Directors
The Company is controlled through the Board of Directors which, on 31 December 2008 comprised four Executive and four Non-Executive Directors. The biographies of the current Directors are shown on pages 32 and 33 of this report.
During the year Hon. Richard Alston was appointed (2 July 2008) and Dave Allen resigned (16 December 2008), both as Non-Executive Directors.
The Board meets quarterly and additionally as necessary and is responsible for overall Group strategy, acquisitions and the consideration of significant financial matters. It reviews the strategic direction of the Group’s trading companies, their annual budgets and their progress towards achievement of those budgets. The Board is responsible for ensuring the integrity of financial information and that the financial controls and systems of risk management, both financial and non-financial, are robust and appropriate.
The Chairman, Lord Bell, is responsible for the running of the Board and he ensures that all Directors receive sufficient, accurate and timely information on financial, business and corporate issues prior to meetings. He also ensures that the Non-Executive Directors have access to any further supplementary information they may require should they request it.
The Chief Executive’s (Christopher Satterthwaite) responsibilities focus on co-ordinating the Company’s business and implementing Group strategy.
Both Lord Bell and Christopher Satterthwaite are due to retire by rotation immediately before and are proposed for re-election at the forthcoming AGM.
Rodger Hughes is the Senior Non-Executive Director.
New Directors receive a full, formal and tailored induction on joining the Board in order to further inform them of the Company’s activities and structure. All Directors are able to take independent professional advice, at the Company’s expense, in furtherance of their duties, if necessary. The Company also makes appropriate training available to all existing Directors. All Directors, in accordance with the Code, will submit themselves for re-election at least once every three years.
Executive Directors are entitled to accept external appointments outside the Company and retain the fees from such appointments provided that the Chairman’s permission is sought and confirmed by the Board.
The Board met on four occasions during 2008. Catherine Biner Bradley attended three meetings. Hon. Richard Alston attended both of the meetings that took place after his appointment. All other meetings were fully attended. When absent from meetings the views of the director concerned are sought in advance then put to the meeting in order to facilitate a comprehensive discussion. Each director continues to make themselves available to their fellow directors and ensures he/she contributes to the major decisions before the Board.
Non-Executive Directors
The individual Non-Executive Directors have different skills, experience and qualifications from working presently or previously in varied sectors of the economy and as such they are able to bring independent judgement to bear on matters for consideration by the Board.
Rodger Hughes was appointed as a Director by the Board in July 2007. He became the Senior Non-Executive Director and Chairman of the Audit, Remuneration and Nomination Committees in October 2007.
Hon. Richard Alston was appointed as a Director by the Board in July 2008 and will be proposed for election by the shareholders at the forthcoming AGM.
Catherine Biner Bradley is due to retire by rotation immediately before and is proposed for re-election at the AGM.
Paul Richardson is the WPP Group plc representative on the Board under the subscription agreement of 1997 and has been a Director of the Company since that date. Under the Code and due to his length of service, Paul will retire immediately before and is proposed for re-election at the AGM.
Dave Allen, WPP’s second representative on the Board, resigned in December 2008.
The Board considers its current Non-Executive Directors to be of sufficient calibre and number that their views may be of sufficient weight that no individual or small group can dominate the Board’s decision-making process. The Board continues to consider suitable candidates as Non-Executive Directors.
The Non-Executive Directors’ terms and conditions of appointment are available for inspection at the Company’s registered office on request and will be available, together with the Executive Directors’ service contracts, at the forthcoming AGM.
Independence of Non-Executive Directors
The Code states that it is for the Board to determine whether a director is independent in character and judgement and consider whether there are any relationships or circumstances that are likely to affect a director’s judgement.
In applying the Code, the Board has considered whether the length of service of Paul Richardson (12 years) has compromised his independence. He is experienced and accomplished in his fields of expertise. In his association with the Company he has acquired an understanding of the Company’s operations, its markets and the issues determining its success. He has shown commitment to the Company in both time and effort. The Board does not consider his long service as a Director to be detrimental or to have eroded his objectivity and it should not raise any concerns about his ability to perform his duties.
