Unilever 2010 Annual Report Download - page 46

Unilever Annual Report and Accounts 2010 43
Report of the Directors Governance
Board evaluation
The Chairman, in conjunction with the Vice-Chairman & Senior
Independent Director, leads the process whereby the Boards
formally assess theirown performance, with the aim of helping
to improve the effectiveness of the Boards and their Committees.
The evaluation process consists of an internal exercise performed
annually with an independent third-party evaluation carried
outwhen the Boards consider appropriate. The last time an
independent third-party evaluation was carried out was in 2006.
The Boards have acknowledged the recommendation of the
newUK Corporate Governance Code to conduct an external
board evaluation at least once every three years and have
determined toconduct their 2011 evaluation process using
anindependent external third-party consultant. The Boards
thenintend to continue to conduct annual evaluations with
anevaluation facilitated by an independent third-party
consultantat least once every three years.
The internal evaluation process includes an extensive bespoke
and confidential questionnaire for all Directors to complete.
Thedetailed questionnaire invites comments on a number of
areas, including board responsibility, performance, operations,
effectiveness, training and knowledge. In addition, each year the
Chairman conducts a process of evaluating the performance and
contribution of each Director, including an interview with each.
The evaluation of the performance of the Chairman is led by the
Vice-Chairman & Senior Independent Director and the Chairman
leads the evaluation of the Chief Executive Officer, both by means
of confidential, bespoke questionnaires. Committees of the
Boards evaluate themselves annually under supervision of their
respective chairmen taking into account the views of respective
Committee members and theBoards.
Action taken in 2010
Following the 2009 evaluations, the Boards agreed to an enhanced
Board training programme in 2010 that would concentrate on
further instruction and familiarisation with Unilever and its
businesses, and this has been achieved via formal knowledge
sessions for the Non-Executive Directors on Unilever’s operations.
In addition, Directors were, and continue to be, actively
encouraged toattend events of importance in Unilever’s calendar
such asInvestor Relations seminars.
2010 process and recommendations
In 2010 the results of the various evaluations were discussed
bythe Boards to address any issues or areas for improvement.
The results of the 2010 Board evaluation were summarised in
apresentation by the Chairman at its meeting in December.
Comparison was made with the 2009 Board evaluation results,
and in general, the results showed an improvement in scores
from the 2009 process indicating that the Directors considered
that no major changes were required toBoard and Committee
processes. The overall conclusion was that individual Directors
continue to be satisfied that the Boards work well, and function
efficiently during the year, and that all the Directors continue to
contribute effectively and demonstrate full commitment to their
duties.
There were however various recommendations of opportunities
for enhancement in certain areas. Notably, going forward, Board
meetings will be organised to ensure there is sufficient time to
allow for greater contributions from the Non-Executive Directors.
Appointment of Directors
Directors are normally appointed by shareholders at the AGMs.
All existing Directors, unless they are retiring, submit themselves
for re-election every year, and shareholders vote to re-appoint
them by a simple majority vote. A list of our current Directors
andthe periods during which they have served as such is set
outon page 40.
In order to seek to ensure that NV and PLC have the same
Directors, the Articles of Association of NV and PLC contain
provisions which are designed to ensure that both NV and PLC
shareholders are presented with the same candidates for election
as Directors. This is achieved through a nomination procedure
operated by the Boards of NV and PLC through Unilever’s
Nomination Committee.
Based on the evaluation of the Boards, its Committees and its
individual members, the Nomination Committee recommends
toeach Board a list of candidates for nomination at the AGMs
ofboth NV and PLC. In addition, shareholders are able to
nominate Directors, and to do so they must put a resolution
toboth AGMs in line with local requirements. However, in order
to ensure that the Boards remain identical, anyone being elected
asa Director of NV must also be elected as a Director of PLC
andvice versa. Therefore, if an individual fails to be elected to
both companies then he or she will be unable to take their place
on either Board.
The provisions in the Articles of Association for appointing
Directors cannot be changed without the permission, in the
caseof NV, of the holders of the special ordinary shares
numbered 1 to 2,400 inclusive and, in the case of PLC, of the
holders of PLC’sdeferred stock. The NV special ordinary shares
may only betransferred to one or more other holders of such
shares. Thejointholders of both the NV special ordinary shares
and the PLCdeferred stock are N.V. Elma and United Holdings
Limited, whichare joint subsidiaries of NV and PLC. The Boards
ofN.V. Elma andUnited Holdings Limited comprise the members
of theNomination Committee, which comprise Non-Executive
Directors of Unilever only.
Group Secretary
The Group Secretary supports the Chairman in ensuring that
Unilever’s governance framework remains fit for purpose at all
times and is subject to regular review, and has a key role to play
in facilitating the effective functioning of the Boards, advising
ofany improvements and initiatives which could add value
tothegovernance of the Group. The Group Secretary is available
to advise all Directors and ensure that Board procedures are
complied with.
The Group Secretary works with the Chairman and Chief Executive
Officer to facilitate the timely presentation of board information
inorder to aid their deliberations and decision making, whilst
ensuring that the Boards’ time is used effectively and is focused
onrelevant issues.
The Boards have the power to appoint and remove the Group
Secretary. The current Group Secretary is Tonia Lovell, who
replaced Steve Williams in that role in July 2010.