Holiday Inn 2011 Annual Report Download - page 49

OVERVIEW GREAT BRANDS HOW WE OPERATE WHERE WE OPERATE FACTS AND FIGURES
Summary Directors’ report and Corporate governance 47
CORPORATE GOVERNANCE
Code compliance
The Board is committed to compliance with all the principles
and provisions set out in the UK Corporate Governance Code
(the Code) and considers that the Company has complied with
its requirements throughout the year ended 31 December 2011.
Internal control and risk management
The Board is responsible for the Group’s system of internal control
and risk management and for reviewing its effectiveness. In order
to discharge that responsibility, the Board has established the
procedures necessary to apply the Code, including clear operating
procedures, lines of responsibility and delegated authorities.
For the year ended 31 December 2011, the Board has conducted
a review of the effectiveness of the system of internal control and
risk management. The system is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and it
can only provide reasonable and not absolute assurance against
material misstatement or loss. Whilst areas for improvement have
been identified and actions initiated, no significant shortcomings
have been identified from the annual assessment.
Board and Committees
The Board is responsible to the shareholders for the strategic
direction, development, performance and control of the Group. It
also ensures that the necessary financial and human resources are
in place for the Group to meet its objectives. There are eight regular
Board meetings a year and further meetings are held as needed.
David Webster was Non-Executive Chairman throughout the year.
Richard Solomons became Chief Executive on 1 July 2011, having
succeeded Andrew Cosslett who retired from the Board on 30 June 2011.
In addition to three other Executive Directors, a team of seven
experienced independent Non-Executive Directors represent
a strong source of advice and judgement and together they have
a broad range of skills, knowledge and experience and represent
a wide geographical spread.
The schedule of matters which are reserved for the Board’s
attention and decision are available on the Company’s website
at www.ihgplc.com/investors under corporate governance/
main board and executive committee. In addition to the Executive
Committee, the following are the main Committees of the Board:
Audit Committee; Nomination Committee; Remuneration
Committee; and Corporate Responsibility Committee. The Audit,
Nomination and Remuneration Committees consist wholly of
Non-Executive Directors. The Chairman of the Board is a member
of the Nomination Committee only. The terms of reference of these
Committees were reviewed during 2011 to ensure that they
continue to reflect best practice and are available on the Company’s
website at www.ihgplc.com/investors under corporate governance/
committees or from the Company Secretary’s office on request.
Induction programmes are prepared for new Directors and ongoing
training and development needs for all Directors are kept under review.
The 2011 performance evaluation of the Board, its main Committees
and its Directors was undertaken during January 2012 by an
independent external facilitator, Lintstock Limited. It involved the
completion of comprehensive questionnaires in which Directors
and the Company Secretary were asked to evaluate the Board, each
of its Committees and their respective Chairman and the Chairman
of the Board. It was concluded that the Board and each of its main
Committees continues to operate effectively and that each Director
continues to make an effective contribution and retains a strong
commitment to the role.
In accordance with the Code, all Directors will submit themselves
for election or re-election by shareholders at the Company’s next
Annual General Meeting.
Senior Independent Director
David Kappler was Senior Independent Director throughout the
year. His role includes being available to liaise with shareholders
who have concerns that they feel have not been addressed through
the normal channels, being a sounding board for the Chairman and
leading the performance evaluation of the Chairman.
Company Secretary
All Directors have access to the advice and services of the Company
Secretary. His responsibilities include advising the Board on
corporate governance, and for ensuring good information flows to
the Board and its Committees and between senior management
and the Non-Executive Directors. He also facilitates the induction
of new Directors and the regular updating and refreshing of all
Directors’ skills and knowledge.
Shareholder relations
The Group reports formally to shareholders twice a year and
releases quarterly results. In addition, regular meetings are held
with major institutional shareholders to discuss progress of the
business, its performance, plans and objectives. The Chairman, the
Senior Independent Director and other Non-Executive Directors are
available to meet with major shareholders to discuss governance
and strategy, and to understand any issues and concerns.
The Annual General Meeting provides an additional forum for
one-to-one communication with private shareholders and to
answer their questions. Information of interest to investors is also
maintained on the Company’s website at www.ihgplc.com/investors
Summary Audit Committee report
The Audit Committee, which is chaired by a financial expert,
supports the Board in meeting its responsibilities in relation to
the integrity of the Group’s financial statements and associated
announcements, the adequacy of internal control and risk
management systems and the appointment and work of the
internal and external auditors. The external auditor and the
Head of Global Internal Audit both have the opportunity to meet
privately with the Committee.
During the year, the Committee’s deliberations included a wide
range of matters addressing all its main areas of responsibility.
The Committee’s main focus was to review the quarterly,
interim and full-year financial results and to review the
effectiveness of internal control, financial reporting and risk
management processes, through reports and presentations
received from Global Internal Audit, the external auditors and
management. Consideration was also given to tax risk, policies
and initiatives, global technology strategy, treasury matters and
the funding position of the Group’s main pension plan.