Aviva 2005 Annual Report Download - page 60

Aviva plc 2005 Governance
Governance continued
Corporate governance continued
In accordance with the Company’s articles of association, the
directors retiring, and proposed for re-election at the forthcoming
Annual General Meeting, are Richard Harvey, Carole Piwnica,
Philip Scott and Patrick Snowball. Richard Harvey is the Group’s
Chief Executive. Philip Scott is the executive director responsible
for the Group’s international businesses and Morley, the
United Kingdom fund management business. Patrick Snowball is
the executive director responsible for the Group’s UK businesses
namely Norwich Union Insurance, Norwich Union Life and RAC.
Carole Piwnica is an independent non-executive director who joined
the Board in 2003. She is a non-executive vice-chairman of Tate &
Lyle plc, practices law in the United States and Europe and is a
member of the Company’s Audit, Remuneration and Corporate
Social Responsibility committees.
Derek Stevens and André Villeneuve have both served as directors
for more than nine years and will therefore retire at the Annual
General Meeting and seek re-election. However, in line with the
Board’s succession plans, it is the intention that subject to being
re-elected, they will both retire on or before 31 December 2006.
Derek Stevens is a member of the financial sector committee of the
Accounting Standards Board and is a former Chief Financial Officer
of British Airways plc and of the TSB Group plc. He is able to
contribute recent and relevant financial experience and is the
chairman of the Board’s Audit Committee and a member of the
Corporate Social Responsibility Committee. André Villeneuve has
knowledge of broking and financial markets and wide general
management experience in the United Kingdom and the United
States. He is a member of the Nomination and Remuneration
committees.
The Combined Code requires that at least half the Board, excluding
the Chairman, should comprise independent non-executive
directors as determined by the Board. The Nomination Committee
performs an annual review of directors’ interests in which all
potential or perceived conflicts, including time commitments,
length of service and other issues relevant to their independence,
are considered. It is the Board’s view that, in addition to being free
of any conflicts, an independent non-executive director also needs
to be able to present an objective, rigorous and constructive
challenge to management, drawing on his/her wider experiences to
question assumptions and viewpoints and where necessary defend
their beliefs. To be effective, an independent director requires a
sound understanding of the insurance industry and the Company
so as to be able to properly evaluate the information provided.
Having considered the matter carefully the Board is of the opinion
that all of the current non-executive directors are independent and
free from any relationship or circumstances that could affect, or
appear to affect their independent judgement.
All the directors being proposed for re-election have been subject
to a formal performance evaluation and took part in a peer
assessment review during 2005, other than Mary Francis who
was not a director at the time.
Biographical details of all the directors, including those proposed
for election or re-election, are set out on pages 52 and 53.
The Chairman
The respective roles of the Chairman and Group Chief Executive are
set out in the Board’s terms of reference. The Chairman’s priority
is the management of the Board and the Group Chief Executive’s
priority is the management of the Company.
Pehr Gyllenhammar served as the Chairman from 1998 until his
retirement from the Board on 31 December 2005. He was
succeeded by Lord Sharman on 1 January 2006. There were no
significant changes to Pehr Gyllenhammar’s commitments during
the year. Lord Sharman’s main duties outside the Company are
set out in his biographical details on pages 52 and 53. He resigned
from the board of Group 4 Securicor plc on 31 December 2005 in
anticipation of the time commitment he would need to give to the
Aviva Board. Lord Sharman’s contractual commitment to the
Company is two to three days per week.
Senior independent director
The main responsibility of the senior independent director is to be
available to shareholders should they have concerns that they have
been unable to resolve through normal channels, or when such
channels would be inappropriate. The senior independent director
is also responsible for leading the Board’s discussion on the
Chairman’s performance and the appointment of a new chairman,
when appropriate. George Paul served as Deputy Chairman and
as the senior independent director throughout 2005. Mr Paul
retired from the Board on 31 December 2005 and Wim Dik was
appointed as the senior independent director on 25 January 2006.
Board effectiveness
The effectiveness of the Board is vital to the success of the Group.
The Company undertakes an annual performance review to assess
how well the Board, its committees and directors are performing.
Directors complete a confidential questionnaire on the Board and
committees’ processes, their effectiveness and areas where they
may be improved. The process also includes a peer review in which
directors assess their own and their fellow directors’ performance
against set criteria, including the skills which they bring to the
Company and the contribution they make. This process is
complemented by separate meetings between each director and
the Chairman. The Board discussed the feedback from the 2005
process when it met in October and a number of actions were
agreed. The review was conducted by the Chairman with the
assistance of the Group Company Secretary.
The performance of the Chairman is also reviewed annually using
a peer review process. Directors are asked for their views on the
Chairman’s performance against the key aspects of the role.
At a subsequent Board meeting, the Chairman leaves the meeting
whilst a summary of the views expressed by the directors is used
as an introduction for discussion. This process is managed by the
senior independent director who subsequently provides feedback to
the Chairman. It has become the Board’s practice to undertake the
Chairman’s review in December each year. However, because Pehr
Gyllenhammar would be retiring from the Board at the end of
December, no review was performed in 2005.
58