RBS 2005 Annual Report Download - page 118

116
Corporate governance
Corporate governance continued
Performance evaluation
The annual performance evaluation of the Board and its
Committees was undertaken in the autumn of 2005. The
evaluation, which covered the operation and effectiveness of
the Board, the Remuneration Committee and the Nominations
Committee, was conducted by the Group Secretary using a
detailed questionnaire and meetings with each director.
Amongst the areas reviewed were the composition of the
Board, Board processes and performance against objectives.
In addition, each director discussed his or her own
performance with the Chairman and the senior independent
director met individually with the executive directors and with
the non-executive directors as a group without the Chairman
present, to consider the Chairman’s performance. The report
on the Board evaluation, which was designed to assist the
Board in further improving its performance, was considered
and discussed by the Board as a whole and specific actions
are currently being implemented.
A review of the effectiveness of the Audit Committee was
undertaken during the year by PricewaterhouseCoopers and
was the subject of a separate report to the Board. Amongst
the areas reviewed were the composition and performance of
the Committee and the Committee’s role in relation to internal
and external audit, risk management and financial reporting.
Board Committees
In order to provide effective oversight and leadership, the
Board has established a number of Board Committees
with particular responsibilities. The Committee chairmanship
and membership are reviewed on a regular basis. The names
and biographies of all Board Committee members are set out
on page 109.
The terms of reference of the Audit, Remuneration and
Nominations committees and the standard terms and
conditions of the appointment of non-executive directors are
available on the Group's website (www.rbs.com) and copies
are available on request.
Audit Committee
All members of the Audit Committee are independent non-
executive directors. The Audit Committee holds at least five
meetings each year. The Audit Committee’s report is contained
on pages 119 and 120.
Remuneration Committee
All members of the Remuneration Committee are independent
non-executive directors. The Remuneration Committee holds at
least three meetings each year.
The Remuneration Committee is responsible for assisting the
Board in discharging its responsibilities and making all relevant
disclosures in relation to the formulation and review of the
Group’s executive remuneration policy. The Remuneration
Committee makes recommendations to the Board on the
remuneration arrangements for its executive directors and the
Chairman. The Directors’ Remuneration Report is contained
on pages 121 to 129.
Responsibility for determining the remuneration of executive
directors has not been delegated to the Remuneration
Committee, and in that sense the provisions of the Code have
not been complied with. The Board as a whole reserves the
authority to make the final determination of the remuneration of
directors as it considers that this two stage process allows
greater consideration and evaluation and is consistent with the
unitary nature of the Board. No director is involved in decisions
regarding his or her own remuneration.
Nominations Committee
The Nominations Committee comprises independent non-
executive directors, under the chairmanship of the Chairman of
the Board. The Nominations Committee meets as required.
The Nominations Committee is responsible for assisting the
Board in the formal selection and appointment of directors. It
considers potential candidates and recommends appointments
of new directors to the Board. The appointments are based on
merit and against objective criteria, including the time available
to, and the commitment which will be required of, the potential
director.
In addition, the Nominations Committee considers succession
planning for the Chairman, Group Chief Executive and non-
executive directors. The Nominations Committee takes into
account the knowledge, mix of skills, experience and networks
of contacts which are anticipated to be needed on the Board
in the future. The Chairman, Group Chief Executive and non-
executive directors meet to consider executive succession
planning. No director is involved in decisions regarding his or
her own succession.
The Board is aware of the other commitments of its directors
and is satisfied that these do not conflict with their duties as
non-executive directors of the company.