Board Committees

The Board has established three standing Committees: the Audit Committee, the Remuneration Committee and the Nominations Committee. Membership and attendance of each Committee is shown in the table on page 39 of the Annual Report 2011.

The Audit Committee - Introduction from the Chairman
All members of the Audit Committee, as identified in Table 1 on page 39 of the Annual report 2011, are independent Non-Executive Directors in accordance with Code provision C.3.1. William Shannon stepped down as a member of the Audit Committee on 21 October 2010. The Board is satisfied that I have recent and relevant financial experience.

The Audit Committee met on four occasions during the financial year and attendance at each of these meetings is set out in Table 1 on page 39 of the Annual Report 2011. In addition, representatives from the auditor, Deloitte LLP (‘Deloitte’) together with the Chief Internal Auditor, attended each of the Audit Committee meetings during the financial year. The Group Chief Executive, the Group Finance Director and other members of senior management are also invited to attend meetings (or parts thereof) as required.

Mark Rolfe
Chairman of the Audit Committee

Principal responsibilities
Under its Terms of Reference the Audit Committee’s principal responsibilities, which form part of its annual work programme, include:

  • monitoring the integrity of the Group’s financial statements and reviewing any formal announcements relating to the Group’s financial performance;
  • reviewing and challenging where necessary the consistency of, and any proposed changes to, its accounting policies;
  • monitoring the effectiveness, independence and objectivity of the external auditor, their audit and non-audit fees and the effectiveness of the external audit process;
  • making recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditor;
  • monitoring the Group’s financial management and reporting systems and assessing the integrity and effectiveness of its accounting procedures, systems of internal control and the process for identifying and monitoring the material risks facing the Group;
  • reviewing and monitoring the effectiveness of the internal audit function, the annual internal audit plan and all reports produced by the internal auditor and management’s responsiveness to the findings and recommendations of the internal auditor; and
  • reviewing whistleblowing procedures and ensuring arrangements are in place for proportionate and independent investigation and follow-up action in respect of any matter raised pursuant to that process.

The full Terms of Reference for the Audit Committee are available from the Company’s website www.barrattdevelopments.co.uk.

As well as carrying out the work associated with the annual financial reporting cycle under its annual work programme, the Audit Committee undertakes other responsibilities during the year including reviewing: risk management processes and framework; the effectiveness of internal control systems; the Audit Committee’s Terms of Reference; non-audit fees policy; the whistleblowing policy; key accounting policies; the external audit plan and associated reports.

Re-appointment of Auditor
The Audit Committee considered the re-appointment of Deloitte as the auditor to the Company in September 2011. Deloitte was appointed as the auditor of the Company through an external tender process in 2007. Taking into account the tenure of the auditor; their objectivity and independence; the ratio of audit to non-audit fees; their performance against the audit plan for the 2010/11 financial year; and the quality of advice and assistance received throughout the year, the Committee concluded that Deloitte’s performance as auditor to the Company continues to be satisfactory and recommended to the Board that a resolution re-appointing Deloitte as the auditor to the Company be proposed at the 2011 AGM. That recommendation was endorsed by the Board who recommend Deloitte’s re-appointment as auditor to shareholders. There are no contractual obligations which restrict the Audit Committee’s choice of external auditor.

Auditor objectivity and independence
The Committee reviews the policy the Company has implemented on Auditor Independence and Non-Audit Fees (the ‘Policy’) as part of its annual work programme. The Policy sets out the duties of the Audit Committee and the limited range of services which the auditor may provide without requiring prior approval of the Audit Committee. Any services outside this scope must be approved by the Audit Committee in order to maintain auditor independence and monitor non-audit fees incurred by the Group. The Policy also sets out a number of services which the external auditor is excluded from providing to the Group, these include:

  • bookkeeping or other services related to the accounting records or financial statements;
  • financial information systems design and implementation relating to the financial statements or accounting records;
  • appraisal or valuation services or fairness opinions;
  • actuarial services;
  • internal audit outsourcing services; and
  • management functions, legal services or executive recruiting.

Under the Policy the Company is required to, and does, obtain written confirmation from the auditor that they remain independent on an annual basis.

