G4S Annual Report and Accounts 2011

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Overview Strategic review Performance Report of the directors continued 10 Substantial holdings The company had been notified under DTR 5 of the following interests in the ordinary capital of G4S plc: As at 31.12.2011 Prudential plc group of companies 89,325,538 (6.33%) BlackRock, Inc 70,033,616 (4.96%) Harris Associates LP 69,584,044 (4.93%) Legal & General Group Plc 56,054,546 (3.97%) Between 1.1.2012 and 12.3.2012 BlackRock, Inc – received 7.2.2012 70,751,402 (5.02%) 11 Auditor Resolutions to re-appoint KPMG Audit Plc, chartered accountants, as auditor to the company and for the auditor’s remuneration to be fixed by the directors, will be submitted to the Annual General Meeting. 12 Directors The directors, biographical details of whom are contained on pages 49 to 51, held office throughout the year. Thorleif Krarup retired from the board on 31 January 2011. In accordance with the provisions on re-election of directors in the UK Corporate Governance Code 2010, each of the directors will offer themselves for re-election. The board believes that the directors standing for re-election possess experience and expertise relevant to the company’s operations; that they continue to be effective; that they are committed to the success of the company; and that they should be re-elected at the Annual General Meeting. Mr Duch-Pedersen has announced his intention to retire from the board once a new chairman has been appointed. This remains his intention notwithstanding that he stands for re-election at the Annual General Meeting. The contracts of service of the executive directors have no unexpired term since they are not for a fixed term. They are terminable at 12 months’ notice. None of the non-executive directors has a contract of service. The company has executed deeds of indemnity for the benefit of each of the directors in respect of liabilities which may attach to them in their capacity as directors of the company. These deeds are qualifying third party indemnity provisions as defined by section 234 of the Companies Act 2006 and have been in effect since 3 November 2006 for each of the directors other than Ms Spottiswoode and Ms Fok (whose indemnities have been in effect since 14 June 2010 and 1 October 2010 respectively). Copies of the forms of indemnity are available on the company’s website. In addition, indemnities have been granted by the company in favour of certain of the directors of certain of the group’s subsidiaries in Germany and the Netherlands. The company has maintained a directors’ and officers’ liability insurance policy throughout the year under review. Details of directors’ interests (including their family’s interests) in the share capital of G4S plc and of the directors’ remuneration are set out on pages 62 to 70. The directors who held office at the date of approval of this directors’ report confirm that, so far as they are each aware, there is no relevant audit information of which the company’s auditor is unaware and each director has taken all the steps that he or she ought to have taken as a director to make him or herself aware of any relevant audit information and to establish that the company’s auditor is aware of that information. Winnie Kin Wah Fok, one of the company’s non-executive directors, declared a possible material interest in relation to the contract which the company entered into for the proposed acquisition of ISS A/S. Apart from this, none of the directors had a material interest in any contract significant to the business of the group during the financial year. By order of the board Peter David Secretary 12 March 2012 The Manor Manor Royal Crawley West Sussex RH10 9UN 56 G4S plc Annual Report and Accounts 2011
Governance Financial statements Shareholder information Corporate governance statement “We understand that corporate governance is not just about reporting against compliance with a code. Rather it is about ensuring that the way we operate in all our businesses maintains an appropriate balance of dynamic entrepreneurship and controls. We strive to ensure that this balance exists and works properly at board level and throughout the group as a whole.” Alf Duch-Pedersen Chairman Compliance with the UK Corporate Governance Code The board’s statement on the company’s corporate governance performance is based on the UK Corporate Governance Code published in June 2010 (“the Code”) which is available on the Financial Reporting Council’s website (http://www.frc.org.uk/corporate/ukcgcode.cfm). The Listing Rules require companies to disclose how they apply the Code’s main principles and report how they have done so. The Code recognises that alternatives to following provisions may be justified in particular circumstances if good governance can be achieved by other means, provided the reasons are explained clearly and carefully. In such cases, companies must also illustrate how their actual practices are consistent with the principle in question and contribute to good governance. The company complied throughout the year under review with the provisions of the Code. This section of the report sets out how the company has applied these provisions. Our governance framework CEO Executive Committee Regional Management Nomination Committee Capex Committee Remuneration Committee G4S plc board Group Risk Committee Regional Risk Committees Audit Committee Group Internal Audit CSR Committee CFO Regional Finance The board sits at the top of the company’s governance framework, setting broad strategic targets, monitoring progress, approving proposed actions and ensuring appropriate controls are in place and effective. Management decisions, development of strategies and policies and implementation of board decisions falls to the executive committee. Regional management teams have responsibility for businesses within their regions and are tasked with implementing policies and controls at business levels, as well as ensuring they meet agreed financial goals. The presence of a majority of independent non-executive directors ensures objectivity, challenge and debate. It is the primary responsibility of the board to provide effective leadership for the group and this is done by, amongst other things, ensuring that decision making is conducted throughout the group within a strong internal control framework – and by setting values and standards. There is a detailed schedule of matters reserved to the board which is set out under 12 separate categories: strategy and management; structure and capital; financial reporting and controls; internal controls; contracts; communication; board membership and other appointments; remuneration; delegation of authority; corporate governance matters; policies; and other. By way of example, board approval is required for major investments, including the acquisition or disposal of any business worth more than £5m; any changes to the group’s long-term objectives and commercial strategy; and the annual operating and capital expenditure budgets. The board fulfils a number of its most important functions through its four committees. Descriptions of the work of three of these committees is set out elsewhere in this report. The CSR Committee has existed since January 2010 and has been chaired by Mark Elliott since then. Initially, it reported to the Audit Committee, but in late 2011 it was formally constituted as a committee of the board in recognition of the desire of the board to increase its focus on corporate social responsibility. Its first meeting as a full board committee was held in January 2012. Its activities will therefore be reported on in greater detail in the company’s 2012 report. The terms of reference of each of the above committees are available on the company’s website: www.g4s.com Board balance Board composition The board comprises the non-executive chairman (Alf Duch-Pedersen), a non-executive deputy chairman (Mark Seligman), five other non-executive directors, the chief executive (Nick Buckles), the chief financial officer (Trevor Dighton) and a chief operating officer (Grahame Gibson). The board considers all the non-executive directors to be independent. The senior independent director is Lord Condon. Lord Condon was deputy chairman until October 2011, when Mr Seligman took on that role. Thorleif Krarup, a non-executive director, retired from the board on 31 January 2011. The directors bring a wide range of skills and experience to the board. This experience and their roles on the board is described in more detail on pages 49 to 51. Succession Mr Duch-Pedersen has announced his intention to retire from the board during 2012 once a replacement chairman has been appointed. The process for selecting his successor is being conducted by the Nomination Committee, led by Lord Condon and assisted by an external recruitment consultant. As deputy chairman, Mr Seligman has been co-opted onto the committee for the purposes of this exercise. Mr Duch-Pedersen is not directly involved in the selection process. The final selection of the new chairman will be a matter for the entire board as, currently, none of the existing directors have put themselves forward as a candidate for the role. Director re-election The company’s articles of association require that all continuing directors are subject to election by shareholders at the next Annual General Meeting following their appointment and that they submit themselves for re-election at least every three years and that at least one-third of the directors not standing for election for the first time stand for re-election at each Annual General Meeting. However, in accordance with the Code provision on re-election of directors, all the continuing directors will stand for re-election at the Annual General Meeting in 2012. G4S plc Annual Report and Accounts 2011 57
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G4S plc The Manor Manor Royal Crawl
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