IMI plc annual report 2012

ENGINEERINGADVANTAGEthe Board’s corporate governance reportAudit Committee (continued)The committee approved the proposed external audit approach and scope as well as the internal audit programme.The committee takes a risk based approach to audit and other assurance activity. The committee surveyed the mainsubsidiaries to assess the performance and efficiency of the external auditor and believes the work has been satisfactory.The committee recommended and the Board approved the proposal to re-appoint Ernst & Young as the external auditor atthe forthcoming annual general meeting. Ernst & Young was first appointed as auditor in 2009 following a formal selectionprocess. The term of appointment is annual and there are no contractual restrictions on the committee’s choice of auditor.The committee met on four occasions during the year with all members in attendance. Minutes and papers are normallycirculated to all members of the Board. The committee normally calls upon the Chairman, all of the executive directors, theGroup Financial Controller and the Group Assurance Director to attend meetings but holds at least part of several meetingseach year alone with the auditor and Group Assurance Director. The committee reviewed its own performance and terms ofreference and approved the foregoing report on its work.Remuneration CommitteeThe Remuneration Committee is chaired by Bob Stack and Roberto Quarta, Anita Frew and Terry Gateley were membersthroughout the year. Kevin Beeston was a member until he left the Board in October 2012. Birgit Nørgaard and Carl-PeterForster joined the committee on 6 November 2012 and 1 October 2012 respectively. The committee’s main responsibilitiesare to determine the remuneration policy and individual terms and conditions in respect of the executive directors includingnew appointments and to set the Chairman’s remuneration. As well as salary and annual bonuses, the committee isresponsible for the structure and level of the performance related elements of executive remuneration and other benefits.The committee also reviews the packages of those at the next most senior level of management and has regard to pay foremployees across the Group when determining executive remuneration. The committee met on five occasions during theyear with all members in attendance. External consultants are engaged by the committee to provide independent adviceand the Chief Executive, Finance Director and the Group Human Resources Director attended its meetings when required.The committee reviewed its own performance and terms of reference and approved the summary report on its work.More details in respect of remuneration matters and the work of the committee are given in the Remuneration Report.Nominations CommitteeThe Nominations Committee comprises the Chairman, Roberto Quarta, who chairs the committee, all of the independentnon-executive directors and the Chief Executive. During the year the committee reviewed the composition of the Board andits committees and made nominations for appointments to the Board and its committees. External consultants are engagedby the committee in relation to any search for successor non-executive directors. Appointments of non-executive directorsare made on the basis of a standard form of appointment letter. Each non-executive director and the Chairman wereappointed on the basis of a stated minimum time commitment judged appropriate by the committee. The committeeconsiders that the time given by each non-executive was sufficient. The committee also reviewed the roles of thenon-executive directors and during the year it made recommendations, which were approved by the Board, concerningthe appointment of three new non-executive directors and the succession for Terry Gateley as Chairman of Audit Committeeand senior independent director. It also agreed on the changes to executive responsibilities recommended to the Boardfollowing the departure of Ian Whiting. The committee met on six occasions during the year with all members in attendanceand also held informal workshop sessions. During 2012 the committee spent a substantial part of its time on executive talentdevelopment, succession planning and the organisation structure of the executive management.In response to Lord Davies’ report on Boardroom Diversity, the Company has issued a policy statement, approved by thecommittee and the Board, which appears on the Company website. Our policy is to recruit the very best people to executeour strategic priorities and to reflect the diverse nature of the global footprint of our businesses, reflecting the location of ourcustomers and markets. We will continue to review the composition of our management teams and Board to ensure that wehave the right mix of skills and experience while maintaining our effectiveness and execution capabilities. We will seek adiverse pool of the best quality candidates to draw from, both internally and when recruiting externally, to maximise thecontinuing effectiveness of the Company. At Board level, there are five nationalities, two of the non-executives are femaleand there is a broad mix of backgrounds and experience.The committee reviewed its own performance and terms of reference and approved the foregoing report on its work.44 Board reports