Marks and Spencer 2008 Annual Report Download - page 44

Board committees
The principal Board committees are the Audit,
Remuneration and Nomination Committees. The written
terms of reference of each committee can be found on
our website.
Audit Committee
The Audit Committee comprises four independent,
non-executive directors: Jeremy Darroch (Chairman),
Martha Lane Fox, Steven Holliday and Sir David Michels.
Martha joined the Board and became a member of the
Committee on 1 June 2007 to replace Jack Keenan who
retired on 10 July 2007.
The Audit Committee assists the Board in fulfilling
its oversight responsibilities and its primary role is to
monitor the integrity of the financial statements and
other information to shareholders; to review the systems
of internal control and risk management; to maintain
an appropriate relationship with the Company’s external
auditors; and to review the effectiveness and objectivity
of the audit process.
It met four times during the year reviewing a number of
internal audits relating to key business processes and the
principal risks and uncertainties facing the Group. The
Committee received updates on the governance process
around business change initiatives and reviewed the Code of
Ethics and whistleblowing returns. Private meetings have been
held separately with the external auditors and internal audit.
The Board has satisfied itself that at least one member
of the Audit Committee has recent and relevant financial
experience and is confident that the collective experience
of the members enables them to act as an effective Audit
Committee. The Committee also has access to the financial
expertise of the Group and its auditors and can seek further
professional advice at the Company’s expense, if required.
The Board has appointed a new Head of Internal Audit and
Risk, Claire Combes, who joined the Company on 6 May
2008. Following the departure on 31 July 2007 of the previous
Head of Internal Audit, John Federer, the function has been
led by the two Audit Managers who have had direct access
to the Audit Committee Chairman.
The Committee keeps under review the independence and
objectivity of the external auditors, PricewaterhouseCoopers
LLP (‘PwC’), including the review of any audit fee proposals
and non-audit fees. An engagement and fee approvals process
is in place which requires prior approval from the Committee
for certain engagements. On occasions, the nature of non-
audit advice may make it more timely and cost-effective to
select PwC, who already have a good understanding of the
Group. PwC may also be appointed for consultancy work,
but only after rigorous checks, including competitive tender,
to confirm they are the best provider. PwC is also subject
to professional standards which safeguard the integrity
of the auditing role performed on behalf of shareholders.
Arrangements have been made, in conjunction with PwC, for
audit partner rotation in accordance with the recommendations
of the Auditing Practices Board. The lead audit engagement
partner, Ranjan Sriskandan, has been in place since 2003/04
and is being succeeded by Stuart Watson with effect from
2008/09. As authorised by shareholders at the AGM on 10 July
2007, the Audit Committee determines the level of remuneration
for the external auditors on behalf of the Board. Details of this
year’s fees are given in note 4 to the financial statements.
Remuneration Committee
The Remuneration Committee comprises four independent
non-executive directors: Louise Patten (Chairman),
Martha Lane Fox, Steven Holliday, and Sir David Michels.
Martha joined the Board and became a member of the
Committee on 1 June 2007 to replace Jack Keenan who
retired on 10 July 2007. It met five times during the year.
The Remuneration Committee’s primary role is to
recommend to the Board the remuneration strategy
and framework, giving due regard to the financial and
commercial health of the Company and to ensure that
executive directors and senior management are fairly
rewarded for their individual contributions to the
Company’s overall performance.
The remuneration of the non-executive directors is determined
by the Chairman and the executive directors. The Remuneration
report is set out on pages 48 to 55 as required by the Directors’
Remuneration Report Regulations 2002.
Nomination Committee
The Nomination Committee comprises Lord Burns (Chairman),
Sir Stuart Rose and all five independent non-executive
directors: Jeremy Darroch, Martha Lane Fox, Steven Holliday,
Sir David Michels and Louise Patten. Martha joined the Board
and became a member of the Committee on 1 June 2007
to replace Jack Keenan who retired on 10 July 2007. From
1 June 2008 Sir David Michels, Deputy Chairman, will chair the
Committee to replace Lord Burns who will retire on that date.
The Nomination Committee’s primary role is to ensure that
appropriate procedures are in place for the nomination,
selection, training and evaluation of directors and for
successional plans. It reviews the Company’s Board
structure, size, composition and successional needs,
thereby keeping under consideration the balance of
membership and the required blend of skills, knowledge
and experience of the Board. Appointments are made
on merit and against objective criteria to ensure that
the Board maintains a balance of skills and experience.
It met twice formally during the year and succession
planning sessions were held by the Board and the
Nomination Committee to consider Board and senior
management changes. Under the Company’s Articles of
Association, all directors seek election at their first Annual
General Meeting following appointment and all directors
are required to offer themselves for re-election at least every
three years. Under the new Board structure from 1 June 2008
we have announced that Sir Stuart Rose will retire and seek
re-election by shareholders on an annual basis, commencing
in 2008, rather than on the usual three-year cycle.
On 10 March 2008 we announced the appointment
with immediate effect of two new executive directors,
Kate Bostock and Steven Esom, as well as changes to
the senior management team. The Board was keen to
ensure a proper mix of top talent, combining new recruits
and existing employees.
42 MARKS AND SPENCER GROUP PLC
Corporate governance statement
continued