During the 2010/11 financial year Deloitte were appointed as the Group’s tax advisers following a competitive tender process in which four of the leading audit firms took part. In making its decision, the Audit Committee took into account, amongst other factors, the impact of the appointment on: (i) the ratio of audit to non-audit fees; and (ii) auditor independence. The Audit Committee, having consulted with the Group Finance Director, concluded that the audit to non-audit fees ratio remained proportionate and in line with best practice guidelines and, given that the tax advisory services are managed by a partner who has no involvement with the audit of the Group, it was satisfied that the appointment of Deloitte as tax advisers did not impair their independence as auditor to the Group. Confirmation of independence was also received from Deloitte prior to their appointment. The Audit Committee confirms that the guidelines described above were followed throughout the year; that there are no independence issues in respect of the auditor; and that the Policy has been appropriately complied with throughout the year under review. Details of the audit related and non-audit fees incurred by the Group can be found on page 82 of the Annual Report 2011.

Remuneration Committee
All members of the Remuneration Committee, as set out in Table 1 on page 39 of the Annual Report 2011, are considered by the Company to be independent in accordance with Code provision D.2.1. William Shannon stepped down as a member of the Remuneration Committee on 21 October 2010. The Remuneration Committee met on five occasions during the financial year. Attendance at each of these meetings is set out in Table 1 on page 39 of the Annual Report 2011. The full Terms of Reference for the Remuneration Committee are available from the Company’s website www.barrattdevelopments.co.uk.

Principal responsibilities
The Remuneration Committee’s principal responsibilities include:

  • determining and reviewing the overall remuneration policy of the Company with regard to attracting, retaining and motivating directors and senior managers of the experience and calibre required by the Company having regard to remuneration paid to employees and an external comparative group of companies;
  • determining, reviewing and making recommendations to the Board on the remuneration package and service contract of the Chairman;
  • agreeing targets and benefits in respect of performance related pay schemes, including long-term performance plans, for all participating employees which are sufficiently challenging; fair and highly motivating; commensurate with sector practice; and consistent with maximising shareholder value and the interests and expectations of shareholders;
  • agreeing severance arrangements or other compensation for loss of office or early retirement for the Chairman, Executive Directors and other senior executives;
  • determining, after consultation with the Chief Executive, the total individual remuneration package of each executive director and other senior executives including bonuses, incentive payments and share options/awards and pension arrangements; and
  • undertaking consultations with institutional investors on remuneration policy and/or other aspects of senior remuneration, as appropriate.

The Remuneration Committee is also responsible for appointing consultants to advise on executive remuneration. Details of the consultants appointed during the 2010/11 financial year can be found on page 49 of the Annual Report 2011.

The Nomination Committee
The Nomination Committee comprises the Chairman, the Chief Executive and all four Non-Executive Directors.The Chairman chairs the meetings of the Nomination Committee, except when the business of the meeting relates to the appointment of his own successor. In accordance with Code provision B.2.1. the majority of members (the Non-Executive Directors) are considered by the Company as being independent. The Nomination Committee met on two occasions during the year to explore, amongst other matters, senior succession issues, review its effectiveness and look at the balance of the Board and its Committees. Attendance at each of these meetings is shown in Table 1 on page 39 of the Annual Report 2011.

Principal responsibilities
The Nomination Committee’s principal responsibilities include:

  • regularly reviewing the structure, size and composition of the Board, having regard to their balance of skills, experience, independence and knowledge;
  • developing succession plans for Directors and senior executives;
  • identifying and nominating candidates to fill Board vacancies and evaluating the role and capabilities required for a particular appointment;
  • reviewing the leadership needs of the Group to ensure continued ability of the Group to compete effectively in the market;
  • annually reviewing, through performance evaluation, the time required from Non-Executive Directors to fulfil their duties; and
  • reviewing and making recommendations to the Board on the authorisation of conflicts of interest of new and existing Directors.

The Terms of Reference for the Nomination Committee are available from the Company’s website www.barrattdevelopments.co.uk.

Robert Lawson
Chairman of the Nomination Committee