IMI plc annual report 2012

the Board’s corporate governance reportSet out below is the Board’s formal report on corporate governance.Compliance StatementThe Board is committed to high standards of corporate governance and confirms that throughout the year ended 31 December2012 the Company has applied the principles of good governance contained in the UK Corporate Governance Code issuedin June 2010 (the ‘Code’) and complied with its best practice provisions as set out below in the Board’s report on corporategovernance and in its Remuneration Report on pages 48 to 69. The Board is able to report compliance with the Codethroughout 2012 subject to the balance of the Board being affected by the loss of one non-executive director in November 2011when Roberto Quarta became Chairman, and restored through the new appointments announced in August 2012.The Board notes the various recent developments in corporate governance including revisions in 2012 to the UK CorporateGovernance Code, the Listing Rules, the FRC Guidance on Audit Committees, the UK Stewardship Code and the UKgovernment’s proposed new regulations in relation to directors’ remuneration and narrative reporting. Action to respond tosuch developments will be taken as appropriate to maintain the Company’s high standard of governance practice.The BoardCompositionAt the end of the year the Board comprised eleven directors: the Chairman; the Chief Executive; six independentnon-executive directors; the Finance Director and two operational executive directors.The six non-executive directors are all free from any business or other relationship which could materially interfere with theexercise of their independent judgement. All of them meet the criteria for independence under the Code and are regardedby the Board as independent of the Group’s executive management. The Chairman, Roberto Quarta, was also regarded asindependent at the date of his appointment to the Board. The non-executive directors are from varied backgrounds andbring with them a wide range of skills and experience of senior management in commerce and industry. Terry Gateley isthe senior independent director and will retire at the annual general meeting in May 2013, when Anita Frew will take upthat position. Kevin Beeston stepped down in October. Phil Bentley and Carl-Peter Forster were appointed with effect from1 October 2012 and Birgit Nørgaard joined the Board on 6 November 2012. Ian Whiting retired as an executive director witheffect from 22 August 2012 and Sean Toomes stepped down as an executive director with effect from 6 March 2013.Biographical details of the continuing directors are shown on pages 34 and 35.In line with the Code, all continuing directors submit themselves for re-election at annual general meetings.RoleThe Board provides leadership, direction and governance for the Company and oversees business and managementperformance. The Board has adopted a Corporate Governance Framework which defines Board roles and includesthe list of matters reserved to it and written delegations of authority for its committees and the executive management.Board reserved matters include strategy and key areas of policy, major operational and strategic risks, significant investmentdecisions and material changes in the organisation of the Group. The Board reviews budgets, forecasts and plans for thebusinesses of the Group on an annual basis. Quarterly meetings of the Board consider detailed financial and managementreports on the operational and strategic progress of the Group, as well as regularly tracking changes in risk assessmentand controls. Senior executives from around the Group are regularly invited by the Board to attend meetings to makepresentations and join in discussion.The Company’s articles of association include certain provisions relevant to the activity of the Board and its committees andcan be viewed on the Company website. These provisions include requirements for disclosure and approval by the Board ofpotential conflicts of interest. These procedures apply, inter alia, to external directorships and it is the Board’s view that theyoperated effectively during the year under review.Division of responsibilitiesThere is a clear division of responsibility between the Chairman and Chief Executive, which is reflected in the writtenCorporate Governance Framework approved by the Board. In summary, the Chairman is responsible for the leadershipand effectiveness of the Board but does not have any executive powers or responsibilities. The Chief Executive leads theexecutive management team in running the businesses and implementing operating and strategic plans under authoritydelegated by the Board.BUSINESS OVERVIEW GROUP OPERATING REVIEW RESPONSIBLE BUSINESS BOARD REPORTSFINANCIAL STATEMENTSIMI plc Annual Report 201241