RBS 2007 Annual Report Download - page 102

RBS Group • Annual Report and Accounts 2007
100
Governance
The non-executive directors combine broad business and
commercial experience with independent and objective
judgement. The balance between non-executive and executive
directors enables the Board to provide clear and effective
leadership and maintain the highest standards of integrity
across the company’s business activities. The names and
biographies of all Board members are set out on pages 92
and 93.
The composition of the Board is subject to continuing review
and the provisions of the Code will be taken into account in
respect of the balance of the Board. The Code requires the
Board to determine whether its non-executive members are
independent.
The Board comprises nine independent and seven
non-independent directors (including executive directors), in
addition to the Chairman. Bob Scott has been nominated as
the senior independent director.
The Board considers that all non-executive directors are
independent for the purposes of the Code, with the exception
of Bud Koch who was formerly Chairman, President and Chief
Executive Officer of Charter One Financial, Inc. which was
acquired by Citizens Financial Group, Inc. in 2004. Larry Fish
will not be considered an independent non-executive director
from 1 May 2008.
Re-election of directors
At each Annual General Meeting, one third of the directors
retire and offer themselves for re-election and each director
must stand for re-election at least once every three years. Any
non-executive directors who have served for more than nine
years will also stand for annual re-election and the Board will
consider their independence at that time. The proposed
re-election of directors is subject to prior review by the Board.
The names of directors standing for re-election at the 2008
Annual General Meeting are contained on page 97 and further
information will be given in the Chairman’s letter to shareholders
in relation to the company’s Annual General Meeting.
Information, induction and professional development
All directors receive accurate, timely and clear information on
all relevant matters. All directors have access to the advice and
services of the Group Secretary and General Counsel who is
responsible to the Board for ensuring that Board procedures
are followed and that applicable rules and regulations are
complied with. In addition, all directors are able, if necessary,
to obtain independent professional advice at the company’s
expense.
Each new director receives a formal induction on joining the
Board, including visits to the Group’s major businesses and
meetings with directors and senior management. The induction
is tailored to the director’s specific requirements. Directors are
advised of appropriate training and professional development
opportunities and undertake the training and professional
development they consider necessary in assisting them to
carry out their duties as a director.
Performance evaluation
The Board has undertaken a formal and rigorous annual
evaluation of its own performance and that of its committees
and individual directors.
The performance evaluation of the operation and effectiveness
of the Board, the Remuneration Committee and the
Nominations Committee was undertaken in the autumn of
2007. This was conducted internally using a detailed
questionnaire and individual meetings with each director.
Amongst the areas reviewed were the role of the Board, Board
composition, Board meetings and processes, Board
performance and reporting, external relationships and Board
Committees. A separate performance evaluation of the Audit
Committee was also undertaken internally in late 2007 using a
detailed questionnaire and meetings with Audit Committee
members and attendees.
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 a
separate report on the outcomes of the evaluation of the Audit
Committee was also considered and discussed by the Board.
The Board evaluation involved detailed consideration of Board
composition, Board engagement in risk management and
capital planning and the format of the Board meetings. The
Board also considered the range and balance of its activities
and was content that it was allocating appropriate time to such
key matters as monitoring business performance, risk appetite
and strategy.
Taking into account their review and discussions the directors
have concluded that the Board is effective in meeting its
objectives and fulfilling its duties and obligations. The directors
are also satisfied that each of the Board’s Committees (Audit,
Remuneration and Nominations) carries out its delegated
duties effectively.
In addition, each director discussed his or her own
performance as a director and their Board evaluation
questionnaire with the Chairman. The senior independent
director canvassed the views of the executive directors and
met with the non-executive directors as a group without the
Chairman present to consider the Chairman’s performance.
The Board is satisfied that each director continues to
contribute effectively to the Board and the Group and
demonstrates commitment to his or her role as a director.
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
pages 92 and 93.
The terms of reference of the Audit, Remuneration and
Nominations Committees and the standard terms and
conditions of appointment of non-executive directors are
available on the Group’s website (www.rbs.com) and copies
are available on request.
Corporate governance continued