RBS 2011 Annual Report Download - page 262

260 RBS Group 2011
The Group Secretary also provides a comprehensive and ongoing
professional development programme for directors. Directors are advised
of appropriate external training and professional development
opportunities and undertake the training and professional development
they consider necessary to assist them to carry out their duties as
directors. Internal training is also provided, tailored to the business of the
Group. As part of their ongoing development in 2011, the directors
received briefings on the UK Bribery Act 2010, the European Commission
Green Paper on the EU Corporate Governance Framework, various
Financial Reporting Council Consultations, amendments to the Code, the
Capital Requirements Directive IV, a Group Treasury presentation on
Balance Sheet Management and Capital Management & Term Funding
and participated in a business visit to Group Technology.
Business visits are also arranged as part of the Group Audit Committee
and Board Risk Committee schedule and all non-executive directors are
invited to attend. During 2011, visits were made to Group Internal Audit,
RBS N.V., Restructuring and Risk and RBS Insurance.
Performance evaluation
In accordance with the Code, an external evaluation of the Board takes
place every three years with the last externally facilitated evaluation
having taken place in 2009.
The 2010 evaluation was conducted internally and a number of initiatives
were implemented aimed at improving the overall performance and
effectiveness of the Board. These included further improvements to the
flow of information to the Board, both in terms of the quality of papers and
the use of new technology to deliver these to directors. The 2011
evaluation concluded that the recommendations from the 2010 evaluation
had been implemented in full.
Performance evaluation process
The directors agreed that the 2011 evaluation of the Board and its key
Board Committees be conducted internally, led by the Group Secretary.
The Group Secretary undertook a formal and rigorous evaluation by:
xcirculating a detailed framework of questions to all directors and
regular meeting attendees;
xcollating the responses and conducting structured individual
meetings with each director and regular meeting attendees;
xdiscussing the outcomes and recommendations with the Chairman;
and
xagreeing the recommendations and outcomes with the Board and
Board Committee members.
Amongst the areas reviewed were Board role and composition, Group
strategy, risk management, Board meetings and processes, external
relationships, Board committees, directors’ support and information, and
continuing professional development.
Findings of performance evaluation 2011
The Board has considered and discussed reports on the outcomes of the
evaluation and is satisfied with the way in which the evaluation was
conducted.
The evaluation concluded that the Board is strong, operating effectively
and meeting its objectives. Headed by an excellent Chairman, the Board
is currently viewed as an appropriate size, although Board composition
should be kept under continual review. Meetings are of an appropriate
length and frequency with sufficient opportunity for debate and
discussion, although it was suggested the Board continue to make use of
evening and lunch slots to facilitate further debate and discussion on key
areas such as strategy and risk management.
Asummary of the objectives and actions proposed to be taken to address
the objectives arising from the 2011 performance evaluation is set out
below:
Key themes Proposed action
Board role and
composition
In light of John McFarlane stepping down
from the Board in March 2012 the
composition of the Board and Board
committees should be reviewed to ensure
the current balance of skills, experiences,
independence and knowledge is maintained.
Strategy
The Board should continue the focus on
Group strategy in the short, medium and
long term to ensure the strategy is
appropriate and sustainable in the current
environment.
Risk management
Risk reporting should continue to be
developed to ensure the Group Board has
adequate oversight of risk management and
risk appetite.
Succession planning
Group executives should be invited to the
Group Board to discuss bench strength and
succession planning in their respective
functions.
Individual director and Chairman effectiveness reviews
Within the performance evaluation questionnaires, directors were asked
to provide feedback on their fellow directors. This feedback was shared
with each director by the Chairman, who met with each director
individually to discuss their own performance and ongoing professional
development. Separately, 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. Feedback was sought on governance and stewardship of
the Group, relationships with key external and internal stakeholders,
execution of the Group’s Strategic Plan and delivery of value and return
to shareholders. The Senior Independent Director also canvassed views
from United Kingdom Financial Investments Limited (UKFI), the FSA and
the Asset Protection Agency. The results of the Chairman effectiveness
review were then shared with the Chairman who agreed to consider the
points raised and provide separate responses in due course.
Corporate governance continued