Corporate governance report

Performance evaluation

A full evaluation of the performance of the Board, the NWL board and the committees was conducted during the year by an external consultant with significant relevant experience. Each director completed a detailed questionnaire prior to a one to one meeting with the consultant. The questionnaire was designed to address the dynamics of the Board and the effectiveness of its approach to strategic, operational and financial matters, as well as the contributions of the directors. The consultant observed the NWG and NWL board meetings in November 2008 and delivered a report to both boards in February 2009. The results of the evaluation were generally very positive and a number of actions were agreed, with a view to consolidating the performance of the boards.

The Chairman has also appraised the performance of each NWG and NWL director by means of one to one meetings. The Chairman’s comments on the performance of the directors seeking re-appointment at the AGM are provided in the Notice of Meeting.

External appointments

To date, executive directors have only accepted non-executive positions outside the Group where this would benefit either the Group or the local community. These positions have tended to be with educational institutions, economic regeneration groups or similar bodies. The Board has agreed that executive directors of the Company who are appointed to non-executive directorships of a more commercial nature may retain the fees, subject to obtaining the Chairman’s consent before an appointment is accepted. Only one such external appointment per director will generally be permitted and there are currently no such appointments.

Board committees

The Board has Audit, Nomination and Remuneration Committees to assist it in the performance of its duties. The Board sets the terms of reference of the Committees and receives regular reports from their chairmen at board meetings. The terms of reference of committees are available on the Company’s website or from the Company Secretary.

Remuneration Committee

The work of the Remuneration Committee and details of the directors’ remuneration are set out in the directors’ remuneration report.

Nomination Committee

The members of the Nomination Committee are Sir Derek Wanless (Chairman), Sir Patrick Brown, John Cuthbert, Martin Nègre, Alex Scott-Barrett and Jenny Williams, and the membership is compliant with the Combined Code.

The main duty of the Nomination Committee is to identify and nominate candidates to fill Board vacancies for approval by the Board. The Committee also reviews succession planning for the Board, NWL board and senior appointments and will make recommendations to the Board when appropriate. The Committee’s general policy is to use external recruitment consultants or to advertise in order to identify suitable candidates. All non-executive directors are appointed for a term of one year. In accordance with the existing Articles, all directors are subject to re-election at the AGM at least every three years. However, an amendment to the Articles proposing that, in future, all directors will be subject to annual re-election, will be put to shareholder vote at this year’s AGM. Please refer to the Notice of Meeting for further details on the proposed amendment. If shareholders approve the amendment, directors will be subject to annual re-election with effect from the 2010 AGM.

During the year, the Committee considered extensions to the appointments of non-executive directors on the NWG and NWL boards whose contracts for services expired during the year. Extensions to the appointments of Sir Patrick Brown and Martin Nègre take them into their seventh year as non-executive directors of the NWG Board and, having been subject to a rigorous review as required by the Combined Code, the Committee remains satisfied with the performance of these two directors. Following the announcement of John Cuthbert’s decision to retire on 31 March 2010, the Committee has agreed the process to be followed in seeking a successor, prepared a person specification and engaged an executive recruitment specialist to advise on and assist in the process.