The Board is committed to the highest standards of corporate governance to safeguard the interests of shareholders and other stakeholders. The following report describes how the principles contained in the Combined Code on Governance (the Code) have been applied by the Company during the year ended 31 March 2009 (the year). The Company has complied throughout the year with the best practice provisions set out in Section 1 of the Code subject to the exceptions highlighted in the report below.
Board membership
The Board currently comprises the Chairman, Chief Executive and Finance Director, and five independent non-executive directors. Glen Moreno is currently the Senior Independent Director and Alison Carnwath has agreed to take over this role on his retirement at this year's Annual General Meeting. The Board is fully satisfied that, notwithstanding his long tenure of office, Glen continues to bring robust independence of thought and substantial challenge to Board debate. The Board draws great strength from the length of service, industry understanding and broad financial expertise of all its non-executive members and proposes to develop and refresh this knowledge and experience base with new recruitment in 2009. Biographical details of all the current directors of the Company are here.
Role of the Board
The role of the Board is to determine and review business direction and strategy, monitor executive performance, oversee the management of risk and internal controls, and ensure that the Company discharges its responsibilities to shareholders and other stakeholders. The Board has delegated responsibility for day-to-day management of the business to the Chief Executive, the Finance Director and their management team. The strategic, financial and risk authorities delegated by the Board, and those matters reserved for its decision, are documented and subject to regular review.
There is an effective working relationship between the Chairman and the Chief Executive based on a clear understanding of their separate roles. However, it has not been considered necessary formally to document this differentiation as required by the Code. The Chairman is responsible for the operation of the Board and the discharge of the Company's responsibilities to shareholders. The Chief Executive is responsible for running the Company's business. The Chairman is able to devote a significant amount of time to running the Board and has no other material business commitments.
Board committees
The Board has delegated certain of its governance responsibilities to three dedicated committees, namely the Audit and Risk, Remuneration and Nomination Committees which are composed solely of non-executive directors. All the non-executive directors are currently members of all the committees. In addition, the Chairman is a member of the Remuneration Committee and Chairman of the Nomination Committee. The full terms of reference of all the committees are given on our website www.mangroupplc.com.
Summary terms of reference for and a report on the activities of the Audit and Risk and Nomination Committees are given later in this section of the Annual Report.
Summary terms of reference for and a report on the work of the Remuneration Committee are set out in the separate Remuneration Report. This gives a full description of the Company's policy and practice on executive directors' remuneration and service contracts and explains how the Chairman's compensation and non-executive directors' fees are determined. It should be noted that the Chairman's compensation is considered by the Remuneration Committee which makes a recommendation to the Board for approval. It is considered that this is the most appropriate way of determining the Chairman's compensation, rather than allowing it to be set solely by the Remuneration Committee as provided by the Code.
Board meetings
The Board holds at least seven formal Board meetings a year, of which at least one comprises a full day strategy review. In 2008/9, as a follow up to its full day strategy review, the Board devoted significant time within its regular Board meetings to reviewing progress on strategy implementation, with particular focus on the development of Man's new integrated hedge fund management business. Board conference calls, in which all Board members are invited to participate, are arranged to take forward and finalise matters such as trading statements which have previously been discussed in outline at a Board meeting. Appropriate arrangements have been put in place for dealing with urgent issues which arise unexpectedly between meetings. There is regular contact outside formal meetings between the Chairman and individual non-executive and executive directors. In addition, the non-executive directors take opportunities to discuss the Company's business without the presence of their executive colleagues. The table below indicates the number of meetings held during the year and individual directors' attendance.
