RBS 2008 Annual Report Download - page 155

RBS Group Annual Report and Accounts 2008154
Corporate governance continued
Board balance and independence
The Board currently comprises the Chairman, three executive directors
and five non-executive directors. The Board functions effectively and
efficiently and is considered to be of an appropriate size. The directors
provide the Group with the knowledge, mix of skills, experience and
networks of contacts required. The Board Committees comprise
directors with a variety of relevant skills and experience so that no
undue reliance is placed on any individual.
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 146
and 147.
In addition to the Chairman, there are five independent and three non-
independent directors (i.e. the executive directors) on the Board.
Following Bob Scott ceasing to be a director on 6 February 2009,
a replacement senior independent director will be appointed in due
course. The Board plans to appoint, in consultation with HM Treasury,
three new independent non-executive directors to the Board during
2009.
The Board considers that the Chairman was independent on
appointment and all non-executive directors are independent for the
purposes of the Code.
Re-election of directors
Directors must stand for re-election by shareholders 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 election at the 2009 Annual General
Meeting are included on page 151 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, and have access to the advice and services of the
Group General Counsel and Group Secretary 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 evaluation of its own
performance and that of its committees and individual directors.
In 2008, this was conducted internally using detailed questionnaires
and individual meetings with each director. Amongst the areas reviewed
were the role of the Board and Committees, composition, meetings and
processes, performance and reporting, and external relationships. The
Board has considered and discussed reports on the outcomes of the
evaluations and is satisfied with the way in which the evaluations have
been conducted.
A number of initiatives are already underway aimed at improving the
overall performance and effectiveness of the Board, including further
Board appointments, restructuring Board agendas and allowing more
time at Board meetings to consider strategic issues. In addition, a
number of actions have already been taken to enhance reporting to the
Board and Audit Committee on risk matters, liquidity and funding.
In addition, the former Chairman evaluated the individual performance
of each director. The former senior independent director canvassed the
views of the executive directors and met with the non-executive
directors as a group without the former Chairman present to consider
his performance.
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 146 and 147.
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.
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 set out on pages 157 and 158.
Remuneration Committee
The Remuneration Committee is comprised of independent non-
executive directors, together with the Chairman of the Board. The
Remuneration Committee holds at least three meetings each year.
The Directors’ Remuneration Report is contained on pages 160 to 168.