Thorn-EMI 1995 Annual Report

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Board of Directors Sir Colin Southgate Choirmon Sir Colin (55) was appointed Chairman in 1989. He joined THORN EMI in 1983 after 22 years in the information technology industry and was appointed to the Board in 1984. He became Managing Director in 1985, and ChiefExecutive in 1987, relinquishing both positions in 1993. He is Non executive Chairman of PowerGen, a Director ofthe Bank ofEngland and Depury President of the CBL Simon Duffy Croup finonce Director Simon Duffy (45) was appointed to the Board in February 1992 on joiningTHORN EMI lrom United Distillers, where he had been Operations Directorsince 1989, having previouslybeen Director of Corporate Finance at Guinness PLC since 1986. He is a Non-executive Director ofGartmore plc- ,ame' Flfleld BBA MgA President ond Chief Executive Officer, EMI Music Jim Fifreld (53) was appointed to the Board in 1990. He joined EMI Music in 1988 and became President and CEO in 1989. He served as President and CEO of CBS Fox from 1985 ro 1988. Prior ro thar he was an Executive Vice-President ofGeneral Mills,where he pursued a 20-yearcareer. He is a Director of lnternational Multifoods, the International Federation ofthe Phonographic Industry (IFPI) and The Rhythm and Blues Foundation. Michael Metcalf BSc. EcA Ch ief Executive, TH ORN Mike Metcalf(43)was appointed to the Board in 1989 as Group Finance Director, a position he held until January 1992 in parallel with his appointment to his present position inJuly 1991. He joinedTHORN EMI in 1985 and became Deputy Group Finance Director in 1988. He was previously a divisional Finance Director with United Biscuits Group. He became a Non-executive Director ofNorthern Foods plc in August 1994. Slr Peter Walters Non-executive Deputy Choirmon Sir Peter (64) was appointed to the Board in 1989 and became Deputy Chairman in 1990. He is Chairman of Blue Circle Industries, Chairman ofSmithKline Beecharn and a Deputy ChairmaD ofHSBC Holdings. He retired in March 1990 as Chairman ofBritish Petroleum, which he joined in 1954. Sir Graham Day Non-executive Sir Graham (62) was appointed to the Board in 1990. He is Counsel to Atlantic Canada law firm, Stewart McKehy Stirling Scales and is Chancellor ofDalhousie University.The former Chairman ofCadbury Schweppes and ofPowerGen, he is a Director ofcompanies in the UK, Europe and Canada, including the Laird Group,The Bank of Nova Scotia, Extendicare Inc., NOVA Corporation, John Labatt Ltd, Nova Scotia Power Inc., Empire Company Ltd and the Shaw Group- Dr llarald Einsmann Non-executive Harald Einsmann (61) was appointed to the Board in May 1992. He is a member ofProcter& Gamble's Main Board and a member ofits Ex€cutive Committee. He began his career with Procter & Gamble in 1961 and was appointed President, Europe, Middle East and Africa in 1990, with responsibility for operations in 37 countries. Lord Grifflths of fforertfach Non-executive Lord Griffrths (53) was appointed to the Board in 1991. He is an International Adviser to Goldman Sachs, a Director ofHerman Miller Inc., Times Newspapers Holdings,TeleVest Communications and Servicemaster Inc., and Chairman of the Centre for Policy Studies. He was Head ofthe Prime Minister's Policy Unit from 1985 to 1990 and is a former Director ofthe Bank ofEngland- Eri< Nlcoli Non-executive Eric Nicoli (44)was appointed to the Board inJuly 1993. He is Group ChiefExecutive ofUnited Biscuits (Holdings) plc. He joined United Biscuits in 1980, was appointed to its board in 1989 and assumed his current role in January 1991. He is a Deputy Chairman ofboth Business in the Community and the PerCent Club.
