Annual report 2010 - Imperial Tobacco Group

6 Performance evaluation: How do weformally evaluate our Board and Committees’performance annually?During the year, with the assistance of an externalconsultant, our Board formally reviewed and evaluatedits performance, together with the performance of itsCommittees and individual Directors. Feedback from eachDirector was obtained through detailed questionnaires whichwere used as the basis for the overall evaluation of the Boardand its Committees and feedback discussions betweeneach Director and the Chairman. The results were discussedby the Board at its meetings in September 2010 andOctober 2010.Our Senior Independent Director met with the Non-ExecutiveDirectors and the Board, without the Chairman present, toconsider the performance of the Chairman.After taking account of the results of the Chairman’s formalperformance evaluation our Senior Independent Directorprovided feedback to the Chairman on a one-to-one basis.The Chairman held meetings exclusively with theNon-Executive Directors to consider, amongst otherthings, succession issues and the performance of theExecutive Directors.Informed by the evaluation, the Board and its Committeesare satisfied they are operating and performing effectively.The evaluation did not identify any significant areas forconcern nor any requirement to provide extra training forour Directors. It also confirmed that all our Directors havesufficient time, knowledge and commitment to contributeeffectively to our Board and its Committees and that,following the Board changes during the year, it remainsappropriately constituted in terms of the Code (and theRevised Code) and skill set.The main area identified for review was the future size andstructure of the Board, including the competencies requiredof potential new Non-Executive Directors who may beappointed when current Non-Executive Directors retirewithout seeking re-election.Following the 2009 Board evaluation, in order to assist withExecutive Director succession planning which was identifiedin the evaluation as the main theme requiring Boardattention, senior managers attended a number of strategydays, Board meetings and Board dinners. Furthersuccession planning also continued to be discussed atNon-Executive Director meetings held during the year.In order to obtain maximum value from the annual evaluationsand to benefit from the varying skills and focuses of alternativefacilitators, we may consider alternative facilitators, formatsand approaches in future years. This will ensure our evaluationsremain appropriate to the requirements of the Chairmanand Board and the recommendations in the UK CorporateGovernance Code published in June 2010.7 Re-election: How do we ensure planned andprogressive refreshing of the Board?Following a rigorous selection process and recommendationby the Nominations Committee, Directors are appointedby the Board. They must, however, submit themselvesfor election by shareholders at the AGM following theirappointment and, with effect from our 2011 AGM, annuallythereafter in accordance with the recommendations of theRevised Code and the proposed new articles of associationof the Company.The performance of each Director is considered as part ofthe Board evaluation, before recommending such election orre-election. Following this evaluation the Board recommendsthe re-election of all Directors at our 2011 AGM.We recognise that a number of shareholders have expressedconcern that annual re-election of Directors could encouragethem to take a short-term view. We are, however, confidentthat our remuneration policies encourage Directors to act in thebest long-term interests of stakeholders, for example throughlong term incentive plans and shareholding requirements.In order to facilitate smooth Board refreshment we regularlyreview the composition, skill set and balance of our Board,together with the length of service of each Director andthereby identify the skills required of future directors.Our Senior Independent Director, who is also the Chairman,of the Remuneration Committee, is approaching nine years’service as a Non-Executive Director. This will be consideredduring the year as part of the regular review of the structureof the Board.Tenure of Directors1No.8 years and over 335-7 years3-4 years2441-2 years1265