| Corporate Governance |
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Corporate governance is concerned with how companies are directed and controlled, in particular with the role of the Board and the framework of accountability. Although not required to do so by the AIM Rules, the Company is committed to the principles of corporate governance contained in the Combined Code on Corporate Governance which is appended to the Listing Rules of the Financial Services Authority and for which the Board is accountable to shareholders. The following links provide further details of the corporate governance procedures and framework at Hydro International. Memorandum and Articles of Association
The Board recognises the importance of good corporate practice and is committed to the principles of corporate governance contained in the Combined Code on Corporate Governance that was issued in 2006 by the Financial Reporting Council (‘the Code’) for which the Board is accountable to shareholders. Although not required to do so by the AIM Rules, the directors have decided to provide corporate governance disclosures comparable with those required of a listed company. Other than those matters referred to below, the Company believes itself to be in compliance with the Code provisions set out in section 1 of the Code. The Company had only one non-executive director for the period up to 3 March 2008. The Board had recognised that the size and complexity of the Group had become such that the appointment of a further non-executive director would be beneficial. To this end the Board recruited Michael Stevens to the role of non-executive director on 3 March 2008. Following this appointment the Company has improved its adherence to the Combined Code but it does not comply with the following provisions: A3.2 The Company has only one independent non-executive director and therefore does not meet the requirement to have at least two independent non-executive directors. A4.1 The Company does not maintain a nominations committee. B2.1 The Remuneration Committee does not consist of at least two independent non-executive directors. C3.1 The Audit Committee does not consist of at least two independent non-executive directors for smaller companies. Additionally the Audit Committee is chaired by the Company Chairman. The Company has applied the principles set out in section 1 of the Code, including both the main principles and the supporting principles, by complying with the Code as reported above.
Responsibilities The Board is responsible for the overall direction of the Group. The Board’s main roles are to create shareholder value, to determine the Group’s strategic objectives and to ensure that necessary financial and other resources are made available to enable these objectives to be met. The Board has a schedule of matters reserved for its approval which it reviews from time to time. Specific responsibilities reserved for the Board include setting Group strategy and long term objectives, approving business plans and annual budgets, overseeing of the Group’s operations, changes relating to the Company’s share capital, financial reporting and controls including annual and interim results and reports, ensuring the maintenance of a sound system of internal control and risk management, approval of significant investments (including acquisitions), Board appointments and corporate governance matters.
Directors The names of the directors currently in office, together with their biographical details, are available on the Group Directors page. Chairman and Chief Executive The Chairman’s principal responsibilities are to chair the Board and general meetings and to ensure the effective running of the Board. The Chief Executive’s principal responsibility is leading the executive team in the day to day running of the Group’s business. Board balance and independence The Board currently comprises four executive and two nonexecutive directors. The Chairman has now served on the board for more than nine years since first appointment. Therefore, in accordance with Combined Code Provision A.3.1, the Board is unable to consider Roger Lockwood as an independent non-executive director. The Board do, however, consider Roger Lockwood’s character and judgement to be independent and have appointed him as Chairman of the Company for a further period of three years. In accordance with the Articles of Association Roger Lockwood will now offer himself for re-election to the Board each year at the Annual General Meeting. Michael Stevens is considered by the Board to be independent in character and judgement and has been appointed as the Senior Independent Director in accordance with Code Provision A.3.3. Information and performance evaluation The Board meets regularly, approximately every month, with additional meetings when circumstances and urgent business dictates. Regular reports and papers are circulated to all directors in a timely manner in preparation for Board and Committee meetings. These include management accounts and operational reports as well as specific information on matters to be considered by the Board. The Board holds at least two meetings a year at different Hydro offices and receives regular presentations from senior executives to gain a deeper understanding of the business and provide presentation development opportunities for managers. The performance of the executive directors other than the Chief Executive is reviewed annually by the Chief Executive. This review consists of a review of past performance and the setting of objectives for the forthcoming period. The performance of the Chief Executive is reviewed in the same manner by the Chairman. As part of the evaluation of performance any individual development requirements are considered. Appointment and re-election of directors Given the size of the Board the need for a formal nominations committee has not been considered appropriate. Appointments to the Board are reached through Board decision through a process of defining selection criteria and interview of suitable candidates. On appointment directors are provided with appropriate training and information on the activities of the Group. Subsequent training is provided as required. All directors are subject to election by shareholders at their first Annual General Meeting after their appointment and to reelection thereafter at intervals of no more than three years. Non-executive directors are appointed for an initial period of three years and their performance evaluated before being extended for further three year terms. Non-executive directors who serve longer than three terms are subject to annual re-election by shareholders. All directors have access to the services of the Company Secretary and may, if necessary in the furtherance of their duties, take independent professional advice at the Company’s expense.
The Remuneration Committee consists of two non-executive directors; Roger Lockwood (as Chairman) and Michael Stevens. The purpose of the Committee is to establish a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages of individual full-time Executive Directors. The key terms are as follows:
Non-executive director remuneration is a matter for the executive directors.
The Audit Committee consists of two non-executive directors; Roger Lockwood (as Chairman) and Michael Stevens. The purpose of the Committee is to provide formal and transparent arrangements for considering financial reports and assessing how to apply the internal control principles set out in the Combined Code, and to maintain an appropriate relationship with the Company's auditors. The key terms are as follows:
One of the Board's principal objectives is to manage the Company on behalf of its shareholders, and accordingly it is always willing to meet or talk with them. The directors maintain a dialogue with a number of private and institutional shareholders on an ongoing basis to discuss the business. The Annual General Meeting is used as a vehicle for both formal and informal liaison with shareholders, where the Chairman of the Committees is available for question.
Memorandum and Articles of Association |
Matters Reserved for the Hydro International plc Board
