the number of proxy votes for, against and
withheld for each resolution, will be disclosed at the meeting and
posted online.