Carphone Warehouse 2007 Annual Report Download - page 26

Introduction
The Board of Directors recognises the importance of high standards of
corporate governance. This Report and the Remuneration Report set out on
pages 25 to 30 explain that the Company has complied during the period with
the principles contained in the Combined Code on Corporate Governance
(“Code”) except as stated to the contrary in this Report. In accordance with the
Listing Rules issued by the Financial Services Authority, the relevant parts of
this Report have been reviewed by the auditors and their opinion is contained
in the Independent Auditor’s Report on page 33.
Board of Directors
Composition of the Board
There are currently five Executive Directors and eight Non-Executive Directors
(including the Non-Executive Chairman and the Non-Executive Deputy
Chairman). Biographies of each of the Directors, their responsibilities and
Board Committee memberships are set out on page 21.
The following changes to the Board have taken place since last year’s
Annual Report:
The appointment of Andrew Harrison as an Executive Director together with the
appointments of Baroness Morgan, Steven Esom and David Mansfield all as
Non-Executive Directors were approved at the Annual General Meeting held on
27 July 2006.
Between the period of 2 April 2006 and 24 April 2007 the Board comprised
five Executive Directors and seven Non-Executive Directors (including the
Non-Executive Chairman and Non-Executive Deputy Chairman). All of the
Non-Executive Directors excluding the Chairman and Deputy Chairman were
considered to be Independent Non-Executive Directors. Throughout the
period from 2 April 2006 and 24 April 2007 half of the Board, excluding the
Non-Executive Chairman and Non-Executive Deputy Chairman, were
Independent Non-Executive Directors as required by the Code. These were
Sir Brian Pitman, Baroness Morgan, David Mansfield, Steven Esom and Adrian
Martin. On 24 April 2007, the Company announced the appointment of David
Grigson as a Non-Executive Director with immediate effect, meaning the Board
then comprised five Executive Directors and eight Non-Executive Directors.
The appointment of David Grigson will be proposed to the shareholders at the
Annual General Meeting to be held on 26 July 2007 (“AGM”) and he is also
considered to be an Independent Director.
On 5 June 2007, the Company announced that Jim Dale would stand down
as a Director of the Company with immediate effect.
Following all of the above changes to the Board and as from the AGM, the
Board will comprise four Executive Directors and eight Non-Executive Directors
(including the Non-Executive Chairman and the Non-Executive Deputy Chairman).
Six of these Non-Executive Directors, excluding the Non-Executive Chairman
and Non-Executive Deputy Chairman, are considered to be Independent
Non-Executive Directors. These are Sir Brian Pitman, Baroness Morgan,
David Mansfield, Steven Esom, Adrian Martin and David Grigson.
Charles Dunstone is the Chief Executive Officer, John Gildersleeve is
Non-Executive Chairman, David Ross is Non-Executive Deputy Chairman
and Sir Brian Pitman is the Senior Independent Director.
All new Directors went through a formal process of induction principally carried
out by the Company Secretary. All Directors are subject to election by
shareholders at the first Annual General Meeting following appointment and
thereafter to re-election at least every three years. Each Executive Director
and David Ross has a service contract that can be terminated by either the
Company or the Director on 12 months’ notice or less.
The Non-Executive Directors, apart from David Ross, have three year periods
of appointment, the terms of which are substantially in the same format as
suggested by the Code, with three month notice periods and no compensation
for loss of office. Further details on each Director’s remuneration, including the
dates of their contracts with the Company, are set out in the Remuneration
Report on pages 25 to 30.
Corporate Governance
Board meetings
The Board meets formally at least six times a year, with additional meetings
as required. The Board met formally seven times during the period (including
a strategy day). All Directors formally attended these meetings with the
exception of Steven Esom and Andrew Harrison who were both absent from
the meeting held on 25 May 2006, Jim Dale who was absent from the meeting
held on 25 January 2007 and David Ross who was absent from the meeting
on 29 March 2007. These absences were due to prior engagements that
could not be changed with the exception of Jim Dale who had to attend a
family funeral. The Company Secretary ensures that all Board papers are sent
out to non-attending Directors and that, where possible, any comments they
have are received beforehand so that they can be expressed at the meeting.
Operation of the Board
The wide range of experience and expertise of the Non-Executive Directors,
combined with the skill sets of the Executive Directors, provides vast experience
of retailing, mobile and fixed line telecommunications and general business
experience, strong personal skills and independence of thought and perspective.
The overriding responsibility of the Board is to provide entrepreneurial and
responsible leadership to the Group within a framework of prudent and effective
controls. These controls allow for the key issues and risks facing the business to
be assessed and managed. The Board determines the overall strategic direction
for the Group, reviews management performance and ensures that the
necessary financial and human resources are in place to enable the Group to
meet its objectives. The Board is comfortable that the necessary controls and
resources exist within the Group to enable these responsibilities to be met. The
Board ensures that the Directors, and in particular the Non-Executive Directors,
develop an understanding of the views of major shareholders about the
Company. The Company regularly communicates with major shareholders and
has a dedicated internal investor relations department. Briefings on market
activity, together with the views of shareholders and analysts on the Company,
are also regularly provided to the Board.
There is a clear and documented division of responsibilities between the roles
of the Chairman and the Chief Executive Officer. There are also documented
schedules of matters reserved to the Board and matters delegated to
Committees of the Board. Such reserved matters include decisions on strategic
and policy issues, the approval of published financial statements and major
acquisitions and disposals, authority levels for expenditure, treasury and risk
management policies. Strategic and policy issues are reviewed annually at
a combined Board and senior executive strategy day.
Performance evaluation
During the period the balance of skills, knowledge and experience of the
Directors was reviewed. The Board, and each individual Director, also
undertook performance evaluations. Using the Higgs ‘Suggestions for Good
Practice’ as guidance, the individual Directors initially completed separate
questionnaires. The results were collated and analysed by the Company
Secretary, who prepared reports as appropriate to the Chairman, the Senior
Independent Director, the Chief Executive Officer and the Board as a whole.
The areas covered included the role of the Executive and Non-Executive
Directors, the Board, the Board Committees, the Chairman of the Company,
preparation for and performance at meetings, the effectiveness of each
Director, leadership, culture and corporate governance. The results were then
considered by the Board as a specific item of business. The Board proposes
that these exercises or similar ones continue to be carried out each year.
Following such performance evaluation the Chairman confirms that all those
Non-Executive Directors seeking election or re-election at the AGM continue to
be effective and demonstrate a commitment to the role, including having time
to attend all necessary meetings and to carry out other appropriate duties.
The Chairman meets regularly with all the Independent Non-Executive Directors
usually in the evening prior to a Board meeting. This provides the opportunity
to raise any questions regarding the performance of the Executive Directors or
in respect of any other matters.
The Carphone Warehouse Group PLC Annual Report 2007
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