The Board
Composition of the Board
The Company's Board now comprises the following directors:
| Date of appointment (if later than 1 May 2009) |
Planned date to leave Board |
Proposed for re-election at 2010 AGM |
Proposed for election at 2010 AGM |
|
| Directors that will remain on the Board after 30 June 2010 | ||||
| Robert Speirs | √ | |||
| Ewan Brown | √ | |||
| Helen Mahy | 1 January 2010 | √ | ||
| Sir George Mathewson | ||||
| GarryWatts | √ | |||
| Phil White | 1 June 2010 | √ | ||
| Ann Gloag | √ | |||
| Brian Souter | ||||
| Martin Griffiths | ||||
| Directors that will leave the Board on 30 June 2010 | ||||
| Iain Duffin | 30 June 2010 | |||
| Janet Morgan | 30 June 2010 | |||
The Combined Code suggests that independent non-executive directors should make up at least half of the Board (excluding the Chairman). From 1 May 2009 to 31 December 2009, the Company's Board comprised nine directors. From 1 January 2010 to 30 April 2010, the Company's Board comprised ten directors. From 1 July 2010, the Company's Board will comprise nine directors. Excluding the Chairman, the Board considers that five of these directors are independent non-executive directors, as follows:
Independent Chairman |
Independent Non-Executive Director |
Other Director |
||
| Robert Speirs | Chairman | √ | ||
| Ewan Brown | Non-Executive Director | √ | ||
| Helen Mahy | Non-Executive Director | √ | ||
| Sir George Mathewson | Non-Executive Director | √ | ||
| GarryWatts | Non-Executive Director | √ | ||
| Phil White | Non-Executive Director | √ | ||
| Ann Gloag | Non-Executive Director | √ | ||
| Brian Souter | Chief Executive | √ | ||
| Martin Griffiths | Finance Director | √ |
In determining the independence of non-executive directors, the Board considers a number of factors. In particular the Board satisfies itself on the following questions:
- Does the director provide a robust and effective challenge to executive management?
- Is the director prepared to challenge others' beliefs, assumptions and viewpoints for the overall good of the Group and its shareholders?
- Does the director effectively contribute to constructive debate by the Board and its Committees?
- Is the director willing to defend his or her own beliefs and viewpoints for the overall good of the Group and its shareholders?
- Does the director have a sufficiently sound and detailed knowledge of the Group's business that enables him or her to effectively question strategy and executive management's running of the business?
Ewan Brown, one of the five independent non-executive directors shown in the above table, has served on the Board since 1988 and is a non-executive director of Noble Grossart, which is an advisor to the Company. The Company recognises and understands investor concerns over longer-serving nonexecutive directors but nevertheless continues to regard Ewan Brown as independent. Ewan Brown's long association with the Group enables him to provide a robust and effective challenge to management because of the sound and detailed knowledge of the Group's business that he has developed. The Board believes that Ewan Brown's length of service, when taken in the context of the Board as a whole, enhances his effectiveness as a nonexecutive director and that he remains independent in character and judgement. In recognition of the factors suggested by the Combined Code for determining independence, Ewan Brown stands for annual re-election as a director. In addition, Ewan Brown does not serve on the Remuneration Committee or the Audit Committee.
Operation of the Board
The Board is generally scheduled to meet six times each year. Additional meetings of the Board are held to consider matters arising between scheduled Board meetings, where a decision of the Board is required prior to the next scheduled meeting. In addition to the formal meetings of the Board and its Committees, the Directors are in more frequent but less formal contact with each other and with the Group's management on a range of matters.
The Chairman ensures that meetings of the Board and shareholders are properly conducted and is responsible for setting and moving forward the Board's agenda. Leadership of the Board (by the Chairman) is not the same as the leadership required (from the Group Chief Executive) to turn the Board's strategic and policy decisions into actions. The Group Chief Executive has day-to-day responsibility for all business of the Group and carries out the agreed strategy and policies of the Board. The split of the Chairman's and Chief Executive's responsibilities is in writing and has been approved by the Board.
The Directors' biographies appear on pages 18 and 19 of this Annual Report and illustrate the Directors' range of experience, which ensures an effective Board to lead and control the Group. The Non-Executive Directors bring an independent viewpoint and create an overall balance.
The Executive and Non-Executive Directors have a complementary range of experience that ensures no one director or viewpoint is dominant in the decision-making process. The Chairman and the Non-Executive Directors periodically meet without the Executive Directors being present. In addition, the Non-Executive Directors, led by the Senior Independent Non-Executive Director, meet without the Chairman at least annually.
All the Directors meet regularly with other senior management and staff of the Group, have access to confidential advice from the Company Secretary and may take independent legal or other professional advice at the Group's expense where it is considered necessary for the proper discharge of their duties as directors. The Company Secretary, whose appointment and removal is a matter for the Board as a whole, is responsible to the Board for ensuring the Board procedures are complied with.
