Nomination Committee report

Terms of reference

The main purpose of the nomination committee (“the committee”) is to assist the board by keeping its composition under review and conducting a rigorous and transparent process when making or renewing appointments of directors to the board. During the year the board approved an adjustment to the committee’s terms of reference to make clear the duty to consider diversity issues when contemplating board appointments.

Membership, meetings and attendance

Membership has not changed during the year and comprises: the chairman, John McAdam, the senior independent director, Peter Long and the next two longest serving non-executive directors, Duncan Tatton-Brown and Alan Giles. The nomination committee met on four occasions during the year.

Activities

The committee oversaw the process of identifying an appropriate candidate to join the board as chief financial officer and with the assistance of external advisers put forward to the board a proposal that Jeremy Townsend should be appointed chief financial officer. The proposal followed a rigorous and transparent selection process which involved all members of the committee as well as other members of the board. Jeremy Townsend was appointed to the board at the end of August 2010.

The committee has specific responsibilities for succession planning to ensure that the board has the correct balance of individuals to discharge its duties effectively. During the year, the committee was briefed on succession planning issues relating to executive director and senior management roles and satisfied itself that action plans are in place to deal with longer term and, as far as is practicable, unexpected short-term gaps or weaknesses in the executive team. The committee is principally concerned with roles at board level and at the level below. The board as a whole is briefed by the group HR director on the more general aim of ensuring that employees with the required skills and experience are developed for the future and adequate procedures are in place to encourage the development of talent across the group.

In order to satisfy itself that it would be appropriate for all directors to submit themselves for re-election at the annual general meeting, the committee reviewed the results of the board evaluation process, including the assessment of individual independence and commitment. The committee noted that Peter Long (who took no part in the discussion) would have served three consecutive terms of three years as a non-executive director in October 2011 but agreed that it would be extremely valuable to retain Peter Long’s detailed knowledge of the range of issues that have affected the company in recent years.

In accordance with the provisions of the Code, the committee reviewed the process conducted by the company for identifying and considering potential conflicts of interest and concluded that the process which was introduced in 2008 remains effective. The review consisted of considering a report from the secretary and reviewing the process and the related documentation, including the questionnaire provided to directors. The committee also reviewed the current authorised potential conflicts of directors and was satisfied that the authorisations remained appropriate.

Committee evaluation

In common with the processes conducted by other committees, the committee with the assistance of an external facilitator, has conducted a review of how it operates which concluded that the committee operates effectively.

On behalf of the board,