Directors' attendance at meetings
The numbers of Board and Board committee meetings held and attended by individual directors during the year were as follows:
| Board meeting |
Audit and Risk Committee |
Remuneration Committee |
Nomination Committee |
|
| Jon Aisbitt1 | 7/7 | 6/6 | 3/3 | 2/2 |
| Alison Carnwath | 7/7 | 4/6 | 3/3 | 2/2 |
| Phillip Colebatch | 7/7 | 6/6 | 3/3 | 2/2 |
| Dugald Eadie | 7/7 | 6/6 | 3/3 | 2/2 |
| Stanley Fink2 | 2/7 | |||
| Glen Moreno | 7/7 | 6/6 | 3/3 | 2/2 |
| Patrick O'Sullivan | 7/7 | 5/6 | 3/3 | 2/2 |
| Peter Clarke3 | 7/7 | |||
| Kevin Hayes3 | 7/7 |
1 Jon Aisbitt is not a member of the Audit and Risk Committee and attends meetings by invitation only.
2 Stanley Fink retired from the Board on 10 July 2008.
3 Peter Clarke and Kevin Hayes are not members of the Audit and Risk and Remuneration Committees and attended meetings by invitation only.
Board information and development
The process for contributing to and setting Board agendas has been formalised and streamlined during the year. Work on creating an annual rolling agenda of cyclical business is in hand. The timetable and process for the preparation, review and circulation of Board papers has been reviewed to ensure that full and timely information continues to be made available to Board members prior to meetings. Slide presentations are circulated in advance wherever possible. There is an annual programme for the rotation of Board meetings around the Company's main overseas locations to enhance the Board's understanding of the global business and give them the opportunity to meet local management teams. Work is planned to update current induction arrangements for new non-executive directors to include presentations by the heads of the principal fund products and business streams. All directors are aware that they may take independent professional advice at the Company's expense if they feel that circumstances warrant this. Appropriate directors' and officers' liability insurance is in place.
Board evaluation
An external evaluation of the effectiveness of the Board was carried out earlier this year. This was led by an independent third party who engaged all Board members in a detailed review of Board governance, processes and culture supported by a structured questionnaire. There was a similar though less detailed review of the operation of the principal Board committees. A report on the key findings was presented to the Board for discussion and agreement on future actions. This year's evaluation also involved a confidential peer review of individual directors, feedback from which was discussed by the Chairman with each director individually. Feedback on the Chairman was discussed with him by the Senior Independent Director.
The evaluation revealed a number of key areas for focus during the coming year. These included a renewed emphasis on strategy review against the background of severe economic downturn, the continuing need for the Board to deepen their understanding of the marketplace in which the Group operates, increased oversight of executive director succession and senior management resource, a review of Board committee membership and the improvement of certain Board support functions.
Conflicts of interest
In the course of last year, in anticipation of the coming into force of the Companies Act 2006 requirement for directors to avoid actual or potential conflicts of interest, the Board reviewed and authorised, in accordance with the Company's Articles of Association, a small number of external directorships and other business interests held by individual directors which might be regarded as giving rise to actual or potential areas of conflict. The most significant of these reported interests was Alison Carnwath's Chairmanship of MF Global.
In all cases where a potential conflict has been identified, it is Board policy that the director in question absents themself from any discussion of the area or issue which gives rise to the conflict and that no related papers or minutes of Board discussion are sent to them. All directors are aware of their continuing obligation to report any new interests or changes in existing interests which might amount to a possible conflict of interest in order that these may be considered by the Board and appropriate authorisations given.
Board appointments
The process for the appointment of directors to the Board is led by the Chairman and the Nomination Committee. Details of this process are given in the report on the work carried out by the Nomination Committee during the year which follows this section.
Non-executive directors are appointed for an initial three year term which may be followed by a further three year term by mutual agreement. Any reappointment of a non-executive director beyond six years is subject to a challenging review of the director's contribution, taking account of the need for regular refreshing of non-executive expertise. Non-executive directors' letters of appointment indicate the approximate time commitment expected for the role and Board meetings are scheduled to maximise directors' availability for Company business. All directors are subject to reappointment by shareholders at the first Annual General Meeting after their appointment and at least once every three years after that. Non-executives who serve on the Board for more than nine years are subject to annual reappointment at the Annual General Meeting each year.
