Full-year - Chime Communications PLC

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Directors’ statement on corporate governanceDirectors’ statement on corporate governanceCorporate governance reportThe Board of Directors is collectivelyaccountable to the Company’s shareholdersfor good corporate governance and iscommitted to maintaining compliance withthe principles of corporate governancecontained in the Combined Code onCorporate Governance that was issued in2006 by the FRC (The Code).A narrative statement on how the Companyhas applied the Principles throughout the yearended 31 December 2008 and a Statement ofCompliance appears below.NARRATIVE STATEMENTDirectorsThe Company is controlled through the Boardof Directors which, on 31 December 2008comprised four Executive and fourNon-Executive Directors. The biographiesof the current Directors are shown onpages 32 and 33 of this report.During the year Hon. Richard Alston wasappointed (2 July 2008) and Dave Allenresigned (16 December 2008), both asNon-Executive Directors.The Board meets quarterly and additionally asnecessary and is responsible for overall Groupstrategy, acquisitions and the consideration ofsignificant financial matters. It reviews thestrategic direction of the Group’s tradingcompanies, their annual budgets and theirprogress towards achievement of thosebudgets. The Board is responsible forensuring the integrity of financial informationand that the financial controls and systems ofrisk management, both financial and nonfinancial,are robust and appropriate.The Chairman, Lord Bell, is responsible forthe running of the Board and he ensures thatall Directors receive sufficient, accurate andtimely information on financial, business andcorporate issues prior to meetings. He alsoensures that the Non-Executive Directors haveaccess to any further supplementaryinformation they may require should theyrequest it.The Chief Executive’s (ChristopherSatterthwaite) responsibilities focus on coordinatingthe Company’s business andimplementing Group strategy.Both Lord Bell and Christopher Satterthwaiteare due to retire by rotation immediately beforeand are proposed for re-election at theforthcoming AGM.Rodger Hughes is the Senior Non-ExecutiveDirector.New Directors receive a full, formal andtailored induction on joining the Board in orderto further inform them of the Company’sactivities and structure. All Directors are ableto take independent professional advice, at theCompany’s expense, in furtherance of theirduties, if necessary. The Company also makesappropriate training available to all existingDirectors. All Directors, in accordance with theCode, will submit themselves for re-election atleast once every three years.Executive Directors are entitled to acceptexternal appointments outside the Companyand retain the fees from such appointmentsprovided that the Chairman’s permission issought and confirmed by the Board.The Board met on four occasions during2008. Catherine Biner Bradley attended threemeetings. Hon. Richard Alston attended bothof the meetings that took place after hisappointment. All other meetings were fullyattended. When absent from meetings theviews of the director concerned are soughtin advance then put to the meeting in orderto facilitate a comprehensive discussion.Each director continues to make themselvesavailable to their fellow directors and ensureshe/she contributes to the major decisionsbefore the Board.Non-Executive DirectorsThe individual Non-Executive Directors havedifferent skills, experience and qualificationsfrom working presently or previously in variedsectors of the economy and as such they areable to bring independent judgement to bearon matters for consideration by the Board.Rodger Hughes was appointed as a Directorby the Board in July 2007. He became theSenior Non-Executive Director and Chairmanof the Audit, Remuneration and NominationCommittees in October 2007.Hon. Richard Alston was appointed as aDirector by the Board in July 2008 and will beproposed for election by the shareholders atthe forthcoming AGM.Catherine Biner Bradley is due to retire byrotation immediately before and is proposedfor re-election at the AGM.Paul Richardson is the WPP Group plcrepresentative on the Board under thesubscription agreement of 1997 and has beena Director of the Company since that date.Under the Code and due to his length ofservice, Paul will retire immediately before andis proposed for re-election at the AGM.Dave Allen, WPP’s second representative onthe Board, resigned in December 2008.The Board considers its current Non-ExecutiveDirectors to be of sufficient calibre andnumber that their views may be of sufficientweight that no individual or small group candominate the Board’s decision-making process.The Board continues to consider suitablecandidates as Non-Executive Directors.The Non-Executive Directors’ terms andconditions of appointment are available forinspection at the Company’s registered officeon request and will be available, together withthe Executive Directors’ service contracts, atthe forthcoming AGM.Independence ofNon-Executive DirectorsThe Code states that it is for the Board todetermine whether a director is independent incharacter and judgement and considerwhether there are any relationships orcircumstances that are likely to affect adirector’s judgement.In applying the Code, the Board hasconsidered whether the length of service ofPaul Richardson (12 years) has compromisedhis independence. He is experienced andaccomplished in his fields of expertise. In hisassociation with the Company he hasacquired an understanding of the Company’soperations, its markets and the issuesdetermining its success. He has showncommitment to the Company in both time andeffort. The Board does not consider his longservice as a Director to be detrimental or tohave eroded his objectivity and it should notraise any concerns about his ability to performhis duties.Paul Richardson remains the WPP Group plcrepresentative on the Board as stated above.Performance evaluation has shown that hecontinues to have a good record ofinvolvement in Board-level discussions andcontributes additional help to further theCompany’s strategies. The Board considersPaul Richardson to be independent.The question of Non-Executive Directors’shareholdings should also be consideredwhen assessing independence. RodgerHughes and Catherine Biner Bradley eachhold a small number of shares in the Companyas disclosed on page 45. The Board considersthat these holdings are not significant andbelieves this alone should not raise questionsregarding their independence. The Boardconsiders that Directors owning shares in theCompany directly aligns them with theinterests of the shareholders.Following performance evaluations for 2008the Board has considered the independenceof its Non-Executive Directors and considersthem to be independent in both judgementand character and that the circumstancesshown above are unlikely to affect theirrespective judgements when consideringmatters of the Company.36Chime Communications plc
