Directors’ report
Corporate governance
The Board of Directors
Our Board currently comprises the Non-Executive Chairman, Chief Executive Officer, Chief Financial Officer, three Executive and three Non-Executive Directors. Details of the members of the Board can be found in the Board of Directors section. We are satisfied that the balance of Executive and Non-Executive Directors is appropriate and that no individual or group may dominate its decisions. Our Board’s Non-Executive Directors are independent of management and have a range of experience covering corporate governance, customer and employee issues, strategy, business operations and finance. The roles of Chairman and Chief Executive Officer are clearly defined and separate. The Chairman is primarily responsible for the effective functioning of the Board. The Chief Executive is responsible for running the Company’s business and for implementing Board strategy and policy.
The Company’s policy is that no Executive Director should take on more than one non-executive directorship of a FTSE 350 company, or the chairmanship of such a company, and any such involvement must be subject to the Board’s prior approval. No Executive Director currently has any such appointments.
The Directors considered to be wholly independent are Bill Halbert, John Carrington and Graham Holden. When assessing the independence of directors, we considered each of the criteria set out in section A3.1 of the Combined Code.
Two of our Non-Executive Directors during the year were nominees from Kingston upon Hull City Council. At the time of their appointment the Council was the Company’s major shareholder, and those Directors had each been nominated and appointed in line with a Relationship Agreement which entitled the Council to nominate two Directors to sit on the Board. Gordon Wilson and John Robinson were, throughout their respective terms of office, serving Councillors. Consequently they were not technically independent, as specified under s.A3.1 of the Combined Code. However, the Council delegated responsibility for all decisions in respect of its shareholdings to a separate Council Committee on which none of the Council-nominated Directors sat or reported to. We were therefore satisfied that in practice, for the duration of their appointment, the Council nominees brought a valuable and independent view to our Board’s deliberations.
Michael Abrahams is the Chairman, and has served for a period of nine years. Michael Abrahams is also Chairman of the London Clinic and Ferrexpo Plc as well as being a director of a number of other companies. In addition to Board and Committee meetings Michael Abrahams is involved in regular dialogue with Company Executives both during and outside normal working hours and represents the Company particularly where his frequent presence in London makes this an efficient means of advancing the Company’s interests. The extent to which he is readily contactable and available to act as the Company’s Chairman is part of the evaluation of his effectiveness by his Board colleagues. The Board is satisfied that Michael Abrahams is able to consistently devote a more than adequate proportion of his time to the Company.
John Carrington has been the Board’s Senior Independent Non-Executive Director since November 2007, when Sean Christie resigned. He is available to shareholders if they have concerns which contact through the normal channels has failed to resolve or for which such contact is inappropropriate. A summary of the responsibilities of the Senior Independent Non-Executive Director is available on the Company website. John Carrington has served as a Non-Executive Director for five years.
None of the other Non-Executive Directors have served for more than six years.
Malcolm Fallen is the Chief Executive Officer and was appointed to this position in November 2003 having previously been Chief Financial Officer. Malcolm Fallen has been employed by the Company since 2001.
Prior to the appointment of any Non-Executive Directors, consideration is given to the time that they will be expected to devote to their roles and the commitment involved is fully explained to them. The extent to which sufficient time is committed in practice is part of the Board’s effectiveness evaluation criteria.
All directors’ service contracts are available for inspection at the Company’s registered office.
The Board usually meets monthly. All Directors receive detailed reports and briefing papers in advance of Board meetings. The Board has a formal schedule of matters specifically reserved to it to ensure retention of full responsibility for, and effective control over, Group strategy and policy and setting the Company’s values. These matters include strategic plans, annual budgets, review of operating and financial performance, individual appraisal of significant new projects, risk management policies, funding, health and safety, environmental social and governance compliance. All Directors may receive independent professional advice at the Company’s expense, and are regularly advised and guided by the Company Secretary on proper corporate governance. Newly appointed Non-Executive Directors receive a comprehensive induction programme and opportunities for training are available for all Directors. Training on technical issues and market developments are integrated with strategy reviews and Board members are also updated on relevant changes in legislation and corporate governance. Senior executives attend Board meetings by invitation from time to time to provide specialist updates. There is a programme of regular reviews of performance and developing best practice in matters which the Board takes very seriously such as health and safety, security and corporate social responsibility. The Board takes account of the significance of environmental, social and governance (ESG) matters when making decisions, and has included ESG in its risk assessment. All Directors are responsible equally for the Company’s affairs; Non-Executive Directors have particular responsibility for ensuring that proposed business projects and strategies are discussed and reviewed. All business units and functions are required to develop formal succession plans which are reviewed annually by the Board. There is a succession strategy for Board members which includes a commitment to equality and willingness to consider appointments from outside traditional disciplines and expertise.
For the last four years the Board has undertaken a formal process to evaluate the effectiveness of its own performance, as well as that of its various committees. Each year the Directors complete a comprehensive survey and the results are collated and assessed against previous results. Following a review by the Board a prioritised action plan is drawn up to implement improvements. This year, for the first time, we moved to an online survey rather than a paper questionnaire in order to improve efficiency and provide more complex analysis. The most recent results were very positive and reflected that Directors believed the Board to be effective and well managed. Evaluation is also carried out for individual directors, taking into account factors such as attendance, integrity, objectivity in decision-making, experience and ability to contribute effectively to Board meetings. No resulting actions have been identified.
Responsibility for managing the business, implementation of business policy and review of business performance is delegated to the Chief Executive Officer supported by the other Executive Directors. The Chief Executive Officer’s delegated powers have been set by the Board. The Board holds in-depth reviews of individual business strategies and performance during the year in addition to an annual review of strategy, business plans and budgets. A formal process of monthly business reviews takes place between senior executives and the management of each business unit prior to each monthly Board meeting. The performance and risks facing each business are considered in the context of the Company’s strategy and the results are reported to the Board. Similar reviews take place for each central services support function.
The record of Directors’ attendance at Board meetings is set out below. The Board met on 11 occasions during the year.
| Meetings attended |
No of meetings |
% | |
|---|---|---|---|
| Michael Abrahams, Chairman | 11 | 11 | 100 |
| John Carrington | 11 | 11 | 100 |
| Malcolm Fallen, CEO | 11 | 11 | 100 |
| Neil Gower | 11 | 11 | 100 |
| Bill Halbert | 11 | 11 | 100 |
| Graham Holden (27/11/07)* | 4 | 4 | 100 |
| Paul Renucci (27/11/07)* | 3 | 4 | 75 |
| Paul Simpson, CFO | 11 | 11 | 100 |
| Kevin Walsh | 11 | 11 | 100 |
| Gordon Wilson (04//06/07)^ | 2 | 2 | 100 |
| John Robinson (05/06/07)^ | 2 | 2 | 100 |
| Sean Christie (27/11/07)^ | 4 | 7 | 57 |
| Peter Halls (20/12/07)^ | 7 | 8 | 88 |
*Appointed ^Resigned
The Non-Executive Directors have met once during the year without the Chairman and Chief Executive Officer present, including a meeting to evaluate the performance of the Chairman. Additionally, the Chairman meets with the Non-Executive Directors without the Executive Directors being present.