Carphone Warehouse 2011 Annual Report Download - page 37

Carphone Warehouse Group plc Annual Report 2011 33
GOVERNANCE
UK Corporate Governance Code
On 28 May 2010 the FRC published a
new UK Corporate Governance Code
(“New Code”) to replace the Code. The
New Code will apply to the reporting
periods beginning on or after 29 June 2010.
It will therefore apply to the Company for
the year ending 31 March 2012 and not for
the financial year covered by this Report.
The Board has however reviewed the
New Code and has decided voluntarily to
adopt the following principles ahead of the
implementation of the New Code. First,
all directors will stand for re-appointment
annually at the Company’s annual general
meeting starting from the 2011 meeting.
Second, the performance of the Board
will be externally reviewed at least every
three years, with the first review to be
carried out no later than the year ending
31 March 2014.
Independence and compliance
The Board has six members, three of
whom, excluding the Chairman, are
considered independent non-executive
directors. These directors are John
Gildersleeve, John Allwood and
Baroness Morgan.
This is the first annual report of the
Company since the Demerger and,
as stated in the Prospectus, Charles
Dunstone, Chairman, was not independent
on his appointment since he was previously
Chief Executive Officer of Old Carphone
Warehouse and also had a significant
shareholding in the Company. The Board
believed that the appointment of Charles
as Chairman benefitted the Group, given
that Charles was the founder of the
business and his knowledge of the Group’s
businesses was likely to be important to its
future development. Major shareholders
were consulted prior to the appointment.
Excluding the Chairman, all of the non-
executive directors are considered to be
independent and therefore, more than half
of the directors excluding the Chairman
are independent.
Executive directors and the Chairman have
service contracts that can be terminated
by either the Company or the director on
between six and twelve months’ notice,
depending on the individual. The non-
executive directors 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 and notice period
are set out in the Remuneration Report on
pages 37 to 42.
Performance evaluation
During the year, 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 for and analysed
by the Chairman, the Senior Independent
Director, the Chief Executive Officer and
the Board as a whole. The areas covered
included the roles of the executive and
non-executive directors, the Board,
the Board Committees, the Chairman,
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.
Following such performance evaluation
the Chairman confirms that all directors
seeking re-election at the annual general
meeting 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 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 Senior Independent Director also
met with the non-executive directors,
in the absence of the Chairman, to assess
the Chairman’s effectiveness, having first
reviewed the results of a performance
evaluation questionnaire completed
by all of the directors apart from the
Chairman. The Board is of the opinion
that the Chairman had no other significant
commitments during the year that affected
his performance in his role.
External appointments
The Board supports executive directors
taking up non-executive directorships as
part of their continued development and
the Board believes that this will ultimately
benefit the Company. Further details are
provided in the Remuneration Report on
pages 37 to 42.
Board Committees
There are three key Board Committees:
Audit, Remuneration and Nomination.
The Committees are provided with
sufficient resources via the Company
Secretary and, where necessary, have
direct access to independent professional
advisors to undertake their duties.