RBS 2012 Annual Report Download - page 305

RBS GROUP 2012
303
The Role of the Board
The Board is the main decision-making forum for the company. It is
collectively responsible for the long-term success of the company and is
accountable to shareholders for financial and operational performance.
The Board has overall responsibility for:
x establishment of Group strategy and consideration of strategic
challenges;
x management of the business and affairs of the Group;
x ensuring the Group manages risk effectively through the approval
and monitoring of the Group’s risk appetite;
x considering stress scenarios and agreed mitigants and identifying
longer term strategic threats to the Group’s business operations;
x the allocation and raising of capital; and
x the preparation and approval of the Group’s annual report and
accounts.
The Board’s terms of reference include key aspects of the company’s
affairs reserved for the Board’s decision and are reviewed at least
annually. The terms of reference are available on the Group’s website
www.rbs.com.
There are a number of areas where the Board has delegated specific
responsibility to management, including to the Group Chief Executive and
the Group Finance Director. These include responsibility for the
operational management of the Group’s businesses as well as reviewing
high level strategic issues and considering risk appetite, risk policies and
risk management strategies in advance of these being considered by the
Board and/or its Committees. Specific delegated authorities are also in
place in relation to business commitments across the Group.
All directors participate in discussing strategy, performance and the
financial and risk management of the company. Meetings of the Board
are structured to allow sufficient time for consideration of all items and the
Chairman encourages constructive challenge and debate.
Membership of the Board
The Board currently comprises the Chairman, two executive directors and
nine independent non-executive directors, one of whom is the Senior
Independent Director. 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 and experience 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 names and biographical details of the current members of the Board
are shown on pages 298 to 301.
The Board is aware of the other commitments of its directors and is
satisfied that all directors allocate sufficient time to enable them to
discharge their responsibilities effectively.
Under the Companies Act 2006, directors have a duty to avoid conflicts of
interest unless authorised. The Board has, since this duty was introduced
in 2008, operated procedures for ensuring that the Board’s powers for
authorising directors’ conflicts of interest (as set out in the Articles of
Association) are being operated effectively. The Board has therefore
considered, and where appropriate authorised, any actual or potential
conflicts of interest that directors may have. The Board reviews its
conflicts register annually.
Election and re-election of directors
In accordance with the provisions of the Code, all directors of the
company are required to stand for re-election annually by shareholders at
the company’s Annual General Meeting. Further information in relation to
the company’s Annual General Meeting can be found in the Chairman’s
letter to shareholders that accompanies the notice of meeting.
Board balance and independence
The roles of Chairman and Group Chief Executive are distinct and
separate, with a clear division of responsibilities. The Chairman leads the
Board and ensures the effective engagement and contribution of all
executive and non-executive directors. The Group Chief Executive has
responsibility for all Group businesses and acts in accordance with the
authority delegated by the Board.
The non-executive directors combine broad business and commercial
experience with independent and objective judgement. The non-
executive directors provide independent challenge to the executive
directors and the leadership team. The balance between non-executive
and executive directors enables the Board to provide clear and effective
leadership across the Group’s business activities.
The Board considers that the Chairman was independent on appointment
and that all non-executive directors are independent for the purposes of
the Code. 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 from RBS Secretariat.
Corporate governance