Annual Report & Accounts 2012 - Euromoney Institutional Investor ...

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Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com Corporate Governance The Financial Reporting Council’s 2010 UK Corporate Governance Code (“the Code”) is part of the Listing Rules (“the Rules”) of the Financial Services Authority. The paragraphs below and in the Directors’ Remuneration Report on pages 41 to 52 set out how the company has applied the principles laid down by the Code. The company continues substantially to comply with the Code, save for the exceptions disclosed in the Directors’ Compliance Statement on page 34. Directors The board and its role Details of directors who served during the year are set out on page 47. During the year the board comprised the chairman, managing director, seven other executive directors and six non-executive directors. Two of the six non-executive directors are independent, one is the founder and ex-chairman of the company, two are directors of Daily Mail and General Trust plc (DMGT), an intermediate parent company, and one has served on the board for more than the recommended term of nine years under the Code. PM Fallon, the chairman, who was due to retire at the AGM in January 2013, died on October 14 2012. The company announced on October 15 2012 that its previously announced succession plans would be accelerated and that PR Ensor would succeed PM Fallon as chairman and CHC Fordham would succeed PR Ensor as managing director, both with immediate effect. There are clear divisions of responsibility within the board such that no one individual has unfettered powers of decision. The board, although larger than average, does not consider itself to be unwieldy and believes it is beneficial to have representatives from key areas of the business at board meetings. There is a procedure for all directors in the furtherance of their duties to take independent professional advice, at the company’s expense. They also have access to the advice and services of the company secretary. In accordance with best corporate governance practice under the 2010 UK Corporate Governance Code all directors will submit themselves for annual re-election. Newly appointed directors are submitted for election at the first available opportunity after their appointment. The board meets every two months and there is frequent contact between meetings. Board meetings take place in London, New York, Montreal and Hong Kong, and occasionally in other locations where the group has operations. The board has delegated certain aspects of the group’s affairs to standing committees, each of which operates within defined terms of reference. Details of these are set out below. However, to ensure its overall control of the group’s affairs, the board has reserved certain matters to itself for decision. Board meetings are held to set and monitor strategy, identify, evaluate and manage material risks, to review trading performance, ensure adequate funding, examine major acquisition possibilities and approve reports to shareholders. Procedures are established to ensure that appropriate information is communicated to the board in a timely manner to enable it to fulfil its duties. Committees Executive committee The executive committee meets each month to discuss strategy, results and forecasts, risks, possible acquisitions and divestitures, costs, staff numbers, recruitment and training and other management issues. It also discusses corporate and social responsibility including the group’s various charity initiatives. It is chaired by the group chairman and comprises all executive directors plus other divisional directors. It is not empowered to make decisions except those that can be made by the members in their individual capacities as executives with powers approved by the board of the company. The discussions of the committee are summarised by the group chairman and reported to each board meeting, together with recommendations on matters reserved for board decisions. Nominations committee The nominations committee is responsible for proposing candidates for appointment to the board having regard to the balance of skills and structure of the board and ensuring the appointees have sufficient time available to devote to the role. This committee meets when required and during the year comprised PM Fallon (chairman of the committee), PR Ensor and four non-executive directors, being Sir Patrick Sergeant, The Viscount Rothermere, MWH Morgan and JC Botts. The committee’s terms of reference are available on the company’s website at: www.euromoneyplc. com/reports/Nominationcommittee.pdf. 30
Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com This committee met three times during the year: in November 2011 to extend PM Fallon’s service contract to January 2013; in December 2011 to recommend to the board the re-election of directors retiring by rotation; and in July 2012 to recommend to the board the appointment of PR Ensor as chairman and CHC Fordham as managing director. The process for appointing a successor to the chairman was conducted by a sub-committee of the nominations committee, led by JC Botts, the company’s longest serving nonexecutive director, supplemented by the company’s independent non-executives, JC Gonzalez and DP Pritchard, and excluding the DMGT representatives on the committee. This sub-committee engaged an external search and board consulting firm to assist with the appointment of both the chairman and managing director. This firm undertook a comprehensive review of candidates including interviews, upward appraisal and external search of candidates. The sub-committee met several times during the year to consider the progress of the external search firm. Remuneration committee The remuneration committee meets twice a year and additionally as required. It is responsible for determining the contract terms, remuneration and other benefits for executive directors, including performance-related incentives. This committee also recommends and monitors the level of remuneration for senior management and overall, including group-wide share option schemes. The composition of the committee, details of directors’ remuneration and interests in share options and information on directors’ service contracts are set out in the Directors’ Remuneration Report on pages 41 to 52. The committee’s terms of reference are available on the company’s website at: http://www.euromoneyplc.com/reports/ Audit committee Details of the members and role of the audit committee are set out on page 34. The committee’s terms of reference are available on the company’s website at: http://www. euromoneyplc.com/reports/Auditcommittee. pdf. Tax and treasury committee Details of the members and role of the tax and treasury committee are set out in the Directors’ Report on page 17. Non-executive directors The non-executive directors bring both independent views and the views of the company’s major shareholder to the board. The non-executive directors who served during the year, whose biographies can be found on page 29 of the accounts, were The Viscount Rothermere, Sir Patrick Sergeant, JC Botts, JC Gonzalez (independent), MWH Morgan and DP Pritchard (independent). At least once a year the company’s chairman meets the non-executive directors without the executive directors being present. The nonexecutive directors meet without the company’s chairman present at least annually to appraise the chairman’s performance and on other occasions as necessary. The board considers JC Gonzalez and DP Pritchard to be independent non-executive directors. JC Botts has been on the board for more than the recommended term of nine years under the Code and the board believes that his length of service enhances his role as a non-executive director. However, due to his length of service, JC Botts does not meet the Code’s definition of independence. Sir Patrick Sergeant has served on the board in various roles since founding the company in 1969 and has been a non-executive director since 1992. As founder and president of the company, the board believes his insight and external contacts remain invaluable. However, due to his length of service, Sir Patrick Sergeant does not meet the Code’s definition of independence. The Viscount Rothermere has a significant shareholding in the company through his beneficial holding in DMGT and because of this he is not considered independent. The Viscount Rothermere and MWH Morgan are also executive directors of DMGT, an intermediate parent company. However, the company is run as a separate, distinct and decentralised subsidiary of DMGT and these directors have no involvement in the day-today management of the company. They bring valuable experience and advice to the company and the board does not believe these nonexecutive directors are able to exert undue influence on decisions taken by the board, nor does it consider their independence to be impaired by their positions with DMGT. However, their relationship with DMGT means they do not meet the Code’s definition of independence. Corporate Governance Company Accounts Group Accounts Our Governance Our Performance Remunerationcommittee.pdf. 31
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