National Grid 2014 Annual Report Download - page 46

Governance framework
Compliance statement
The Board considers that it complied in full with the provisions
of the UK Corporate Governance Code 2012 (the Code) during
the financial year being reported, see page 51 for our explanation
in relation to external audit tendering.
This report explains the main features of the Company’s
governance structure to give a greater understanding of how the
main principles of the Code have been applied. The report also
includes items required by the Disclosure and Transparency
Rules.The index on page 57 sets out where to find each of the
disclosures required in the Directors’ Report together with the
Board’s sign-off on the report.
Fair, balanced and understandable
The Board received a paper on the governance arrangements that
have been put in place to make sure that the Annual Report and
Accounts meet the requirements of the Code.
The coordination and review of the Annual Report and Accounts
follows a well-established and documented process, which is
conducted in parallel with the formal audit process undertaken
bythe external auditors. The Board considered and endorsed
thearrangements in place to enable it to confirm (see page 76)
that the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable.
Our Board
Our Board is set out on the previous page, along with the age,
committee membership, independence, and tenure of all members.
Their full biographical details are set out on pages 171 to 173.
The Directors who were in place during the year are shown on page
48, together with details of Board meeting attendance. Committee
membership during the year and attendance at meetings is set
outin each of the individual committee reports later in this report.
For further details about the Directors’ service contracts and letters
of appointment, see page 65 of the Remuneration Report.
Our Chairman is responsible for the leadership and
management of the Board and its governance. By promoting
aculture of openness and debate, he facilitates the effective
contribution of all Directors and helps maintain constructive
relations between Executive and Non-executive Directors.
Our Chief Executive is responsible for the executive leadership
and day-to-day management of the Company, to ensure the
delivery of the strategy agreed by the Board. Through his
leadership of the Executive Committee, he demonstrates
commitment to safety, operational and financial performance.
Our Senior Independent Director acts as a sounding board
for the Chairman and serves as an intermediary for the other
Directors, as well as shareholders as required.
Independent of management, our Non-executive Directors
bring diverse skills and experience, vital to constructive
challenge and debate. Exclusively, they form the Audit,
Nominations and Remuneration Committees, and have an
important role in developing proposals on strategy.
Role of our Board
Our Board is collectively responsible for the effective oversight of
the Company and its businesses. It also determines the strategic
direction and governance structure that will help achieve the
long-term success of the Company and deliver sustainable
shareholder value.
The Board sets the risk appetite for the Company and takes the
lead in areas such as safeguarding the reputation of the Company
and financial policy, as well as making sure we maintain a sound
system of internal control (see page 25).
The Board as a whole is responsible for making sure that there
issatisfactory dialogue with shareholders. Further details of our
investor engagement activities are set out opposite.
The Board’s full responsibilities are set out in the matters reserved
for the Board, available on our website, together with other
documentation relating to the Company’s governance.
Examples of Board focus during the year:
• review of safety performance and initiatives following the
previously reported fatality in April 2013;
• half-day strategy session including discussions on technology
developments and the differences between the UK, European
and US markets, followed by further discussions about strategy
at Board meetings;
• risk workshop in support of the Board’s oversight of corporate
risk management;
• updates on RIIO delivery and the UK business change
programme;
• US Foundation Program post systems implementation review
and regular updates;
• UK regulatory update, including future energy scenarios
andEMR delivery plan;
• update on the politics of UK energy, including the
increasedprofile of the Company in the run-up to the next UK
general election;
• in-depth US operational update on topics central to the delivery
of the US business strategy;
• talent management update, including important elements
ofourstrategy relating to people;
• the results from the 2013 employee opinion survey and the
associated action plan; and
• progress against the actions arising from the 2012/13 Board
andcommittee evaluation.
Examples of expected Board focus for next year:
• annual review of safety activities;
• continued detailed review of strategy and financing;
• risk appetite discussions;
• progress on the stabilisation of the new enterprise resource
system and updates on the US Foundation Program;
• review of the business performance under RIIO;
• outcome of the New York gas audit;
• talent review and succession planning;
• results and actions from the 2014 employee opinion survey; and
• progress against the actions from the 2013/14 Board and
committee evaluation.
Board composition
The successful delivery of our strategy depends upon attracting
and retaining the right talent. This starts with having a high-quality
Board. Balance is an important requirement for the composition
ofthe Board, not only in terms of the number of Executive and
Non-executive Directors, but also in terms of the range of
expertise and backgrounds.
While traditional diversity criteria such as gender and ethnicity
areimportant, we also value diversity of skills, experience and
knowledge. You can read about our Board diversity policy in
theNominations Committee report on page 55.
Corporate
Governance
continued
44 National Grid Annual Report and Accounts 2013/14