Aviva 2002 Annual Report Download - page 47

Application of the Combined Code
The Financial Services Authority requires listed companies to
disclose, in relation to Section 1 of the Combined Code produced
by the Committee on Corporate Governance in June 1998
(the Combined Code), how they have applied its principles and
whether they have complied with its provisions throughout the
accounting year.
During 2003 we will be reviewing our corporate governance
arrangements in the light of changes proposed to the Combined
Code following the recent reports by Higgs and Smith.
The Board of Directors
The Board has eight scheduled meetings each year and meets
more frequently as required. It currently comprises seven
non-executive directors, excluding the Chairman, and six executive
directors. Each non-executive director serves for a fixed term of
three years, which may be renewed by mutual agreement, and
there is no limit to the number of terms a director may serve.
The Company’s articles of association require that, following
appointment by the Board, directors must submit themselves for
election by shareholders at the following Annual General Meeting.
The articles also provide that one-third of directors must retire by
rotation each year, but are eligible to submit themselves for
re-election by the shareholders, and that all directors are obliged
to retire at least every three years.
The Board has a formal performance review process to assess how
well the Board, its committees and processes are performing and
how they might be improved. The review also assesses the
performance of each director and the contribution he/she makes.
The last review was undertaken in July 2002.
The directors bring to the Board a wide range of experience and
skills and participate fully in decisions on the key issues facing the
Group. To ensure that the non-executive directors are able to
exercise an independence of judgement, the Nomination
Committee undertakes an annual review of directors’ interests in
which all potential or perceived conflicts and issues relevant to their
independence are considered. Based on the December 2002
review, the Board considers that all of the current non-executive
directors and the Chairman are independent of management and
free of any relationship that could materially interfere with the
exercise of their independent judgement.
Directors receive appropriate training when joining the Board and
are required to commit to continue their personal development
through attendance and participation on courses, seminars,
workshops and lectures on issues relevant to the Group’s business.
The duties of the Board and its committees are set out clearly in
formal terms of reference, which are reviewed annually, stating the
items specifically reserved for decision by the Board, which include
the approval of the Group’s strategy and business plans,
acquisitions and disposals outside delegated limits, significant
financial decisions and approval of key business policies. The said
terms of reference contain a procedure whereby directors may, in
the furtherance of their duties, seek independent professional
advice at the Company’s expense if considered appropriate.
Directors are fully briefed in advance of Board meetings on all
matters to be discussed and at the Board meetings directors
receive regular reports on the Group’s financial position, key areas
of the Group’s business operations and other material issues.
The Group Company Secretary is responsible for ensuring that
Board procedures are followed and all directors have access to his
advice and services.
The Board has established a number of committees, including
Remuneration, Audit, Nomination, Chairman’s and Information
Technology Strategy. Each operates within clear terms of reference
and the minutes of their meetings are circulated to all directors.
Remuneration Committee
Details of the Remuneration Committee, including its membership
and duties are set out in the Directors’ remuneration report on
page 35.
Audit Committee
The Audit Committee comprises the following non-executive
directors, appointed by the Board:
Derek Stevens (Chairman)
Guillermo de la Dehesa
George Paul
Sir Michael Partridge
The Committee meets four times each year to assist the Board
in discharging its responsibilities for the Company’s financial
announcements (including considering the appropriateness of
accounting policies), business risk management, internal control
issues and regulatory compliance, as well as to oversee the
objectivity and effectiveness of the internal and external auditors.
The Committee receives reports on significant issues raised at the
audit committees which have been established in the Group’s
principal businesses. The Committee meets regularly with the
external auditors, in the absence of management, and reports
regularly to the Board.
Nomination Committee
The Nomination Committee comprises the following directors,
appointed by the Board:
Pehr Gyllenhammar (Chairman)
Guillermo de la Dehesa
Richard Harvey
Elizabeth Vallance
The Committee deals with the constitution of the Board and
considers the balance of skills and experience of the directors.
It oversees the appointments and reappointments to the Board,
monitors potential conflicts of interests and reviews annually the
independence of the non-executive directors. The Committee
makes recommendations to the Board as appropriate.
Chairman’s Committee
The Chairman’s Committee comprises the following non-executive
directors, appointed by the Board:
Pehr Gyllenhammar (Chairman)
George Paul
Derek Stevens
Elizabeth Vallance
The main duties of this Committee are to review the performance
of the Group Chief Executive and the other executive directors,
and the succession planning for this group of management.
The Committee makes recommendations to the Board
as appropriate.
Information Technology Strategy Committee
This Committee comprises the following members appointed by
the Board:
André Villeneuve (Chairman)
Wim Dik
Pehr Gyllenhammar
Richard Harvey
Sven Skarendahl*
Philip Twyman
*Sven Skarendahl is an independent consultant. He is not a director of the
Company but has been appointed by the Board to this Committee due to his
broad experience in technology and internet-based companies.
The Committee advises the Board on the Group’s information
technology and e-commerce strategies.
Corporate governance
33 Aviva plc
Annual report + accounts 2002