Directors’ statement on corporate governanceAudit CommitteeMembership is restricted to thoseNon-Executive Directors deemed to beindependent by the Board and is shown onpage 32.The Committee met on three occasions duringthe year to discuss accounting, audit andinternal control matters together with reviewingfinancial statements and compliance withaccounting standards and the Company’saccounting policies. The Audit Committee isalso responsible for ensuring that aprofessional and objective relationship existswith the Company’s external auditors. Theexternal auditors are represented at eachmeeting and may request a meeting of theCommittee without management beingpresent if necessary. The Audit Committeealso reviews the work of its sub-committee,The Risk Management Committee, whichoversees the Company’s risk identification andmanagement system.During the year the Committee has additionallyconsidered the review of internal controls andrisk management systems; has monitored theimplementation of the Company’s DisasterRecovery Plan and has developed theresponse to new and revised legislation andregulatory requirements.Each meeting was attended by thefull membership.Remuneration CommitteeThe Committee measures the performance ofthe Executive Directors and of key membersof senior management as a prelude torecommending their annual remuneration. TheCommittee is also responsible for overseeinggrants under the Company’s Co-InvestmentPlan, Executive Share Option Scheme, theSavings-Related Share Option Scheme andthe Deferred Share Plan to employees of theGroup. When required the Chairman, LordBell, attends the meetings but is not actually amember. The remuneration of the Non-Executive Directors is recommended by theChairman and Finance Director and takesaccount of the time spent on Board andCommittee matters. Final decisions aremade by the Board but no director takespart in any discussion regarding his or herown remuneration.During the year the Committee has carriedout performance evaluations and agreedthe remuneration for the Executive Directorsfor 2008.It has reviewed and approved further grantsunder the Company’s Deferred Share Plan forsenior managers and the Savings-RelatedShare Option Scheme, which is open to allstaff after a qualifying period. The Committeecontinues to monitor the administration of theincentive schemes and the performancetargets that apply to each.The Committee has also set the keyperformance indicators for the individualExecutive Directors; approved a formalexpenses policy for the Directors andapproved the disclosures to shareholders inthe financial statements of the Company.In 2008 the Committee met on threeoccasions and all the members were presentat each meeting.Nominations CommitteeMembership of the Nominations Committeeis restricted to independent Non-ExecutiveDirectors as shown on page 32. TheCommittee leads the process of appointmentsto the Board by evaluation of the skills,knowledge and experience required fora particular appointment.The Code requires the Company to have aformalised process for the selection andappointment of new directors. The Boardconsiders that a prescriptive procedure isinappropriate and could prove restrictive andcostly both in terms of identifying potentialcandidates and the selection process itself.The Company does not believe that it shouldcommit to the exclusive use of externalrecruitment consultants although there may beoccasions where this method is employed.The Committee met once during the yearto discuss the appointment of Hon RichardAlston as a Director. All of the memberswere present.Performance evaluationIn line with the Code, the Company carries outannual performance evaluations of the Board,its committees and the individual Directors.The 2008 performance evaluation took placein early 2009. The aim of the evaluation is torecognise the strengths and address anyweaknesses of the management process; toensure that the Board meets its objectives andthat effectiveness is maximised.The Remuneration Committee, led by RodgerHughes, the Senior Independent Non-Executive Director, evaluates the performanceof the Executive Directors. The Board, led bythe Chairman, is responsible for theassessment of the performance of the Non-Executive Directors.The work of the Board and its Committeestogether with the processes used and thebusiness transacted during the year isassessed by the Board, taking into accountthe specific workloads of each forum; theknowledge and expertise of its members; andthe recommendations made to the Boardregarding specific tasks put before theCommittees concerned.Relations with shareholdersThe Company is keen to promote two-waycommunications with its institutional andprivate investors and responds quickly toqueries received. Lord Bell, Chairman;Christopher Satterthwaite, Chief Executive;and Mark Smith, Group Finance Director, arethe Company’s principal spokespersons withinvestors, analysts, the press and otherinterested parties.All shareholders are sent copies of theCompany’s Annual and Interim Reportsand, where appropriate circulars andprospectuses. The Annual and Interimreports are also published on the Groupwebsite, www.chime.plc.uk, together withannouncements, press releases and Companyinformation. This enables investors worldwideto keep informed of the Company’s progress.Shareholders are given at least 21 days’ noticeof the Annual General Meeting at which allDirectors are generally present and at whichquestions are both invited and encouraged.Accountability and auditFinancial reportingA review of the businesses in the Group isincluded in the Chief Executive’s Review. TheBoard uses this, together with the Chairman’sStatement and the Directors’ report onpages 46 to 47 to present a balanced andunderstandable assessment of the Company’sposition and prospects. The directors’responsibilities for the financial statements aredescribed on page 48 of the Report andFinancial Statements.Internal controlThe Board has established a process foridentifying, evaluating and managing significantrisks faced by the Group. The board regularlyreviews the process, which has been inplace from the start of the year to the dateof approval of this report and which is inaccordance with revised guidance on internalcontrol published in October 2005 (theTurnbull Guidance). The Board is responsiblefor the Group’s system of internal control andfor reviewing its effectiveness. The control andrisk management procedures are designed tohighlight any weaknesses and/or failures in thesystems to the Board at the earliest opportunitytogether with action taken and/or proposed.Such a system is designed to manage ratherthan eliminate the risk of failure to achievebusiness objectives, and can only providereasonable and not absolute assuranceagainst material misstatement or loss.Annual Report & Accounts 2008 37
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Chime Communications plc14 Curzon S
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Full-year - Chime Communications PLC

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