The Board

Composition

The names, responsibilities and other details of the Board Directors are set out on on the Board of Directors page. The Board met on 11 occasions during the financial year.

Board responsibilities

The Company is led and controlled by the Board which has overall responsibility for the conduct of the business of the Group. The Board is responsible for setting the strategic direction of the Group and ensuring that it has adequate resources and appropriate controls, values and standards in place to deliver its strategy. Each Board Director is aware of his/her responsibilities, individually and collectively, to promote the long term success of the Company. There are a number of matters that have been specifically reserved for the Board and these include: approval of the strategy and management of the Group; ensuring adequate financial resources are available; half-yearly and annual results; interim management statements and trading updates; dividend and treasury policies; internal control and risk management systems and processes; material investments/transactions; and approval of core policies relating to, amongst other matters, Health and Safety and Employee Conduct.

Board Committees

The Board has established three standing Committees to which it has delegated specific responsibilities: the Audit Committee; the Remuneration Committee; and the Nomination Committee. Each Committee is provided with sufficient resources to undertake the duties delegated to them and is able to seek advice from the Group General Counsel and Company Secretary and external advisers, as appropriate. Each of these Committees (and the Board) completed annual effectiveness reviews.

Board independence and balance

At the end of the financial year the Board comprised nine members, including the Chairman, four Non-Executive Directors and four Executive Directors. The Board therefore believes that it has the appropriate balance of Executive and independent Non-Executive Directors having regard to the size and nature of the business and continuing need to keep its cost base under tight control. In addition, the combination of the make-up and calibre of the Non-Executive Directors collectively, having regard to their diverse backgrounds and experience and their varying lengths of service, further enhances this balance.

The Board believes that all of the Non-Executive Directors are independent in that they have no business or other relationship with the Group that might influence their independence or judgement. Details of their interests as shareholders are contained in Table 6 on page 56 of the Remuneration report, contained in the 2011 Annual Report.

Bob Lawson was appointed Non-Executive Chairman of the Company with effect from 1 July 2008 and was considered to be independent on his appointment. Bob Lawson’s other significant commitments, his Non-Executive Chairmanship of Genus plc and his directorship of The Federation of Groundwork Trusts, do not impinge upon his availability to fulfil his duties to the Company. Bob retired from his position as Non-Executive Chairman of Hays plc in November 2010.

Roles of Chairman, Chief Executive and Senior Independent Director

The division of responsibility between the Chairman of the Board and the Group Chief Executive is clearly defined in writing and has been approved by the Board.

The Chairman, Bob Lawson, leads the Board in the determination of strategy and in the achievement of its objectives. He is responsible for: organising the business of the Board; setting its agenda and ensuring that adequate time is available for discussion of all agenda items, in particular strategic issues; facilitating the effective contribution of the Non-Executive Directors and constructive relations between Executive and Non-Executive Directors; ensuring that the Board receives timely and accurate information so as to properly conduct its business; and ensuring effective communication with shareholders. The Chairman is supported by the Group General Counsel and Company Secretary in carrying out these duties.

Mark Clare, the Group Chief Executive is responsible for the day-to-day management of the operational activities of the Group in accordance with overall strategy and policy as determined by the Board. He carries out duties delegated to him by the Board through an Executive Committee comprising of the Executive Directors, the Group General Counsel and Company Secretary, Tom Keevil, the Managing Director of Wilson Bowden Developments Limited, Nick Richardson, the Group Director of Corporate Affairs, Patrick Law, the Group People and Customer Experience Director, Jayne Mee and the Marketing Director, Jeremy Hipkiss. The Executive Committee meets on a weekly basis to review operational matters and also undertakes more in-depth monthly reviews.

The current Senior Independent Director, Bob Davies, has specific responsibility for evaluating the performance of the Chairman, at least annually, with the other Non-Executive Directors (excluding the Chairman) having consulted the Executive Directors beforehand. He is also responsible for ensuring that, where required, he is available to shareholders to (i) address any material issues or concerns which the Chairman and/or Group Chief Executive have failed to resolve, and (ii) listen to their views in order for the Company to gain a balanced understanding of their issues and concerns.

Directors’ conflicts of interest

On 1 October 2008, the Companies Act 2006 (the ‘Act’) codified the duty to avoid conflicts of interest, by which Directors have a duty to avoid a situation in which they have, or may have, a direct or indirect conflict of interest or possible conflict of interest with the Company. This duty applies to the exploitation of any property, information or opportunity regardless of whether the Company could have taken advantage of it. The Company’s Articles of Association (the ‘Articles’) were amended at the annual general meeting held on 18 November 2008 to include a general power for the Board to authorise such conflicts.

The Board has, in accordance with the Articles and best practice guidance, authorised the Nomination Committee to oversee the process for reviewing and making recommendations to the Board concerning any actual and/or potential conflicts of interest which arise or may arise in relation to each member of the Board including details of any terms and conditions which it deems necessary to impose on any authorisation given. This process was carried out satisfactorily during the year.

