Board Achievement, Performance Evaluation and Training

The procedure for appointment of new Directors to the Board is overseen by the Nominations Committee. All Directors joining the Board submit themselves for election at the Annual General Meeting following their appointment and a third of Directors retire each year and submit themselves for re-election to the Annual General Meeting. The names of the Directors subject to election and re-election are set out in the Directors’ Report of the Annual Report and Accounts. Non-Executive Directors are appointed for a 3-year term and normally serve a second 3-year term subject to performance review and re-election. Beyond this a third 3-year term may be served subject to rigorous review.

During the year a formal and structured process of evaluation of the performance of the Board, its Committees and individual Directors is undertaken by the Nominations Committee under the leadership and direction of the Group Chairman, based on the guidance set out in the Higgs Report “Review of the Role and Effectiveness of Non-Executive Directors”.

Central to the evaluation process are the Board’s annual review of business strategy and the objectives and performance targets set by the Board each year for itself, its Committees, for the Chief Executive, and through him for the Executive Team, against which overall performance is measured. In this way the evaluation is undertaken within clear parameters linked to overall strategy, operational and financial performance and the role and contribution made by the Board, its Committees and individual Directors in the attainment of agreed objectives and targets.

During the last financial year the Board circulated to all Directors a comprehensive performance evaluation questionnaire through which all Directors and the Company Secretary were given the opportunity to give their views on the effectiveness of the Board and its Committees, particularly by identifying any shortcomings in procedures, working methods or any other areas of weakness requiring attention and improvement. In addition, the performance of individual Non-Executive Directors and the Chief Executive was appraised by the Chairman and the performance of the Executive Team by the Chief Executive. The Senior Independent Director led the appraisal of the Chairman’s performance after obtaining the views of all Directors in one-to-one discussions.

The results of the questionnaires, system and proposals were reviewed and evaluated by the Nominations Committee and reported to the Group Board. On the evidence provided the Board and its Committees are satisfied with the overall effectiveness and balance and with the performance and contribution of the individual Directors. As a result of the process the number of Board meetings has been increased to 8 per year for 2008, a detailed and comprehensive shareholder relations and communications plan has been developed and steps are being taken to increase the amount of time available to focus on strategy.