RBS 2012 Annual Report Download - page 307

RBS GROUP 2012
305
In 2012, as part of their ongoing development, the directors received
briefings on the UK Bribery Act 2010, the new UK regulatory regime,
various Financial Reporting Council consultations (including amendments
to the Code, audit committee guidelines, the stewardship code and
international standards on auditing for the UK and Ireland), a number of
government consultations on narrative reporting, executive remuneration
and shareholder voting rights and the draft proposals under the Capital
Requirements Directive IV, as well as other regulatory consultations.
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. The Group Audit Committee and the Board Risk
Committee undertook a total of six visits in 2012 to RBS Risk
Management (2), Group Internal Audit (2), Group Finance and Business
Services to review the Change programme.
Performance evaluation
In accordance with the Code, an external evaluation of the Board takes
place every three years. An internal evaluation takes place in the
intervening years.
The 2011 evaluation was conducted internally by the Group Secretary
and a number of initiatives were implemented aimed at improving the
overall performance and effectiveness of the Board. These included
additional improvements to the flow of information to the Board,
appointment of additional Directors to Board committees and additional
succession planning sessions. The 2012 evaluation concluded that the
recommendations from the 2011 evaluation had been implemented in full.
In 2012, the Board and Committee evaluation process was independently
facilitated by IDDAS Limited, a specialist board evaluation consultancy.
IDDAS Limited were selected following a competitive tender and the
Board is satisfied that IDDAS Limited has no other connection with the
Group.
Performance evaluation process
IDDAS Limited undertook a formal and rigorous evaluation by:
x using a detailed framework of questions which was used to structure
individual meetings held with each director;
x discussing the outcomes and recommendations with the Chairman;
and;
x recommending the outcomes and areas for improvement to the
Board members.
Amongst the areas reviewed were Board structure, membership
(including diversity) and processes, Board committees, Director
competence, independence and behaviour.
Outcomes of the 2012 performance evaluation
The 2012 performance evaluation has concluded that the Board and
Board committees are operating effectively. The key findings were as
follows:-
x the Group has a highly capable Board which is well-balanced and
diverse, with the skills required to respond to the very full agenda
and key priorities of the Group;
x Board composition and executive succession planning should
remain under review;
x the Board is headed by a strong and effective Chairman and Board
meetings are open and transparent with constructive discussion,
particularly around culture. The skills and contribution that the
executive directors bring to the Board was recognised;
x as a result of the continued challenging external and regulatory
environment, and the number of regulatory investigations, a
substantial time commitment is required from the non-executive
directors;
x whilst improvements in the quality and clarity of Board and Board
Committee papers during 2012 was acknowledged, Board
information flows should remain under review so that improvements
can be made on a continuous basis;
x Board committees continue to play a key role supporting the work of
the Board and the directors, individually and collectively, dedicate
extensive time to the Group; and
x given the increased focus on culture, the role and responsibilities of
the Group Sustainability Committee should be enhanced in respect
of cultural and behavioural issues.
A summary of the key themes arising from 2012 performance evaluation
is set out below, together with an overview of the proposed actions:
Key themes included Proposed action
Board composition
The composition of the Board and Board
committees to remain under review to ensure the
board has the appropriate balance of skills,
experience, independence and knowledge.
Board and executive
succession planning
The Board and Group Nominations Committee to
review board and executive succession planning.
Board Papers
RBS Secretariat to establish a board-sponsored,
multi-disciplinary project, to devise an optimal
board information pack, with summaries and
levels of depth to suit each reporting area or
issue.
Group Sustainability
Committee
The Group Sustainability Committee to be given
an expanded remit for customer related
sustainability and reputation issues, oversight of
cultural and behavioural change, and
sustainability aspects of the people agenda.