For Year Ended 31 March 2011
Great Portland Estates' Board is committed to maintaining a high standard of corporate governance in respect of leadership, effectiveness, accountability, remuneration and our relationship with our shareholders as identified by the UK Governance Code. Fundamental to achieving these is, I believe, transparency in how we operate, together with good communication, both internally and externally.
Board culture and evaluation
Leadership starts with the Board and each year the Board undertakes a formal evaluation of its own performance and that of its Committees and individual directors either internally, by the Senior Independent Director, or by external consultants. In order to maintain objectivity and to ensure "best practice" following two years of internal Board review, this year the performance evaluation was undertaken externally by Jan Hall of JCA Group, who provides no other services to the Group, which concluded the Board operated in an efficient and effective manner. The process covered Board, Committee and personal performance and the output was reviewed at the January 2011 Board meeting to ensure any pertinent points could be incorporated into the Group's strategic review and wider corporate governance review in March 2011. Overall the process confirmed that:
- there is open and real dialogue between the executive and Non-Executive Directors with the right balance being achieved in the level of constructive challenge and contribution given by the different members of the Board;
- the Committees were considered to be working effectively; and
- the quality of information provided to the Board was high.
Whilst there were no recommendations to change the way in which the Board operates, unsurprisingly, it was considered that the Board's review of risk and the make-up of the Board were key areas which should be continually borne in mind in maintaining the Board's effectiveness.
Resourcing and succession planning
To implement our strategy to make further selected acquisitions, to drive rental growth and execute our extensive development programme during the year we have actively recruited to help broaden the strength and depth of our asset management, investment, development and finance teams. Overall headcount increased by almost 15% in the year to 31 March 2010 and we have appointed individuals with significant experience. As part of the Strategy Review, the Board also reviews the succession planning and development requirements for key executives and senior managers across each of the teams.
The Board has noted the publication of the Davies Review on Women on Boards in February 2011 and the subsequent consultation being undertaken by the Financial Reporting Council in relation to potential changes to the UK Corporate Governance Code. The Board aims to have a broad range of skills, backgrounds and experience.
Whilst the Company's policy remains that selection should be based on the best person for the role, the Board recognise the benefits of gender diversity and will continue to ensure that this is taken into account when considering any particular appointment. 30% of the Group's senior managers are women with women making up 40% of all employees.
In accordance with the UK Corporate Governance Code, for the first time in 2011, all of the directors submitted themselves for re-election at the Annual General Meeting.
Risk management
Consideration of risks is integral to each stage in all of the Group's activities of investment, asset management and development. When seeking approval of projects or transaction events, "sponsoring" individuals are specifically required to highlight the main risks associated with the transaction and how these will be monitored and addressed. These are debated by both Senior Executives and the Board, as appropriate, as part of the transaction approval process. During 2010, the Group revisited how it formally reported on its risks internally and the revised processes were reviewed by the Audit Committee. Since July 2010, the whole Board now formally considers the Group's risks and review processes at its November and May Board meetings. The Group's key risks and how they have changed during the year, along with processes used to manage them are disclosed in Risk management.
The work undertaken by the Audit Committee during the year is also covered here.
Bribery Act 2010
With the Bribery Act 2010 coming into force on 1 July 2011, we have reviewed our policies and procedures to ensure that we will be compliant with the Act. Although our way of conducting our business has not changed as a result of this review, in some areas we have amended our policies and procedures to ensure that our agents acknowledge their obligations under the Act, and internally, that we document the basis of decisions taken in selecting contractors and awarding tenders. Where appropriate, members of the asset management, investment and development teams have received training on these changes. Our whistleblowing policy has also been updated to include third parties and has been made available on our Company website.
Executive reward
In 2010, the Chairman of the Remuneration Committee and I met with a number of the Group's major shareholders and consulted with several shareholder representative bodies on a proposed new remuneration structure designed to simplify the Group's remuneration structures and to ensure the measures under the Group's performance plans mirrored the fundamental measures that demonstrate the Group's performance, being:
- growth in absolute Net Asset Value per share;
- relative Total Shareholder Return; and
- relative Total Property Return.
I am pleased to be able to report that the new remuneration structure was approved at our 2010 Annual General Meeting and the alignment of the Group's variable awards for executives with Company strategy is shown on page 105 of the Remuneration Report. Download the remuneration report (PDF) to read more.
Communication with shareholders
Communication with shareholders is given a high priority by the board with over 180 presentations being made in the year to investors, potential investors and analysts by a combination of the Executive Director team and senior managers below the Board. Independent feedback on presentations by the Executive Directors to all major shareholders is provided to the Non‑Executive Directors on a regular basis. I am also delighted to be able to say that, for the third time in four years, we received external recognition for our efforts on our Annual Report in winning the PwC Building Public Trust Awards 2010 'Excellence in Reporting' in the FTSE 250.
Martin Scicluna
Chairman