Carphone Warehouse 2006 Annual Report Download - page 27

areas of fixed line telephony and insurance. Further details will be given
in next year’s Annual Report.
Audit Committee
Prior to the changes to the Board detailed earlier in this Report, the
Committee comprised the following independent Non-Executive Directors:
Adrian Martin (Chairman), John Gildersleeve, Sir Brian Pitman and Martin
Dawes. The Committee currently comprises the following independent
Non-Executive Directors: Adrian Martin (Chairman), Sir Brian Pitman,
David Mansfield, Steven Esom and Sally Morgan. Adrian Martin is deemed
by the Board to be the Committee member with recent and relevant
financial experience. All of the Committee members have extensive
commercial experience. The Committee met formally three times during
the period. All members, whilst being a Director, attended each meeting,
with the exception of Martin Dawes, who was absent from the meeting
held on 17 May 2005 because he had a prior engagement that could not
be changed. The Company Secretary ensured that he received all relevant
papers in advance and that any comments he had were communicated
to the meeting. The Chairman of the Committee updates the Board on
any significant issues that may have arisen at the Board meeting following
each Committee meeting.
During the period, all the requirements of the Code in respect of the
Committee were met. The work undertaken by the Committee is
described within the following sections of this Report.
The Group’s Chief Financial Officer and other senior management attend
Committee meetings by invitation of the Committee. Representatives
of the Company’s external auditors and the Group Director of Risk also
attend these meetings by invitation of the Committee. The external and
internal auditors have direct access to the Committee during formal
meetings and time is set aside for them to have private discussions
with the Committee, in the absence of management.
The Committee’s terms of reference, which are available on request from
the Company Secretary and are published on the Company’s website,
comply with the Code. During the period, the formal calendar of items
considered at each Audit Committee meeting within each annual cycle
embraced the Code requirements to:
•monitor the integrity of the financial statements of the Company,
and any formal announcements relating to the Company’s financial
performance, including reviewing significant financial reporting
judgements contained in them;
•review the Company’s internal financial controls and its internal
control and risk management systems and to make recommendations
to the Board;
•review the Company’s arrangements by which employees may raise
concerns in confidence;
•monitor and review the effectiveness of the Company’s internal
audit function;
•make recommendations to the Board in relation to the appointment,
re-appointment and removal of external auditors and to approve
their remuneration and terms of engagement;
There is a clear and documented division of responsibilities between the
roles of the Chairman and the Chief Executive Officer. There are also
documented schedules of matters reserved to the Board and matters
delegated to Committees of the Board. Such reserved matters include
decisions on strategic and policy issues, the approval of published
financial statements and major acquisitions and disposals, authority
levels for expenditure, treasury and risk management policies. Strategic
and policy issues are reviewed annually at a combined Board and senior
executive strategy day.
Performance evaluation
During the period the balance of skills, knowledge and experience of
the Directors was reviewed. The Board, and each individual Director,
also undertook performance evaluations. Using the Higgs ‘Suggestions
for Good Practice’ as guidance, the individual Directors initially completed
separate questionnaires. The results were collated and analysed by
the Company Secretary, who prepared reports as appropriate to the
Chairman, the Senior Independent Director, the Chief Executive Officer
and the Board as a whole. The areas covered included the role of
the Executive and Non-Executive Directors, the Board and the Board
Committees, preparation for and performance at meetings, the
effectiveness of each Director, leadership, culture and corporate
governance. The results were then considered by the Board as a
specific item of business. The Board proposes that these exercises
or similar ones be carried out each year.
Following such performance evaluation the Chairman confirms that all
those Non-Executive Directors seeking election or re-election at the AGM
continue to be effective and demonstrate a commitment to the role,
including having time to attend all necessary meetings and to carry out
other appropriate duties.
The Chairman meets regularly with all the independent Non-Executive
Directors usually in the evening prior to a Board meeting. This provides
the opportunity to raise any questions regarding the performance of the
Executive Directors or in respect of any other matters.
The Senior Independent Director also met with the Non-Executive
Directors, in the absence of the Chairman, to assess the Chairman’s
effectiveness, having first reviewed the results of a performance evaluation
questionnaire completed by all the Directors apart from the Chairman.
The Chairman had no other significant commitments during the period
that would have affected his performance in his role.
External appointments
The Board supports Executive Directors taking up Non-Executive
Directorships as part of their continued development, and the Board
believes that this will ultimately benefit the Company. Further details
are provided in the Remuneration Report on pages 26 to 32.
Board Committees
There are three key Board Committees: Audit, Remuneration and
Nomination. The Committees are provided with sufficient resources
via the Company Secretary and, where necessary, have direct access
to independent professional advisers to undertake their duties. The Board
has also recently proposed to create two new Committees dealing
specifically with certain compliance matters affecting the Group in the
Corporate Governance continued www.cpwplc.com 23
Governance