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Terms of Reference - Nomination Committee

DUTIES

1. The Nomination Committee shall consist of the Chairman of the Board, Senior Independent Director (Vice Chairman of the Board) and an Independent Director as required with the Chief Executive and Secretary in attendance;

2. The Nomination Committee should lead the process for Board appointments and make recommendations to the Board;

3. The Nomination Committee should lead the process for Board Succession and make recommendations to the Board;

  • plans for succession for both Executive and Independent Directors as appropriate [to include the Chair and Vice Chair of the Society];
  • the re-appointment of any Independent Director at the conclusion of their specified term of office as appropriate [following a particularly rigorous review at 6 years and annual election, if Independent Director, over 9 years];
  • the re-election by members of any Director under the retirement by rotation provisions in the Society's Rules;
  • any matters relating to the continuation in office of any Director at any time.
    [Combined Code A.7 attached]

4. The terms and conditions of appointment of a Independent Director should be made available for inspection; [Combined Code A.4.4]

5. The process by which the Nomination Committee has determined to make the appointment should be recorded setting out whether it has been through an AGM process, external research consultancy or has been openly advertised; [Combined Code A.4.6]

6. The Nomination Committee shall ensure together with the Society's Secretary that an induction training programme is in place for a new Independent Director as set out in the Higgs Suggestions for Good Practice;

7. The Nomination Committee should be aware of the Higgs Suggestions for Good Practice at interview – Questions to be asked of Board;

8. The Nomination Committee should be mindful of the appointment letter as set out in the Higgs Suggestions For Good Practice;

9. The majority of members of the Committee should be Independent Directors. [The Chairman should chair the Committee, but the Chairman should not chair the Nomination Committee when it is dealing with the appointment of a successor of the Chairmanship]. [Combined Code A.4.1]

RESPONSIBILITIES

1. Minutes must be kept of meetings to indicate attendance and in the case of any new appointment, the method of attainment of candidates and number interviewed and records of interviews. A report must be made to the Board following any Committee meeting.

SUMMARY OF THE PRINCIPAL DUTIES OF THE NOMINATION COMMITTEE

Appointments

1. To be responsible for identifying and nominating for the approval of the Board candidates to fill Board vacancies as and when they arise;

2. Before making an appointment, evaluate the balance of skills, knowledge and experience on the board and, in the light of this evaluation, prepare a description of the role and capabilities required for a particular appointment;

3. Consider candidates from a wide range of backgrounds and look beyond the “usual suspects”.

Succession Planning

1. To give full consideration to succession planning, taking into account the challenges and opportunities facing the Society and what skills and expertise are therefore needed on the Board in the future;

2. Regularly review the structure, size and composition (including the skills, knowledge and experience) of the Board and make recommendations to the Board with regard to any changes;

3. Keep under review the leadership needs of the Society, both Executive and Independent Directors, with a view to ensuring the continued ability of the Society to compete effectively in the marketplace;

4. If an Independent Director has been on the Board beyond six years a rigorous review must be made to take into account the need for progressive refreshing of the Board. Independent Directors may serve longer than nine years (three three-year terms), subject to annual re-election. Serving more than nine years could be relevant to the determination of a Independent Director and the Committee must state its reasons for determining that the Director remains independent; [Combined Code A.7.2]

5. Review the succession plan for Independent Directors and report to the Board;

6. To review the Independent Director's re-appointment at the conclusion of any specified term of office as appropriate under the Society's Rules in respect of retirement by rotation;

7. To review the Independent Director's continuation in office at any time;

8. Review annually the time required from a Independent Director. Performance evaluation should be used to assess whether the Independent Director is spending enough time to fulfill their duties.

Records

1. Make available its terms of reference explaining clearly its role and the authority delegated to it by the Board upon request; and

2. Ensure that on appointment to the Board, Independent Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, Committee service and involvement outside Board meetings.

General

1. To review annually the performance of the Board and its Committees and report to the full Board; and

2. To review annually the Terms of Reference of the Committee together with the Committee's own effectiveness [to include scope and adequacy] and recommend any necessary changes to the main Board.

3. To annually evaluate the balance of skills, knowledge and experience on the Board and in light of this evaluation prepare a description of the role and capabilities required for a particular appointment. [A4.2 Combined Code]

COMBINED CODE

Re-election (A.7)

Main Principle

All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance. The board should ensure planned and progressive refreshing of the board. The board should reconsider board appointments in relation to any specific skills required particularly if there is a change in business strategy or major new initiative undertaken within the Society.

Code Provisions

All directors should be subject to election by members at the first annual general meeting after their appointment, and to re-election thereafter at intervals of no more than three years. The names of directors submitted for election or re-election should be accompanied by sufficient biographical details and any other relevant information to enable members to take an informed decision on their election.

Non-executive directors should be appointed for specified terms subject to re-election and the board should set out to members in the annual general meeting papers accompanying a resolution to elect a non-executive director why they believe an individual should be elected. The chairman should confirm to members when proposing re-election that, following formal performance evaluation, the individual's performance continues to be effective and to demonstrate commitment to the role. Any term beyond six years (eg, two three-year terms) for a non-executive director should be subject to particularly rigorous review and should take into account the need for progressive refreshing of the board. Non-executive directors may serve longer than nine years (eg, three three-year terms), subject to annual re-election. Serving more than nine years could be relevant to the determination of a non-executive director's independence.

The Code in this respect states that the board should determine whether a director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the director's judgement. The board should state its reasons if it determines that a director is independent and has served on the board for more than nine years from the date of the first election. (Combined Code 1.3.1)

Independence of Directors

The board should identify in the annual report each non-executive director it considers to be independent. The board should determine whether the director is independent in character and judgment and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the director's judgment. The board should state its reasons if it determines that a director is independent notwithstanding the existence of relationships or circumstances which may appear relevant to its determination, including if the director:

  • has been an employee of the Society or group within the last five years;
  • has, or has had within the last three years, a material business relationship with the Society either directly, or as a partner, shareholder, director or senior employee of a body that has such a relationship with the Society;
  • has received or receives additional remuneration from the Society apart from a director's fee, participates in the Society's share option or a performance-related pay scheme, or is a member of the Society's pension scheme;
  • has close family ties with any of the Society's advisers, directors or senior employees
  • holds cross-directorships or has significant links with other directors through involvement in other companies or bodies;
  • represents a significant shareholder; or has served on the board for more than nine years from the date of their first election.

The Chairman must meet the independence criteria when first appointed but thereafter the test of independence is not appropriate in relation to the Chairman. [Combined Code A.2.2]

[Combined Code June 2008]

 

AUGUST 2009