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Corporate Governance
EMI remains committed to high standards of corporate go€mance.
lhe Board considers that the Company has, throughout the yeat
complied with the Code prwisions set out in Section 1 of the
Combined Code issued by the Commiftee on Corporate
Go\€rnance, apart from those relating to the length of Directo6'
service contracts, which are discussed in the Remuneration Repon
(on page 33). ln accordance with guidance issued by the London
Stod Exchange, the statement on pages 26 and 27 regarding
the Companys system of internal control is limited to internal
financial controls.
Ernst & Young have reMewed the Company's statement as to
its compliance wth the Combined Code, in so far as it relates to
those parts of the Combined Code which the UK Listing Authority
specifies for their review, and their report is set out on page 37.
The remainder of this section provides an explanation of hcnrrr
EMI applies the principles of good governance which are set out
in the Combined Code.
The Board
The Board of EMI cunently comprises four Executile Directors
and five Non-executive Directors. All of the I'lon€xecutle DiEctors
are considered to be independent of management and free from
any business or other relationship which could material! interfere
wrth the exercise of their independent judgement. As reflected
in their biographies, which appear on page 24, the DirectoB
hare a wide range of experience in muhinational and consumer
orientated businesses. fte Board therefore has a balanced range
of experience.
Mr Eric Nicoli is both Chairman and the senior executive officer
of the Company Mr Nicoli took over these posittons followng
Sir Colin Southgates retirement after the conclusion of the 1999
Annual General Meeting. Dayto-day executive responsibility for
the running of the Company3 two main businesses lies wth Mr
Ken Berry as Chief Executive Officer, EMI Recorded Music, and
with Mr Martin Bandier as Chief Executive Officet EMI Music
Publishing, Given the importance of the roles of Mr Berry and Mr
Bandier, the Board consideB that the appointment of an executive
chairman, who brings complementary skills and experience and
to whom the divisional chief executive officers report, is the most
effective structure for EMI and is in the best interesB of both
the Company and its shareholders. The Board also considers that
the nature and level of matters reserved for decision, erther to
the Board as a whole or to standing committees of the Board,
appropriately limit the authority of the Chairman and reflect
the fact that the posts of chairman and senior executilte officer
are combined in one person.
It is the Boards policy that, so long as the Chairman is also the
senior executive officer of the Company, the independent Nonexecutive
Directo6 should comprise a numerical majority of the
Board and that the senior independent Non-€xecutive Director
should also be either sole or joint Deputy Chairman. Sir Dominic
cadbury is the senior independent Non€xecutive Directot haMng
succeeded Sir Peter Walte6, vvho retired at the conclusion of the
1999 AGM. Sir Dominic became the sole Deputy Chairman
following the resignation of Mr Simon Duffy on 31 December
1999. Prior to then, Sir Dominic and Mr Duffy were joint Deputy
Chairmen. Mr Dufry was also Group Finance Dircctor and has
been succeeded in that role by Mr Tony Bat6, who combines
his naru mponsibilitig with his preMous role as Executive Vice
President and Chief Financial Officer, EMI Recorded Music.
The appointment of Directo6 and executive appointmena wthin
the Board are considercd by the Board as a rrvhole based on
recommendations from the Nomination Committee. The Articles
of Association include a requirement that all Directors should
submit themset!€s for reelection by the shareholdeB at least
once every three years.
The Board meets at least six times each year, with additional
meetings or contact betl^/een meetings as necessary The
programme for each year is approred by the Board and. cunently,
involves reviarvs of strategy and the operations and results of
the two marn business units, as well as the approval of annual
budges and medium-term plans. Actual results for the Group and
individual business units are reported to all Directos each month.
At least once each year the Board meets at the premises of one of
the Groups business operations, to allow for presentations by, and
more detailed discusions with, local management.
These procedures, together with other regular and ad hoc reports,
are antended to ensure that the Board is supplied in a timely
manner with information appropriate to enable it to discharge
its duties.
lhe Board has delegated certain matte6 to standing committees,
details of which are set out belcMi. Horvgrer, to ensure its overall
control of the Companys affairs, the Board has resened certain
matteB to itself for decision. lhese include the Groups nrategic
plans and annual operatrng budgeb, sgnificant acqursitions
or disposals of companies, businesses or asets, and signfficant
contractual commitmen6 or items of expenditure, together
with policies relating to the Groups treasury function, pensions,
major lrtigation, employee share schemes, and environmental
and ethical isues.
All Directom have access to the services and advice of the
Company Secretary and there are also procedures for Director
to obtain independent professional advice at the cost of the
Company in appropriate circumstances.