As members of the Board, all directors are required to:
- provide entrepreneurial leadership of the Company within a framework of prudent and effective controls which enable risk to be assessed and managed;
- set the Company's strategic aims, ensure that the necessary financial and human resources are in place for the company to meet its objectives, and review management performance; and
- set the Company's values and standards and ensure that its obligations to its shareholders and others are understood and met.
The Board as a whole is collectively responsible for promoting the success of the Company by directing the company's affairs. In addition to these requirements for all directors, the non-executive directors are expected constructively to challenge and help develop strategy, to participate actively in the decision-making process of the Board, and to scrutinise the performance of management in meeting agreed goals and objectives.
1. Key Accountabilities
The role of the Non-Executive Director has the following key elements:
- Strategy. Non-Executive Directors should constructively challenge and help develop proposals on strategy.
- Performance. Non-Executive Directors should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance.
- Risk. Non-Executive Directors should satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible.
- People. Non-Executive Directors are responsible for determining appropriate levels of remuneration of executive directors, and have a prime role in appointing, and where necessary removing, executive directors and in succession planning.
In order to fulfil their role, Non-Executive Directors will:
- meet from time to time, if appropriate, as a group without executive directors being present, and at least once a year without the Chairman being present. In this case the meeting is led by the Senior Independent Director; and
- be entitled to seek independent professional advice, at the Company's expense, in the furtherance of their duties.
Non-Executive Directors may be asked by the Board to serve on one or more of the board committees. If appointed to a board committee, Non-Executive Directors will be advised of the committee terms of reference, and any specific additional responsibilities involved.
2. Time Commitment
All directors must be able to allocate sufficient time to the Company to perform their responsibilities effectively. Non-Executive Directors will be required to:
(i) undertake that they will be able to allocate sufficient time to meet the expectations of the role, as set out in their letter of appointment, or as agreed from time to time;
(ii) disclose their other significant commitments to the Board before appointment, with a broad indication of the time involved; and
(iii) inform the Board of any subsequent changes.
A Non-Executive Director should seek the agreement of the Chairman before accepting additional commitments that might impact on the time he or she would be able to devote to the role as a director of the Company.
Non-Executive Directors are appointed for an initial term of three years. The term may be renewed if both the director and the Board agree. Appointments are subject to the provisions of the Companies Act and the articles of association, including those relating to election/re-election by the shareholders at annual general meetings and the removal of directors. No compensation for lost fees is payable if a director leaves office for any reason.
There is an expectation that appointments are renewed for one term of three years only. In line with the corporate governance code issued by the Financial Reporting Council ("UK Corporate Governance Code"), any extension of a term beyond six years (ie two three-year terms) for a Non-Executive Director will be subject to a particularly rigorous review.
As recommended in the UK Corporate Governance Code, the Board will identify in the annual report each Non-Executive Director it considers to be independent.
The Board will determine whether the director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the director's judgement. The Board will state its reasons if it determines that a director is independent notwithstanding the existence, of relationships or circumstances which may appear relevant to its determination, including if the director:
- has been an employee of the Company or group within the last five years;
- has, or has had within the last three years, a material business relationship with the company either directly, or as a partner, shareholder, director or senior employee of a body that has such a relationship with the company;
- has received or receives additional remuneration from the Company apart from a director's fee;
- has close family ties with any of the Company's advisers, directors or senior employees;
- holds cross-directorships or has significant links with other directors through involvement in other companies or bodies; or
- has served on the Board for more than nine years form the date of their first election.
In the event that the Board agrees to retain or recruit Non-Executive Directors who do not meet the independence criteria, in order to achieve the appropriate balance between independence and relevant industry experience on the Board, where this would mean that the board composition no longer has a majority of independent Non-Executive Directors, the annual report will include an explanation of the appointment.