The Group General Counsel and Company Secretary maintains a Register of Directors’ conflicts of interest which is reviewed annually. Following this review the Group General Counsel and Company Secretary will make recommendations to the Board in respect of any changes to the authorisations, or terms and conditions applied, that may be required. Each Director is responsible for notifying, and is aware of their responsibility to notify, the Chairman and/or the Board of any new conflicts or possible conflicts and of any change in circumstances relating to authorisations already given. The Board, when authorising any conflict or possible conflict of interest, does not count in the quorum the Director whose conflict or possible conflict is being discussed and reserves the right to exclude a Director from a meeting whilst a conflict or possible conflict is being considered. The Board may revoke or vary any authorisation at any time.

Re-appointment of Non-Executive Directors

Non-Executive Directors are appointed, subject to re-election by shareholders and statutory provisions relating to the removal of directors, by the Board for an initial three-year term and normally serve a second three-year term. Beyond this a third term of up to three years may be served subject to particularly rigorous review and taking into account the need for progressive refreshment of the Board. In accordance with the Code, any Non-Executive Director who serves nine years or more on the Board would be subject to annual appointment.

During the year the Board considered and approved the re-appointments of Bob Lawson, Mark Rolfe, Bob Davies and Rod MacEachrane. Bob Lawson and Mark Rolfe have both completed three years’ service on the Board this year, Bob Davies has completed seven years’ service and Rod MacEachrane has completed five years’ service on  the Board. Following a formal evaluation process by the Board, it was agreed that each of Bob Lawson, Mark Rolfe and Rod MacEachrane continue to be effective in (and that they each demonstrate satisfactory commitment to) their respective roles as Directors. Accordingly, the Board re-appointed each of them, subject to annual re-election by shareholders, for a further three-year term. During this period each of them will continue with the roles they currently hold upon the Committees of the Board.

In light of having served beyond six years on the Board, the re-appointment of Bob Davies was subject to particularly rigorous review by the Chairman and the Nomination Committee. The Board believes that Bob Davies’ performance continues to be effective and that he demonstrates commitment to his role. The Board has therefore agreed to re-appoint Bob Davies, subject to annual re-election, for a further two-year term, during which he will remain as the Senior Independent Director and continue in the positions he currently holds upon the Committees of the Board.

The letters of appointment of the Non-Executive Directors are available for inspection by any person at the Company’s registered office during normal office hours and will also be available at the 2011 AGM for 15 minutes before and throughout the meeting. The letters of appointment clearly set out the time commitment expected from each Non-Executive Director to ensure they sufficiently perform their duties and each Non-Executive Director confirms that they are able to allocate the time commitment required at the time of appointment and during their annual effectiveness review.

Retirement and re-election of Directors

The Articles currently require Directors to submit themselves for re-election by shareholders at the first annual general meeting following their initial appointment to the Board and thereafter at each subsequent annual general meeting (‘AGM’) at intervals of no more than three years. The Board has, however, in accordance with the Code and emerging practice, agreed to submit all of its Directors for re-election by the shareholders at the 2011 AGM, and at subsequent AGMs, irrespective of their date of appointment and length of service on the Board. Each of the Directors has been subject to a formal performance evaluation process and it is believed that they each continue to be effective in and demonstrate commitment to their respective roles. Biographies of each of the Directors and supporting statements for the re-election of all Directors are set out on pages 36 and 37 of this report and in the Notice of the 2011 AGM. Details of the Executive Directors’ service contracts can be found in the Remuneration report on pages 54 and 55.

The Board recommends that shareholders approve the resolutions to be put forward at the 2011 AGM relating to the re-election of all Directors.

Induction and development

On joining the Company, each new Director is provided with an induction pack and participates in an induction process which includes site visits, meetings with all Board members and senior and operational management teams across the business. In January of each year the Board meets for a full day to review and develop the overall business strategy of the Group which includes presentations from senior management within the Group as well as external professionals.

The Directors continue to update their skills, knowledge and familiarity with the Company by attending appropriate external and internal seminars and training courses, meeting with senior management and continuing to visit regional and divisional operating offices and sites. Additionally, during the year, guidance on specific matters such as the steps necessary to put in place adequate procedures to ensure continuing compliance with the Bribery Act 2010, competition law and the Code, was provided to the Board. The Chairman regularly reviews and annually agrees training and development needs with individual Directors.

Information and support

The Chairman is responsible for ensuring that the Board receives accurate, timely and clear information. Each Director is issued with an agenda, briefing papers and comprehensive operating and financial management reports for the period under review at least a week before any Board Meeting. The Group General Counsel and Company Secretary attends all Board and Committee Meetings and all Directors have access to his advice and, if necessary, to independent professional advice at the Company’s expense to assist with the discharge of their responsibilities as Directors.

All Directors are provided with a rolling three-year schedule of proposed meeting dates. Any Director who is unable to attend a meeting is invited to provide their views to the Chairman ahead of that meeting, having reviewed the agenda, briefing papers and management information. Reasons for non-attendance are recorded by the Group General Counsel and Company Secretary. Thereafter the Group General Counsel and Company Secretary will, if required, meet with any absent Director to go through any action points which are of relevance to that Director.

Formal minutes of each Board meeting are prepared, circulated and submitted for approval at the next meeting.