Carphone Warehouse 2006 Annual Report Download - page 26

Corporate Governance
The Carphone Warehouse Group PLC Annual Report 2006
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proposed at this year’s Annual General Meeting on 27 July 2006 (AGM).
Charles Dunstone is the Chief Executive Officer, John Gildersleeve is
Non-Executive Chairman, David Ross is Non-Executive Deputy
Chairman and Sir Brian Pitman is the Senior Independent Director. All
new Directors went through a formal process of induction principally
carried out by the Company Secretary.
All Directors are subject to election by shareholders at the first Annual
General Meeting following appointment and thereafter to re-election at
least every three years. Each Executive Director and David Ross has
a service contract that can be terminated by either the Company or
the Director on twelve-months’ notice or less.
The Non-Executive Directors, apart from David Ross, have three-year
periods of appointment, the terms of which are substantially in the same
format as suggested by the Code, with three-month notice periods and
no compensation for loss of office. Further details on each Director’s
remuneration, including the dates of their contracts with the Company,
are set out in the Remuneration Report on pages 26 to 32.
Board meetings
The Board meets at least six times a year, with additional meetings
as required. The Board met seven times formally during the period
(including a Strategy Day). All Directors formally attended these meetings
with the exception of Sir Brian Pitman, who was absent for the Board
meetings held on 26 May 2005, 27 July 2005 (Strategy Day) and 28 July
2005 and Steven Esom and Geoffroy Roux de Bezieux who were both
absent from the meeting held on 30 March 2006. These absences were
due to prior engagements that could not be changed. The Company
Secretary ensures that all Board papers are sent out to non-attending
Directors and that, where possible, any comments they have are
received beforehand so that they can be expressed at the meeting.
Operation of the Board
The wide range of experience and expertise of the Non-Executive
Directors, combined with the skill sets of the Executive Directors,
provides vast experience of retailing, mobile and fixed line
telecommunications and general business experience, strong
personal skills and independence of thought and perspective.
The overriding responsibility of the Board is to provide entrepreneurial
and responsible leadership to the Group within a framework of prudent
and effective controls. These allow for the key issues and risks
surrounding the business to be assessed and managed. The Board
determines the overall strategic direction for the Group, reviews
management performance and ensures that the necessary financial and
human resources are in place to enable the Group to meet its objectives.
The Board is comfortable that the necessary controls and resources
exist within the Group to enable these responsibilities to be met.
The Board ensures that the Directors, and in particular the Non-
Executive Directors, develop an understanding of the views of major
shareholders about the Company. The Company regularly
communicates with major shareholders and has a dedicated internal
investor relations department. Briefings on market activity, together with
the views of shareholders and analysts on the Company, are also
regularly provided to the Board.
Introduction
The Board of Directors recognises the importance of high standards of
corporate governance. This Report and the Remuneration Report set out
on pages 26 to 32 explain that the Company has complied during the
period with the principles contained in the Combined Code on Corporate
Governance (Code) except as stated to the contrary in this Report.
In accordance with the Listing Rules issued by the Financial Services
Authority, the relevant parts of this Report have been reviewed by the
auditors and their opinion is contained in the Independent Auditor’s
Report on page 35.
Board of Directors
Composition of the Board
There are currently five Executive Directors and seven Non-Executive
Directors (including the Non-Executive Chairman and the Non-Executive
Deputy Chairman). Biographies of each of the Directors, their responsibilities
and Board Committee memberships are set out on page 21.
The following changes to the Board took place during the period.
On 28 July 2005 Hans Snook resigned as Non-Executive Chairman,
Martin Dawes resigned as Non-Executive Director, David Goldie was
appointed as an Executive Director, David Ross moved from an
Executive Director to become Non-Executive Deputy Chairman and
John Gildersleeve moved from a Non-Executive Director to become
Non-Executive Chairman. On this date the Company also announced
that with effect from 29 September 2005 David Mansfield would become
a new Non-Executive Director and that the Board was actively engaged
in attracting additional Non-Executive Directors and expected to make
further announcements in due course. Accordingly, on 29 September
2005 Steven Esom was appointed as a new Non-Executive Director
and on 1 November 2005 Sally Morgan was appointed as a new
Non-Executive Director. On 3 April 2006 Geoffroy Roux de Bezieux
resigned as an Executive Director and Andrew Harrison was appointed
as an Executive Director.
Following such Board changes, half the Board, excluding the
Non-Executive Chairman and Non-Executive Deputy Chairman now
comprises independent Non-Executive Directors. The five Non-Executive
Directors considered to be independent are Sir Brian Pitman, Adrian
Martin, David Mansfield, Steven Esom and Sally Morgan. Consequently
between 29 July 2005 and 31 October 2005 half of the Board, excluding
the Non-Executive Chairman and Non-Executive Deputy Chairman,
were not independent Non-Executive Directors as required by the Code.
However the Board had taken all reasonable steps prior to and during
this short period to identify and recruit new Non-Executive Directors
and it was only a question of appointment dates that led to the short
period of not having the requisite number of independent Non-Executive
Directors. The Board also believed that the experience of those
independent Non-Executive Directors who were on the Board during
that short period was such that no individual or small group of
individuals could dominate the Board’s decision taking. The appointment
of David Goldie as an Executive Director was approved at the Annual
General Meeting held on 28 July 2005. The appointments of David
Mansfield, Steven Esom and Sally Morgan as Non-Executive Directors
and the appointment of Andrew Harrison as Executive Director, will be