Corporate governance report

Authorisation of directors’ conflicts of interest

Directors now have a statutory duty, under section 175 of the Companies Act 2006, to avoid a situation in which they have, or can have, a conflict of interest with the Company’s interests. However, there is no breach of this duty if the Board has authorised the matter in question. Changes to the Articles, which took effect on 1 October 2008, now permit directors to authorise any such situations and, during the year, directors were asked to confirm any known or potential conflicts of interest and a list of the interests thought to require authorisation was submitted to the Board in November 2008. At the meeting, directors (other than the director having the interest in question) were asked to authorise the situations giving rise to a known or potential conflict. A register of the interests which have been authorised is maintained by the Company Secretary and is available at every Board meeting.

Board balance and independence

There are currently eight directors – the Chairman, two executive directors, the senior independent non-executive director and four other non-executive directors. Sir Derek Wanless is the non-executive Chairman. The executive directors are John Cuthbert (Managing Director) and Chris Green (Finance Director). Sir Patrick Brown is the senior independent non-executive director and the other independent non-executive directors are Martin Nègre, Alex Scott-Barrett and Jenny Williams. Claude Lamoureux is also a non-executive director but is not independent as he was, until 1 December 2007, President and CEO of OTPP, which holds 27% of the issued share capital of the Company.

The Company complies with the Combined Code’s requirement that half of the directors, excluding the Chairman, are independent non-executive directors. The Chairman was independent on appointment. Biographical details of the directors appear here and details of their service contracts are in the directors’ remuneration report.

The Chairman and Managing Director have clearly defined written responsibilities which have been agreed by the Board. The Chairman leads the Board and creates the conditions for overall Board and individual director effectiveness, both inside and outside the boardroom. The Managing Director is responsible for running the Company’s business on a day to day basis.

Sir Patrick Brown, as senior independent non-executive director, is available to shareholders who wish to raise any concerns and leads the non-executive directors in their evaluation of the Chairman’s performance.

The non-executive directors bring to the Board many years of business experience as well as financial expertise and the ability and willingness to challenge and support the executive directors.

The General Counsel and Company Secretary, Martin Parker, assists the Board to ensure that good corporate governance compliance is achieved. He is also Company Secretary of NWL and is secretary to all Board committees.

Information and professional development

All directors have access to independent professional advice to assist them in the performance of their duties, at the Company’s expense, and to the Company Secretary for advice and assistance. The Chairman, with the assistance of the Company Secretary, monitors the induction and training requirements of directors. All new directors receive an induction information pack and are offered site visits and meetings with managers. Managers from within the Group submit papers or give presentations at Board meetings. Water industry representatives meet the NWL board to discuss current issues.

The Company Secretary ensures that directors are kept informed and that information flows effectively within the Group by:

• keeping in regular contact with directors;
• sending Board papers to directors before each Board meeting;
• sending briefing packs to directors in the months when Board meetings are not held; and
• providing a directors’ team room intranet site containing Board and committee papers, minutes, analysts’ reports and reference and regulatory documents, to which all directors have access.