Paul Richardson remains the WPP Group plc representative on the Board as stated above. Performance evaluation has shown that he continues to have a good record of involvement in Board-level discussions and contributes additional help to further the Company’s strategies. The Board considers Paul Richardson to be independent.
The question of Non-Executive Directors’ shareholdings should also be considered when assessing independence. Rodger Hughes and Catherine Biner Bradley each hold a small number of shares in the Company as disclosed on page 45. The Board considers that these holdings are not significant and believes this alone should not raise questions regarding their independence. The Board considers that Directors owning shares in the Company directly aligns them with the interests of the shareholders.
Following performance evaluations for 2008 the Board has considered the independence of its Non-Executive Directors and considers them to be independent in both judgement and character and that the circumstances shown above are unlikely to affect their respective judgements when considering matters of the Company.
Audit Committee
Membership is restricted to those Non-Executive Directors deemed to be independent by the Board and is shown on page 32.
The Committee met on three occasions during the year to discuss accounting, audit and internal control matters together with reviewing financial statements and compliance with accounting standards and the Company’s accounting policies. The Audit Committee is also responsible for ensuring that a professional and objective relationship exists with the Company’s external auditors. The external auditors are represented at each meeting and may request a meeting of the Committee without management being present if necessary. The Audit Committee also reviews the work of its sub-committee, The Risk Management Committee, which oversees the Company’s risk identification and management system.
During the year the Committee has additionally considered the review of internal controls and risk management systems; has monitored the implementation of the Company’s Disaster Recovery Plan and has developed the response to new and revised legislation and regulatory requirements.
Each meeting was attended by the full membership.
Remuneration Committee
The Committee measures the performance of the Executive Directors and of key members of senior management as a prelude to recommending their annual remuneration. The Committee is also responsible for overseeing grants under the Company’s Co-Investment Plan, Executive Share Option Scheme, the Savings-Related Share Option Scheme and the Deferred Share Plan to employees of the Group. When required the Chairman, Lord Bell, attends the meetings but is not actually a member. The remuneration of the Non-Executive Directors is recommended by the Chairman and Finance Director and takes account of the time spent on Board and Committee matters. Final decisions are made by the Board but no director takes part in any discussion regarding his or her own remuneration.
During the year the Committee has carried out performance evaluations and agreed the remuneration for the Executive Directors for 2008.
It has reviewed and approved further grants under the Company’s Deferred Share Plan for senior managers and the Savings-Related Share Option Scheme, which is open to all staff after a qualifying period. The Committee continues to monitor the administration of the incentive schemes and the performance targets that apply to each.
The Committee has also set the key performance indicators for the individual Executive Directors; approved a formal expenses policy for the Directors and approved the disclosures to shareholders in the financial statements of the Company.
In 2008 the Committee met on three occasions and all the members were present at each meeting.
Nominations Committee
Membership of the Nominations Committee is restricted to independent Non-Executive Directors as shown on page 32. The Committee leads the process of appointments to the Board by evaluation of the skills, knowledge and experience required for a particular appointment.
The Code requires the Company to have a formalised process for the selection and appointment of new directors. The Board considers that a prescriptive procedure is inappropriate and could prove restrictive and costly both in terms of identifying potential candidates and the selection process itself. The Company does not believe that it should commit to the exclusive use of external recruitment consultants although there may be occasions where this method is employed.
The Committee met once during the year to discuss the appointment of Hon Richard Alston as a Director. All of the members were present.
Performance evaluation
In line with the Code, the Company carries out annual performance evaluations of the Board, its committees and the individual Directors. The 2008 performance evaluation took place in early 2009. The aim of the evaluation is to recognise the strengths and address any weaknesses of the management process; to ensure that the Board meets its objectives and that effectiveness is maximised.
The Remuneration Committee, led by Rodger Hughes, the Senior Independent Non-Executive Director, evaluates the performance of the Executive Directors. The Board, led by the Chairman, is responsible for the assessment of the performance of the Non-Executive Directors.
The work of the Board and its Committees together with the processes used and the business transacted during the year is assessed by the Board, taking into account the specific workloads of each forum; the knowledge and expertise of its members; and the recommendations made to the Board regarding specific tasks put before the Committees concerned.
