Setting new standards - Friends Life

CORPORATE GOVERNANCE
CORPORATE SOCIAL RESPONSIBILITY REPORT
DIRECTORS AND MANAGEMENT
Corporate Governance Report
and Committee Reports
The Board
The Board provides leadership of the Group and, either directly or
through the operation of committees of directors and delegated
authority, brings an independent judgment on all issues of strategy,
performance, resources (including key appointments) and standards
of conduct. The Board sets the Group’s strategic aims, which it then
implements through its approval and regular monitoring of a
business plan and budget prepared by the executive directors. The
business plan specifies key developments towards the strategic
objectives that are to be achieved by management within an agreed
budget. The Chairman, together with the Company Secretary,
ensures that the directors receive timely and clear information on all
relevant matters. At board meetings, directors receive reports from
finance, risk management and each of the key business areas. The
Board, supplied with information that is both timely and appropriate,
deals with those matters specifically reserved for its decision, and
takes all material decisions affecting the Group. These include
acquisitions, sales, capital structure, financing, the establishment of
board committees and their terms of reference, and the oversight
and review of the operation and achievement of the Group’s
activities. During 2006, it has been the practice for non-executive
directors to have a private session after each board meeting without
the executive directors being present. The boards of F&C and the
UK and international insurance subsidiaries also meet separately and
regularly to monitor and direct the operations of those businesses
and report, on a timely basis, through the respective chief
executives, to their immediate controlling companies.
Board membership, attendance and balance
The current membership of the Board and the significant
commitments of the directors are stated on pages 44 and 45.
The names of the chairman and members of each of the Audit
and Compliance, Nomination and Remuneration Committees are
stated in the reports of those committees.
During 2006, the Board met on 10 occasions, and directors also
attended an off-site strategy meeting. The total number of
meetings including Board committees and the attendance of
directors at these meetings are shown as follows:
Total number of meetings B A&C N R I
(see key below) 10 7 10 8 4
Sir Adrian Montague
Chairman 10 – 9 – 4
Lady Judge
Deputy Chairman, and
senior independent director 10 – 9 8 4
Alison Carnwath
Non-executive director 10 6 – 8 –
Christopher Jemmett
Non-executive director 10 7 – 8 4
Ray King
Non-executive director 9 7 – – 4
Sir Mervyn Pedelty*
Non-executive director 3 – – – 1
Lord MacGregor of Pulham Market
Non-executive director 10 7 10 – –
Keith Satchell
Group Chief Executive 10 – – – 4
Ben Gunn
Chief Executive FPLP 10 – – – –
Philip Moore
Group Finance Director 10 – – – 4
Alain Grisay
Chief Executive F&C 10 – – – 4
*appointed on 1 October 2006
KEY: B Board
A&C Audit and Compliance Committee
N Nomination Committee
R Remuneration Committee
I Investment Committee
50 Friends Provident Annual Report & Accounts 2006
The Board accepts the Nomination Committee’s assessment and
considers all six non-executive directors (which expression
excludes the Chairman) to be independent in character and
judgment and is not aware of any relationships or circumstances
which are likely to affect, or could appear to affect, the judgment
of any of them. Christopher Jemmett and Lord MacGregor are
both now aged 70 and in accordance with the Company’s policy
will retire at the 2007 AGM. Notwithstanding Lady Judge was first
elected to the Board of Friends’ Provident Life Office in May 1994
and to the Board of the Company in June 2001, the Board is
entirely satisfied that Lady Judge is independent in character and
judgment, that there are no relationships or circumstances that are
likely to affect, or could appear to affect, her judgment.
Her other roles as Deputy Chairman of the Financial Reporting
Council and Chairman of the Professional Standards Advisory
Board of the Institute of Directors inform her contributions to
Board debates on governance issues and complement her role as
the senior independent director.
The Board is satisfied that, as a non-executive director seeking reelection,
Lady Judge continues to perform effectively and
demonstrates commitment to her role, including commitment of
time for Board and committee meetings and her other duties.
The Nomination Committee worked closely with the Board in order
to ensure that the independent executive directors have the
appropriate balance of skills and experience to support the
activities of the Board and to help the Group continue to compete
effectively in the market place. During 2006, the Nomination
Committee devoted considerable time to succession planning
which resulted in a number of changes to the Board. Details of the
process followed are contained in the report of the Nomination
Committee on page 58. The non-executive directors have a wide
range of experience and the Board is able to lead and give
direction to the Group without any imbalance that may allow any
individual or group of individuals to dominate its decision taking.
Any director having a concern in this or any other regard may raise
it with the Chairman or the senior independent director.
All directors have access to the advice and services of the
Company Secretary who ensures that Board processes and leading
corporate governance practice are followed. There is also an
established procedure whereby individual directors who consider it
necessary in furtherance of their duties, may take independent,
professional advice at the Company’s expense.