All the Directors submit themselves for election by shareholders at the Annual General Meeting following their appointment and all the Directors are required to stand for re-election by shareholders at least every three years. Non-Executive Directors, including the Chairman, who are not considered by the Board to be independent, or are considered independent but have served on the Board for more than nine years, submit themselves for annual reelection.
Each director receives induction training on appointment and subsequently such training or briefings as are considered necessary to keep abreast of matters affecting their roles as directors. Training can encompass environmental, social and governance matters. The Chairman endeavours to ensure that all the Directors (including any newly appointed directors) attend the Annual General Meeting, providing an opportunity for shareholders to meet the Directors and to address questions to them.
The number of full Board meetings during the year was seven. The full Board typically meets once a year at an operational location and regular communication is maintained by the Chairman with other directors between meetings to ensure all directors are well informed on strategic and operational issues. In May 2010, the Board visited the Group's bus operations in Cambridgeshire. Some of the Directors also attended health and safety meetings of operating companies during the year.
The Board has a number of matters reserved for its consideration, with principal responsibilities being to agree the overall strategy and investment policy, to approve major capital expenditure, to monitor performance and risk management procedures of senior management, to ensure that there are proper internal controls in place and to consider major acquisitions or disposals. The Directors have full and timely access to information with Board papers distributed in advance of meetings. Notable matters that the Board considered during the year ended 30 April 2010 included:
- Evaluating the potential opportunity to acquire all or parts of National Express Group plc;
- Assessing the Group's overall strategy in light of developments in the bus and rail sector;
- Reviewing the Group's financing arrangements, including considering of the issue of a new corporate bond that was completed in December 2009;
- In conjunction with the Group's management, monitoring the financial performance of the Group during weaker macroeconomic conditions and determining appropriate responses, particularly in the UK Rail Division;
- Monitoring the progress of the SouthWestern Trains arbitration and;
- Reviewing the composition of the Board and agreeing the appointment of new directors.
The Board keeps the roles and contribution made by each director under review and changes in responsibilities are made where necessary to improve the Board's effectiveness. To provide a more manageable process and better control, certain of the Board's powers have been delegated to committees.
Minutes are taken of each meeting of the Board and its Committees. Where any director has significant concerns that cannot be resolved about the running of the Group or a proposed action, these concerns are recorded in the minutes. It is also the Group's policy that where a director resigns, the director is asked to provide a written statement to the Chairman of any concerns leading to his or her resignation.
Operational management of the Group
The Board delegates the operational management of the Group to the Group Chief Executive and Group Finance Director (“Executive Directors”). The Executive Directors maintain day-to-day contact and meet regularly face-toface or in video conferences with non-board senior management. There are three principal operating divisions (UK Bus: headed by a Managing Director, North America: headed by two Chief Operating Officers and UK Rail: headed by a Chief Executive up until he left the Group on 28 February 2009 and since then headed by the Executive Directors) which each comprise a varying number of autonomous business units, each headed by a chairman or managing director who is responsible for the day-to-day performance of the business unit. Each chairman or managing director is supported by his/her own management teams.
A Rail Business Development Committee, comprising the Executive Directors and other senior management, oversees the performance and development of the Group's rail business, including bidding on new rail franchises.
A Chief Executive heads the Group's joint venture, Virgin Rail Group. The Group has two representatives on the Board of Virgin Rail Group. Similarly, the Group has three representatives on the Board of Twin America LLC, which is headed by a chief executive.
Performance evaluation
The Board assesses its own performance and the performance of each individual Board member; this assessment is co-ordinated and directed by the Chairman with the support of the Company Secretary. The Senior Independent Non-Executive Director co-ordinates the Board's assessment of the performance of the Chairman. As part of the assessment process, the Non-Executive Directors meet without the Executive Directors being present. The Non-Executive Directors also meet without the Chairman being present. The Chairman obtains feedback from each individual director on the performance of the Board and other Board members - this involves the completion of a questionnaire and a follow-up discussion. In the same way, the Senior Independent Non-Executive Director obtains feedback from each individual director on the performance of the Chairman. A similar process is undertaken to assess the performance of each of the Board's committees.
The Directors have reviewed the effectiveness of the Board as a whole and its committees. Each director has assessed the effectiveness of the Board and each committee of which he or she is a member.
The assessment of effectiveness included consideration of:
- The effectiveness of the formal Board and committee meetings;
- The nature and extent of the Board's interaction with the management of the Group;
- The timeliness, relevance and accuracy of the information provided to the Board and its committees;
- The allocation of the Board's time between differing priorities including the time spent on strategic considerations relative to other matters; and
- The composition of the Board and its committees.
The Board has considered the results of these assessments and has concluded that overall the Board and its committees continue to operate in an effective and constructive manner.
Succession planning in respect of the Directors was previously identified from the assessment of effectiveness as a key area where focus was required and the appointments of Helen Mahy and Phil White during the last six months reflect the attention given to refreshing the composition of the Board. Succession planning for the Chairman has been identified as an important area and the Nomination Committee is overseeing the plans in this regard.
