Holiday Inn 2015 Annual Report Download - page 68

Corporate Governance continued
Statement of compliance with the UK Corporate Governance Code
Our statement of compliance summarises how the Group has
implemented the principles and provisions of the UK Corporate
Governance Code as published in 2014 (the Code). This should be
read in conjunction with the corporate governance statement on pages
52 to 65 and the Directors’ Remuneration Report as a whole. The Code
is available to view in full on the Financial Reporting Council (FRC)
website (www.frc.org.uk).
The Board considers that the Group has complied in all material
respects with the Code for the year ended 31 December 2015 with
the exception of Code provision C.3.7, which requires external audit
contracts to be put to tender at least every 10 years. The Group has
not re-tendered within that period, but the Audit Committee monitors
this in line with legislation and the current Auditor’s performance
(further details are provided on pages 62 and 63).
A. Leadership
A.1 The role of the Board
The Board leads IHG’s strategic direction and the long-term objectives
and success of the Group. It approves strategic plans and capital and
revenue budgets, and reviews significant investment proposals,
maintaining an overview and control of IHG’s operating and financial
performance. It monitors the Group’s overall system of internal controls
and risk management, governance and compliance, considering regulatory
changes and developments (where appropriate), while ensuring that the
necessary financial and human resources are in place for the Group to
meet its objectives.
The Board is responsible for the overall leadership and long-term
strategic aims of the Group. Details of those matters reserved for the
Board and not delegated to management are available on our website
at www.ihgplc.com/investors under corporate governance. Directors’
biographies and the Board and Committee composition are set out
on pages 53 to 58.
The Board meets formally eight times each year, with additional meetings
scheduled as necessary. One of the meetings includes a strategy meeting.
Details of 2015 Board meetings are set out on pages 60 and 61. The
attendance by Committee members at Committee meetings can be found
on page 54.
All Directors are covered by the Group’s directors’ and officers’ liability
insurance policy (see page 152).
A.2 Division of responsibilities
The separate roles of the Chairman and Chief Executive Officer are clearly
established.
Chief Executive Officer
As Chief Executive Officer, Richard Solomons leads the development of the
Company’s strategic direction and implementation of the agreed strategy.
As well as building and leading an effective Executive Committee, he
oversees IHG’s business operations and manages its risks.
A.3 The Chairman
As well as building and maintaining an effective Board, Patrick Cescau,
as Chairman of the Board, leads the operation and governance of the Board
and its Committees. This includes setting the Board’s agenda and ensuring
that Directors receive timely, accurate and clear information on the Group’s
business and that all Directors are fully informed of relevant matters.
The Chairman oversees corporate governance matters, ensuring they
are addressed, and leads the performance and effectiveness evaluations
of the Board, its Committees and the Directors. The Chairman was
independent on appointment.
A.4 Non-Executive Directors
As a strong source of advice and judgement for IHG, our Non-Executive
Directors constructively challenge and help develop proposals on strategy.
They provide significant external commercial experience and a broad
range of skills for the Board to draw on.
Senior Independent Non-Executive Director
As Senior Independent Non-Executive Director, Dale Morrison is available
to liaise with shareholders who have concerns that they feel have not been
addressed through the normal channels of the Chairman, Chief Executive
Officer and other Executive Directors. He also leads the annual performance
review of the Chairman with the other Non-Executive Directors, and as
necessary provides advice and judgement to the Chairman, and serves
as an intermediary for other Directors when necessary.
After each Board meeting, our Non-Executive Directors and the Chairman
meet without Executive Directors being present. During the year, if any
Director has unresolved concerns about the running of IHG or a proposed
action, these would be recorded in the minutes of the meeting.
Further information on each of these roles can be found on our website
at www.ihgplc.com/investors under corporate governance.
B. Effectiveness
B.1 The composition of the Board
The size and composition of the Board and its Committees is regularly
reviewed for the appropriate balance of skills, experience, independence
and knowledge to ensure they can carry out their duties and
responsibilities effectively.
Potential conflicts of interest are reviewed annually and the Board’s current
composition meets the requirement under the Code for at least half of the
Board, excluding the Chairman, to be Independent Non-Executive Directors
(see page 54). Further details of the composition of the Board and its
Committees are available on pages 53 to 58.
Jennifer Laing has served on the Board for over nine years and will be
stepping down following the Company’s AGM to be held on Friday 6 May 2016.
The Nomination Committee has reviewed her independence and is satisfied
that she continues to demonstrate independence in character and judgement
and is independent as required under the Code. The Board has also
considered this and reached the same conclusion.
B.2 Appointments
The Board has delegated a number of responsibilities to the Nomination
Committee. The Nomination Committee leads the appointment of new
Directors to the Board and senior executives in accordance with its terms
of reference (available on our website at www.ihgplc.com/investors under
corporate governance/committees or from the Company Secretary’s office
on request) and supports the Board in succession planning. Further details
of the role of the Nomination Committee and what it did in 2015, including
details of the appointment process of Directors, are set out in the
Nomination Committee Report on page 65. The overall process of
appointment and removal of Directors is overseen by the Board as a whole.
Both Jennifer Laing and Ying Yeh have served on the Board for over six
years and will be stepping down following the Company’s AGM. In the
interim, their appointments will continue to be subject to review and
scrutiny by the Nomination Committee and the Board.
B.3 Commitment
The terms of appointment of our Non-Executive Directors outline the time
commitment expected to fulfil their role. On appointment, Directors are
advised of, and requested to make, the necessary time commitment required
to discharge their responsibilities effectively. IHG’s Executive Directors are
not permitted to take on more than one external non-executive directorship
or chairmanship in addition to their role. Biographical details of all current
Directors, including their external commitments, can be found on pages 55
to 57. Richard Solomons has one non-executive directorship (see page 55).
Details of Directors’ service contracts and appointment terms are set out
on pages 73, 77 and 159.
The Chairman annually reviews the time each Non-Executive Director has
dedicated to IHG as part of the internal performance evaluations of each
Director (see page 60), and is satisfied that their other duties and time
commitments do not conflict with those as Directors.
B.4 Development
A full, formal and tailored induction is developed for new Directors
(see page 59).
The Chairman and Company Secretary ensure that Directors continually
update their skills and have the requisite knowledge and familiarity with
the Group to fulfil their roles on the Board and its Committees (see page
59). All Directors are encouraged to request further information as they
consider necessary to fulfil their role.
66 IHG Annual Report and Form 20-F 2015