Aviva 2014 Annual Report Download - page 80

Aviva plc Annual report and accounts 2014
Directors’ and corporate governance report continued
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time commitments required for the role,
and the results of the review of external
candidates, the committee concluded that
Sir Adrian Montague had the requisite skills
and capabilities to undertake the role of
Chairman, was the best candidate for the
role and recommended his appointment to
the Board subject to Sir Adrian reducing his
external time commitments during 2015. In
particular, an internal appointment provides
continuity and stability to the Board. His
appointment has received approval from the
PRA and FCA. Given the well developed
succession plan in place the Committee
decided not to use an external search
consultancy or open advertising on this
occasion.
Board appointments and diversity
The committee led the process to find a
new CFO following Pat Regan’s resignation
and appointed Spencer Stuart to assist in
the search process. A role profile was
agreed by the committee and a shortlist of
internal and external candidates considered.
The final candidates were interviewed by
Spencer Stuart, the Chairman, Group CEO,
HR Director, Group General Counsel &
Company Secretary and members of the
committee and the committee then met to
review feedback and, after due
consideration, recommended to the Board
that Tom Stoddard was the best candidate
and that he be appointed to the Board as
CFO. Spencer Stuart is a signatory to the
Voluntary Code for Executive Search Firms
and is also used by the Group for other
senior executive searches.
In connection with the proposed
acquisition of Friends Life, discussions were
held with the current Chairman and Group
Chief Executive of Friends Life and it was
proposed that Andy Briggs, the current
Group Chief Executive of Friends Life, join
the Board and be appointed as CEO of the
Group’s combined UK & Ireland Life
business. The committee discussed this
proposal and its potential impact and after
due consideration recommended to the
Board that Andy Briggs be appointed as an
Executive Director of the Board. The
committee also considered whether any of
the Friends Life Non-Executive Directors
would be suitable for appointment to the
Board given their experience and
knowledge of the Friends Life group, which
would be invaluable in integrating the
Friends Life business into the Group
following the completion of the proposed
acquisition. After due consideration, the
committee recommended to the Board that
Sir Malcolm Williamson, current Chairman
of Friends Life, be appointed as a Non-
Executive Director of the Board and that he
become the Company’s Senior Independent
Director once Sir Adrian Montague becomes
Chairman. These appointments are subject
to regulatory approval and the successful
completion of the proposed acquisition.
Due to the circumstances surrounding these
appointments it was not appropriate to use
an external search consultancy or open
advertising for these appointments. The
committee considered Sir Malcolm to be
independent as he was considered
independent upon his appointment as
Chairman of Friends Life and is independent
in character and judgement and meets the
Code criteria.
The Board approved these
appointments and intend that they will
become effective following the 2015 AGM
subject to regulatory approval and
successful completion of the proposed
acquisition. The new directors would stand
for election by shareholders at the 2016
AGM. The Company Secretary will
implement induction plans for the new
directors.
All appointments to the Board are made
on merit, against the criteria identified by
the committee, having regard to the
benefits of diversity on the Board, including
gender. The committee strongly believes
that diversity throughout the Group and at
Board and senior management level is a
driver of business success. Diversity brings a
broader, more rounded perspective to
decision-making and risk management,
making the Board and senior management
more effective.
Whilst the Board is currently below its
target of 25% female representation at
18% it remains committed to achieving that
goal as soon as possible.
At the date of this Report, 19% (2013:
21%) of Group Executive members and
21% (2013: 21%) of senior executives in
the Company were female. It is the
Company’s intention to increase this
number as it is recognised that a greater
number of women in senior management
positions will create a stronger talent
pipeline and is better for business. Further
details on diversity can be found in the
‘Engaging with our people’ section of the
Strategic report.
Other activities
During the year the committee reviewed the
composition of the Board’s committees and
recommended changes to the Board for
approval.
The committee also reviewed the
independence of each NED; carried out an
annual review of each director’s conflicts of
interest and the balance of skills,
knowledge, experience and diversity on the
Board. In doing so, the committee noted
that a member of Glyn Barker’s family
works for the Company’s External Auditor,
but that this person did not have any
involvement in work carried out for the
Group; and the cross-directorships of
Michael Hawker and Patricia Cross on
Macquarie Group Limited and Macquarie
Bank Limited. Consideration of Glyn’s
former employment by PwC is considered in
the Audit Committee report. Scott Wheway
has served on the Board for seven years and
the committee was satisfied that he remains
independent. His presence on the Board
provides continuity given the number of
changes to the Board during the previous
two years and he makes a considerable
contribution to the Board, through his
knowledge of the Company and wide skill
set. Over the last year the Chairman’s
external commitments have increased with
appointments to FirstGroup, Westfield
Corporation and Barclays plc. The Chairman
has commenced an orderly handover of his
duties to Sir Adrian Montague and the
committee was therefore satisfied that Mr
McFarlane continued to devote sufficient
time to fulfil his role at Aviva.
Following consideration of these issues
the committee concluded that it considered
each NED to be independent in character
and judgement and that there are no
circumstances that are likely to affect their
judgement and recommended that each
NED standing for re-election at the 2015
AGM be re-elected.
Taking into account the time
commitments and any potential conflicts
involved, the committee reviewed and
recommended that the Board agree the
appointments of Glyn Barker as a Non-
Executive Director of Auctus Industries plc,
Gay Huey Evans as Deputy Chairman of the
Financial Reporting Council and Bob Stein as
a director of Resolution Life Holdings Inc in
the US, in advance of such appointments
being taken up.
Committee performance and
effectiveness
—
The Board undertook an annual review of
the committee’s performance and
effectiveness as part of the Board
effectiveness review and the results of the
review will be incorporated into the
committee’s processes and activities for
2015. In particular it was agreed that the
committee would review its processes for
recommending appointments to the Board
and hold additional meetings on succession
planning for Executive Directors.
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