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Corporate GovernanCe report Continued
During the Year the Committee considered the matters that fell within its area
of responsibility above, and in particular the arrangements for monitoring the
effectiveness of internal controls, and also considered the current economic
climate and its likely impact on the Group:
The Audit Committee will normally meet not less than three times a year.
The external auditors attend meetings of the Committee, other than when
their appointment is being reviewed. The Group Finance Director also attends
as appropriate. The Committee will meet with the auditors in the absence of
executive management at least twice a year.
The Audit Committee considers annually the reappointment of the auditors and
their remuneration, and makes recommendations to the Board, and the auditors
are reappointed each year at the Annual General Meeting. The Committee will
consider the level of service provided by the auditors and their independence
annually.
The Committee has approved a policy on the engagement of the external
auditors for non-audit work, in order to ensure that the objectivity of the
auditors’ opinion on the Group’s financial statements is not or may not be seen
to be impaired, and has established a process to monitor compliance with that
policy.
The policy identified three categories of potential work. Firstly, those tasks
that the auditors may not provide, as to do so would represent a real threat
to independence. That work includes the preparation of accounting entries or
financial statements, IT systems design and implementation, management of
projects and tax planning where the outcome would have a material impact on
the financial statements or where the outcome is dependent upon accounting
treatment.
Secondly, types of work that the auditors may undertake with the consent of
the Chairman of the Audit Committee. Included in this category are certain
corporate finance services, acquisition due diligence, management consultancy
and secondment of staff other than for the preparation of accounting entries or
financial statements.
Thirdly, there are services that the auditors may provide as the work is clearly
audit related and there is no potential threat to independence, including
regulatory reporting and acting as reporting accountants. The Company is
satisfied that its policy falls within the requirements of the Auditing Practices
Board.
Every engagement of the auditors for non-audit work is to be reported to the
next meeting of the Committee.
The Combined Code recommends that the Audit Committee is made up of at
least three non-executive directors, independent in character and judgement
and free from any relationship or circumstance which may, could or would be
likely to, or appear to, affect their judgement. The Audit Committee currently
consists of only two independent non-executive directors and the Acting
Chairman, but the Company intends when appropriate to appoint additional
independent non-executive directors to the Board, following which a further
independent non-executive director will also be appointed a member of the
Audit Committee, and the Committee’s structure will then comply with the
recommendation set out in the Combined Code.
remuneration Committee
Directors who served on the Committee during the Year were:
• Dave Singleton (Chairman)
• Simon Bentley
• Malcolm Dalgleish
The main responsibilities of the Remuneration Committee are to:
• Determine the Company’s policy on executive remuneration, including the
design of bonus schemes, and targets and payments made thereunder.
• Determine the levels of remuneration for the Chairman and each of the
executive directors.
• Monitor the remuneration of senior management and make
recommendations in respect of thereof.
• Agree any compensation for loss of office of any executive director.
The Committee met on four occasions during the Year.
20 Corporate Governance Report
During the Year the Committee reviewed directors and senior managers
remuneration arrangements, and considered bonus schemes, and in particular
the proposed Bonus Share Scheme, approval of which will be sought at
the Annual General Meeting of the Company in September. The Committee
considered directors’ salaries and determined not to increase them. The
Committee decided whether any payments were due to executive directors
under the 2007-08 Annual Bonus Scheme, and decided not to operate an Annual
Bonus Scheme for executive directors for 2009-10 if the proposed Bonus Share
Scheme was approved and implemented. The Committee also reviewed the
Performance Share Plan and its performance measures and made awards
thereunder to executive directors and to certain senior managers.
A report on the remuneration of directors appears on pages 22 to 26. The
Combined Code recommends that the Remuneration Committee is made up of
at least three non-executive directors, independent in character and judgement
and free from any relationship or circumstance which may, could or would be
likely to, or appear to, affect their judgement. The Committee currently consists
of only two independent non-executive directors and the Acting Chairman.
The Company intends to appoint when appropriate additional independent
non-executive directors to the Board following which a further independent nonexecutive
director will be appointed a member of the Remuneration Committee,
and the Committee’s structure will then comply with the recommendations set
out in the Combined Code.
nomination Committee
Members of the Nomination Committee during the Year were:
• Simon Bentley (Chairman)
• Mike Ashley
• Malcolm Dalgleish
• Dave Singleton
The Committee met on one occasion during the Year.
The main responsibilities of the Board Nomination Committee are to:
• Review the Board’s structure.
• Review the composition and make up of the Board, including evaluating
the balance of skills, knowledge and experience of the members of the
Board.
• Give consideration to succession planning for directors.
• Prepare a description of the role and capabilities required for any Board
appointment including that of Chairman.
• Make recommendations to the Board concerning the standing for
reappointment of directors.
• Identify potential candidates to be appointed as directors, and make
recommendations to the Board as the need may arise.
The Nomination Committee also determines succession plans for the Chairman
and the Chief Executive, who will not be present at meetings when such matters
are being discussed.
The Nomination Committee will meet at least once a year and will also meet
when appropriate.
During the Year the Committee considered the desirability of appointing a
Chairman and a further non-executive director or directors, and also considered
the standing for reappointment of directors retiring by rotation.
Dave Forsey, as Chief Executive, will normally attend meetings of the
Nomination Committee, save where the Nomination Committee is dealing with
matters relating to him or with the appointment of his successor.
The Combined Code recommends that a majority of the Nomination Committee
be non-executive directors, independent in character and judgement and free
from any relationship or circumstance which may, could or would be likely to, or
appear to, affect their judgement.
The Committee currently consists of the Acting Chairman, and two independent
non-executive directors and accordingly the Committee’s structure now
complies with the recommendations set out in the Combined Code.