Directors who held office during 2004 are listed in the Board of Directors
with the exception of Mr D E Baird, Lord Moore of Lower Marsh and
Sir John Weston. Following an illness in December 2003, Mr D E
Baird resigned as a non-executive director and Chairman of the
Company with effect from June 21, 2004. Sir John Weston retired as
a non-executive director on December 1, 2004. Lord Moore of Lower
Marsh served as Acting Chairman from December 17, 2003 to June 21,
2004. Following Mr D E Baird’s resignation on June 21, 2004, Lord
Moore served as Chairman on an interim basis until his retirement
on December 31, 2004.
Sir John Taylor and Mr I C Conn were appointed as independent
non-executive directors with effect from November 5, 2004 and January 20, 2005 respectively. Mr S M Robertson was appointed as a non-executive director with effect from November 5, 2004 and as non-executive Chairman with effect from January 1, 2005.
On his appointment, Mr S M Robertson met the criteria for independence contained in the Combined Code. Before his appointment, he disclosed to the Board his other significant commitments which are described in the Board of directors. He has since retired from the Board of Invensys plc and will be retiring from the Board of Inchcape plc at or before its annual general meeting in 2005. Details of the process followed by the Company in respect of Mr Robertson’s appointment are given in Corporate governance.
Under the Company’s Articles of Association, one third of the directors are subject to re-election every year, with each director also being subject to re-election at intervals of not more than three years. Any director appointed during the year is separately required to retire and seek re-election by the shareholders at the next AGM. For the last two years, the Board has adopted the approach of requiring all the directors to retire each year and to seek re-election at the AGM. The Board has reviewed this policy and has concluded that it should, in future, adopt the approach contained in the Articles of Association. It will in addition require any non-executive director who has served on the Board for more than nine years to be subject to annual re-election at the AGM. The Board believes that this revised approach is fully consistent with UK corporate governance best practice and is in the interests of the Company and its shareholders. The directors retiring at this year’s AGM are the Hon A L Bondurant, Mr J P Cheffins, Mr J M Guyette and Mr A B Shilston. As newly appointed directors Mr S M Robertson, Mr I C Conn and Sir John Taylor will also retire at the AGM in 2005. They all offer themselves for re-election. Sir Robin Nicholson will retire as a non-executive director of the Company at the conclusion of the AGM in 2005 and will not therefore be seeking re-election.
The non-executive directors are appointed by the Board on the basis of recommendations put to it by the nominations committee. All the non-executive directors are considered by the Board to be independent of management and free of any relationship which could materially interfere with the exercise of their independent judgement. The Board reviews the independence of non-executive directors at least annually.
The Board does not accept the view that a non-executive director automatically loses his or her independence after serving as a director for more than three consecutive terms of three years. The Board considers that in a long-term, complex and technologically advanced business, it is essential that non-executive directors have the opportunity to acquire, over a number of years, the experience and knowledge of the business and the sectors within which the Group operates. The Board therefore concluded that Sir Robin Nicholson who has served on the Board for more than nine years remained fully independent during the year.
Lord Moore, who retired on December 31, 2004, had also served on the Board for more than nine years. For the reasons explained above, the Board took the view that he remained fully independent until June 21, 2004 but that on appointment as Interim Chairman, he should no longer be considered as independent. He therefore resigned as a member of the audit and remuneration committees and ceased to be the Company’s Senior Independent Director with effect from that date.
The Company has entered into separate Deeds of Indemnity in favour of its directors. The deeds provide substantially the same protection as that already provided to directors under the indemnity in Article 170 of the Company’s Articles of Association. The Company has also arranged appropriate insurance cover for legal action taken against its directors.