National Grid 2015 Annual Report Download - page 46

Corporate Governance
Corporate Governance continued
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 53 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 59 sets out where to find each of the
disclosures required in the Directors’ Report and in respect of
Listing Rule 9.8.4, together with the Board’s sign-off on the report.
UK Corporate Governance Code 2014
The new UK Corporate Governance Code 2014 (the New Code)
applies to the Company for the next financial year, 2015/16.
InMarch, the Board considered the current governance
arrangements and approved refinements to support compliance
with the New Code. Details will be provided in the 2015/16 Annual
Report and Accounts.
Fair, balanced and understandable
The requirement for Directors to state that they consider the Annual
Report and Accounts, taken as a whole, is fair, balanced and
understandable remains a key consideration in the drafting and
review process. The coordination and review of the Annual Report
follows a well-established and documented process, which is
conducted in parallel with the formal audit process undertaken
bythe external auditors and the review by the Board and its
committees (of relevant sections).
This process gives the Board comfort that all material statements
are accurate and that the Annual Report gives sufficient
prominence to negative as well as positive information. The drafting
and assurance process supports the Audit Committee and Board’s
assessment of the overall fairness, balance and clarity of the
Annual Report and the Directors’ statement on page 78.
Our Board
Our current Board membership is set out on the previous page,
with biographical details of Directors on pages 178 to 179. The
Directors in place during the year are set out on page 49, 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 67 of the Directors’ Remuneration Report.
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, business plan, objectives 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 and risk management (see pages 38 to 41).
The Board’s full responsibilities are set out in the matters reserved
for the Board, which were updated in January 2015. These are
available on our website, together with other governance
documentation.
Our Chairman is responsible for the leadership and
management of the Board and its governance. He ensures the
Board is effective in its role by promoting a culture of openness
and debate, facilitating the effective contribution of all Directors
and helping to 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 when 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.
Examples of Board focus during the year:
Board strategy session. In addition to time allocated during the
year at Board meetings, in January the Board took part in a
half-day interactive strategy session, involving a combination of full
Board discussions and breakout groups. The Board considered
questions raised by the business plan and recent strategic analysis,
future opportunities for the Company including business
development, mergers and acquisitions and how our core
capabilities could be exploited.
The Board found the additional session extremely useful and
suggested that further regular updates and discussions would help
consolidate its thinking, in particular in relation to the development
of a longer-term perspective on potential growth in other
geographical areas.
European energy policy. The Board received updates on how
changes in the EU will affect and influence the UK energy policy,
including Electricity Market Reform, support for interconnectors
and Carbon Capture and Storage.
The 2014 UK Winter Outlook. This annual publication confirmed
that the Company was in a strong position in respect of gas in the
UK, with no heightened concerns, but for electricity, margins were
expected to be tight. Updates to the Board confirmed that the
UKbusiness had a good understanding of the issues and risks.
Arobust mitigation strategy, agreed with the UK Government,
wasapproved and implemented.
Interconnector projects. In January, the Board received
apresentation on Great Britain’s interconnector market and our
pipeline of opportunities, including an overview of our two most
advanced projects; potential new links to Belgium and Norway.
Following feedback provided, the Board approvedthe final
investment decision in relation to the Belgium interconnector in
February 2015 and the interconnector with Norway in March 2015.
Emerging risks. The Board received a risk update paper including
an overview of the framework that has been developed to track
emerging risks and the resulting opportunities and/or threats.
Additionally, the Board received an update on three themes that
had emerged from the 2014 risk workshop to make sure that we
were sufficiently prepared for ‘black swan’ events (catastrophic
events of extremely high impact and extremely low likelihood).
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