Board report on corporate governance
Compliance with the provisions of the revised
Combined Code
Throughout the year to 31 December 2004, the Company complied with all the provisions
set out in the revised combined code ('the Code') on corporate governance
issued in July 2003 with the exception of those areas as detailed in this report.
Application of the main and supporting principles set out in
the Code
In this report, the heading to each of the main principles in the Code is set
out and the manner in which the Company has applied or intends to apply the
main and supporting principles underlying each of the main headings is described.
The Board
The Company has a Board comprising Keith Hopkins, an independent non-executive
Chairman, Geoff Gaywood, Chief Executive, two other executive directors and
three independent non-executive directors. The senior non-executive director
is Michael Hartnall. The Company considers Michael Hartnall to be an independent
director notwithstanding the fact that he was appointed a non-executive director
of Elementis Holdings Limited, a subsidiary of the Company, more than twelve
years ago on 2 February 1993. Keith Hopkins was appointed a director with
effect from 1 August 2004 and became Chairman on 7 October 2004 in place
of Jonathan Fry who left the Board at that time. Kevin Matthews was appointed
as a non-executive director on 16 February 2005.
The Board operates within a framework of controls used to minimise
risks, including a formal schedule of matters specifically reserved
for its decision. The Board sets the strategic aims and objectives
for the Company and regularly reviews its resources to ensure they
are sufficient to meet the Company's needs. The Board regularly
reviews management performance and sets values and standards to
ensure that its obligations to its shareholders and others are
understood and met.
The decisions reserved to the Board are of a strategic and material
nature and include the approval of financial statements, circulars
to shareholders and press releases, recommendation of dividends,
significant changes in accounting policies, convening of shareholder
meetings, membership of the Board and its committees, strategic
management control matters including approval of Group strategy,
annual operating plans, treasury policies, internal control structure
and capital and revenue commitments above certain levels. Although
the Board retains responsibility for major capital expenditure,
disposal of significant fixed assets, material agreements, leases
and contracts it delegates responsibility for those items, where
they are not material in Group terms, to management committees.
During 2004, the Board met twelve times. All directors attended
all meetings with the exception of one meeting in February from
which Edward Wilson was absent.
The Remuneration Committee held three meetings during the year,
all of which were attended by all the members of the Committee.
Peter Russell, Director of Group Human Resources, was also present
at all the meetings. Geoff Gaywood attended two meetings and the
other executive directors attended one meeting. No executive director
was present during discussion of his own remuneration.
Chairman and Chief Executive
The Company has both a Chairman and a Chief Executive. There is a clear division
of responsibility which the Board has agreed and is set out in writing, a
copy of which can be obtained from the Company website. The Chairman is responsible
for running the Board which includes setting the style and tone in which
the Board operates, providing a forum for constructive discussion and ensuring
receipt of accurate, timely and clear information. The Chairman also ensures
that an effective process of communication with the Company's shareholders
takes place on a regular basis and that shareholder concerns are made known
to all members of the Board. The Chief Executive is responsible for the development
of strategy, the running of the Group's businesses and reporting on
their performance accurately to the Board. Major decisions have to be made
by the Board as a whole and no one individual has unfettered powers of decision.
Board balance and independence
The Board comprises three executive and, including the Chairman, four nonexecutive
directors all of whom are considered to be independent. Each director has
a vote and no individual or small group of individuals dominates the Board's
decision making.
No non-executive director:
- has been an employee of the Group within the last five years;
- has, or has had within the last three years, a material
business relationship with the Group;
- receives remuneration
other than a Director's fee;
- has close family ties with
any of the Group's advisers, Directors
or senior employees;
- holds cross-directorships or has significant
links with other Directors through involvement in other companies
or bodies; or
- represents a significant shareholder; and
- has served on the
Board for more than nine years with the exception of Michael
Hartnall.
Board report on corporate
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