Role of the Board

 

The Board has ultimate responsibility for the management, direction and performance of the Group, and leads and controls the Group's business. The Board is also responsible for ensuring appropriate resources are in place to achieve its strategy and deliver sustainable performance. Through authorities delegated to its Committees, the Board directs and reviews the Group's operations within an agreed framework of controls, allowing risk to be assessed and managed within agreed parameters. The Board is collectively accountable to the Company's shareholders for the proper conduct and success of the business.

The Board's powers are set out in the Company's Articles of Association, which are available to view on its website, and may be amended by a special resolution of its members. The Board may exercise all powers conferred on it by the Articles, in accordance with the Companies Act 2006 and other applicable legislation.

The Board has established a formal schedule of matters reserved for its approval, and has delegated other specific responsibilities to its principal committees: the Audit, Remuneration and Nomination Committees. These are clearly defined within the written terms of reference of the respective committees. Information on the responsibilities and work of each of the Board's committees is set out in the Terms of Reference section.

During the year, as part of its annual review process, the matters reserved for the Board were reviewed, and, where necessary amended to reflect best practice. The schedule of matters reserved for the Board includes the consideration and approval of:

  • the Group's overall strategy, medium-term plans and annual budgets;
  • financial statements and Group dividend policy including recommendation of the final dividend;
  • major acquisitions, disposals and capital expenditure;
  • major changes to the capital structure including tax and treasury management;
  • major changes to accounting policies or practices;
  • the Group's corporate governance and compliance arrangements;
  • the system of internal control and risk management policy; and
  • review of management development strategy.

Composition of the Board

The Board is made up of a non-executive Chairman, four executive directors and six non-executive directors. The current balance of the Board's skills, experience and knowledge, together with regular briefings by executives below Board level, ensures that views, perceptions and discussions are not dominated by any one specific view. The composition of the Board is continually reviewed to ensure it remains suitable for the needs of the business, and this continues to be the primary focus of the Nomination Committee.

There is an established, formal, rigorous and transparent procedure for the selection and appointment of new directors to the Board, and this is described in the Nomination Committee Terms of Reference. During the year, Kevin O'Byrne stepped down as Group Finance Director to take up the role of CEO B&Q and Koçtaş brands, and was replaced by Karen Witts, who joined the Board on 1 October 2012. Euan Sutherland and Philippe Tible were appointed to the Board as executive directors on 1 October 2012. Mr Sutherland subsequently stepped down from the Board on 31 January 2013 ahead of leaving the Group in March 2013.

Board evaluation

The Board conducts a review of its performance each year. During the year under review, the Board evaluated its effectiveness using an externally facilitated questionnaire and a series of one-to-one interviews between each director and the Chairman. The questionnaire was developed by reference to the topics discussed and recommendations made during the previous evaluation, and drafted following discussions between the Chairman, the Company Secretary and the external facilitator, Lintstock. Responses to the questionnaire were collated and the output was used by the Chairman in his individual meetings with directors as part of the evaluation process.

The areas considered during the evaluation were:

  • Board composition;
  • Board expertise;
  • strategic oversight;
  • risk management and internal control; and
  • succession planning and human resource management.

The results of the evaluation were considered by the Board at its meeting in January 2013. No significant issues were highlighted and the review clearly indicated that the Board continued to work efficiently and effectively, and that the contribution and commitment of each director, and their interaction with each other, was good, and that the non-executive directors offered robust challenge where appropriate. As a result of the evaluation, the Board agreed to undertake the following activities during the 2013/14 financial year:

  • review the forward business agenda to ensure that there is sufficient time to focus on common key Group programmes and initiatives;
  • maintain oversight of the Group's performance relative to its competitors and customer trends; and
  • increase its exposure to the Group's senior management below the Board.

As part of the evaluation process, the Group Chief Executive carried out a performance review of the executive directors. In addition, the non-executive directors, led by the Senior Independent Director, conducted the performance review of the Chairman in respect of the financial year.

The Board has confirmed that the contribution of each of the directors continues to be effective and that shareholders should be supportive of their appointment or re-appointment to the Board. Biographical details of each director are set out in the Management & committees section.

The Board will continue to review its procedures, effectiveness and development in the year ahead, and the Chairman will use the output of the most recent Board evaluation in his individual meetings with directors during the year.

In accordance with Provision B.6.2 of the Code, which requires Boards to undertake an externally facilitated evaluation at least every three years, the Board intends to appoint a suitable independent facilitator during the year to conduct the 2013/14 performance evaluation, and will report on the findings of that evaluation within the 2013/14 annual report.

Induction, information and professional development

All new directors appointed to the Board receive an induction pack as part of their comprehensive induction programme tailored to their experience, background and particular areas of focus. The induction programme is designed to develop directors' knowledge and understanding of the Group's operations and culture.

The induction programme includes:

  • individual one-to-one meetings with the Chairman, the Group Chief Executive, the Group Finance Director and other directors;
  • site visits to the Group's stores and those of its competitors;
  • meetings with management of the Group's Operating Companies and other senior management; and
  • if required, external training courses at the Group's expense.

In accordance with best practice, the Chairman considers and addresses the development needs of the Board as a whole, if any, and ensures that each director updates their individual skills, knowledge and expertise.

Following the appointment of three new executive directors during the year, the Company Secretary arranged for the Group's corporate lawyers to provide a training session on their duties and responsibilities as directors of a UK listed company. Amongst other topics, the training covered Listing Rules compliance and the control and release of inside information, and provided case studies and practical situations for the directors to consider.

Subsequent training in specific aspects of the Group's businesses is provided to directors, when requested, or regularly as part of site visits. Directors are briefed on issues at Board and Committee meetings and have full and timely access to relevant information ahead of each meeting.

The Board also receives reports on circumstances where issues and concerns have been raised by the Company's institutional shareholders. This process allows directors to develop necessary understanding of the views of these shareholders and also enables the Board to judge whether investors have a sufficient understanding of the Group's objectives.

In addition to planned development and briefings, directors are expected to take responsibility for identifying their own individual needs and to take necessary steps to ensure that they are adequately informed about the Group and their responsibilities as a director. The Board is confident that all its members have the requisite knowledge, ability and experience to perform the functions required of a director of a listed company. There is also an agreed procedure whereby directors may take independent professional advice at the Group's expense in the furtherance of their duties.

Conflicts of interest

Each director has a duty under the Companies Act 2006 to avoid a situation where he or she may have a direct or indirect interest that conflicts with the interests of the Company. The Company has robust procedures in place to identify, authorise and manage such conflicts of interest, and these procedures have operated effectively during the year.

A register of directors' situational and transactional conflicts is maintained by the Company Secretary and reviewed by the Board on a regular basis. The Board confirmed during the year that there were no situations of which they were aware which would, or potentially could, give rise to conflicts with the interests of the Company, other than those that might arise from directors' other appointments, which are set out in the directors' biographies in the Management & committees section.

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