Corporate Governance In previous Annual Reports, I have described how I, as Non-executive Deputy Chairman, and my fellow Non-executive Directors carry out our responsibilities to ensure thatTHORN EMI measures up to the issues which, together, are regarded as representing 'good corporate governance'. An important way in which we exercise these responsibilities is through three committees: the Audit Committee, the Remuneration Committee and the Nomination Committee. I chair th€se committees which are formed either exclusively by Non-executive Directors, or on which Non-executive Directors form the majority ofthe membership. Our overriding duty as Non-executive Directors is to ensure that the procedures followed by the Company and the decisions which the Board takes reflect the best interests ofthe Company's shareholders and its other stakeholders, The effectiveness ofourcommittees in achieving this is not simply a function oftheir terms of reference. It is also greatly influenced by the strongly independent opinions which we, as Non-executive Directors, bring to their deliberations, based upon the extensive experience each ofus has gained from ourwidely differing backgrounds. Our role is to be supportive of the management of THORN EMI but at the same time to vigorously challenge its assumptions and objectively monitor its performance. One ofthe issues which is attractingwide topical attention is that ofexecutive remuneration. The Remuneration Committee which I chair and which, apart from the Chairman, comprises Nonexecutive Directors, takes a robust view on this issue. We believe that shareholders should be able to reach an informed view ofthe appropriateness ofthe remuneration relative to the performance ofthe Company and the returns received by shareholders.To do so requires that they should have sufficient information regarding both the principles and policies on which the Remuneration Committee bases its decisions and the detail ofthe Executive Directors' remuneration and benefits. Clearly, the amount of information required to provide this is too great to include in my comments. Therefore, I would refer you to Note 32 on pages 56 to 75 ofthis Annual Report which covers the subject in the detail that should enable shareholders to form such a view. I would comment, however, that I and the other Non-executive Directors believe that the principles it describes, and the relationship it establishes between remuneration, performance against agreed targets and the return to the shareholder demonstrate thatTHORN EMI is also at the forefront ofbest practice in this aspect ofcorporate governance. THORN EMI's executive remuneration policy reflects the competitive reality of the different sectors in which its three individual businesses operate.It also recognises the importance ofnot only recruiting but retaining the high calibre ofinternational management needed for it to continue to comp€te successfully on a global basis.In emphasising the award ofshares and the use oftotal shareholder return as a key benchmark for reward, the interests of its executives are directly aligned with those ofthe shareholder. Such an approach to remuneration emphasises long term perlormance and, most importantln denies reward when performance is poor. Slr Peter Walters Deputy Chairman summary of Board (ommitteej Audit Committee Chaied by the Deputy Choirmon Membership:All Nonexecutive Directors.The Chairrnan and the Group Finance Director regularly attend by invitation. A representative ofthe Company's external ar.rditors attends all meetings. Remuneration Committee Choircd by the Deput/ Chaitmon Membership: All Nonexecutive Directors and the Chairman. Advised, as required, by the Director ofHuman Resources. Nomination Committee Choired by the Depury Choirmon Membership: All Nonexecutive Directors and rhe Chairman. Executive Committee Choned by the Choirmon Membership: All Executive Directors. Company senior executives may be invited to attend meetings. Finance Committee Chaied by the senior Diectot present Membership:The Chairman and Group Finance Director. The GroupTreasurer attends, as required. Cape)( Committee Chaired bythe Choirmon Membership: The Chairman and Group Finance Director. Other Directors, Company senior executives and external advisers may be invited to attend meetings.
Page 1 and 2: accounts
Page 3 and 4: Operating profit
Page 5 and 6: ETHoRN EMt Annual General Meeting T
Page 7 and 8: It is the Remuneration Committee's
Page 9 and 10: (d) On exercise of options the Comp
Page 11: 7. Ordinary Resolution THAT the Dir
Page 14 and 15: Chairman's statement The year was o
Page 16 and 17: Chairman's statement economy and to
Page 18 and 19: Financial review Simon Duffy Group
Page 20 and 21: Financial review Other exceptional
Page 22 and 23: EMI a repeat performance Country su
Page 24 and 25: strong releases Steven Crlftls Chap
Page 26 and 27: increasing Pace of THORN achieved
Page 28 and 29: Reshaping business NewZealand was e
Page 30 and 31: HMV customer-driven performance An
Page 32 and 33: lnvestih$ in tomorrow's world...
Page 34 and 35: A ta rg eted programme of community
Page 36 and 37: Prog ress towa rds env:ronmental im
Page 38 and 39: controlling key impacts CO, emifted
Page 42 and 43: Directors'Report for the year ended
Page 44 and 45: Directors' Report The internal cont
Page 46 and 47: Auditors'report Report of the Audit
Page 48 and 49: Accounting policies Depreciation of
Page 50 and 51: Consolidated profit and loss accoun
Page 52 and 53: Group Fixed arsetr Music publis
Page 54 and 55: Statement of total recognised galns
Page 56 and 57: Notes to the accountr 2. Analysis o
Page 58 and 59: Notes to the accounts 8. Exceptlona
Page 60 and 61: Noter to the accounts I l.Tanglble
Page 62 and 63: Notes to the accounts 12, Flxed ass
Page 64 and 65: Notes to the account3 15. lnvestmen
Page 66 and 67: Noter to the accounts 16. Borrowing
Page 68 and 69: Notes to the accounts of changer i
Page 70 and 71: Notes to the a(counts 23.5hare capi
Page 72 and 73: NoteJ to the accounts 26. tinancial
Page 74 and 75: Notes to the accounts 29, Dispotal
Page 76 and 77: Notes to the a(counts 3O. Purchase
Page 78 and 79: Notes to the accounts 32. Directors
Page 84 and 85: Notes to the a
Page 86 and 87: Notes to the a(counts 32, Directors
Page 88 and 89: Five year summary for the years to
Page 90 and 91:
lnvestor information Financial cale
Page 92 and 93:
Tlte nz,er and bus;flut otnlaieu pa
Page 95 and 96:
"The British music scene is enioyin
Page 97 and 98:
From {\ "Alternative music is quick
Page 99:
iii0 . ,'.' H'] .I . ar
Page 103 and 104:
develop a unique catalogue of recor
Page 105:
thc,rcore,rudielceorlttr,rctrl,rrge
Page 109 and 110:
to ownership opportunity. The intro
Page 111 and 112:
to idcntif,v and exploit synerg-r;
Page 113 and 114:
Curtomer 5atisfa
Page 115:
Street, HMV's UK 1-lagship store re
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Thorn-EMI 1995 Annual Report

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