The Board has Audit, Nomination and Remuneration Committees. Each Committee has formal, written Terms of Reference which are available to download from the Rotork website at www.rotork.com/en/investors/index/committees. All Board Committees have four independent non-executive Directors within their composition. The Group Company Secretary advises and acts as secretary to the Committees.
The Committees have authority to take external, independent professional advice at Rotork’s expense for matters relating to the discharge of their duties.
Chairman: SA James
Members: LM Bell, GB Bullard, JE Nicholas
Activities of the Audit Committee during the year
The Audit Committee maintains a rolling programme of activities which is kept under review and forms the basis of its scheduled meetings throughout the year. This rolling programme is supplemented by consideration of specific issues as and when they arise. The Committee met six times during the year (once in February, April, July and August and twice in November). Meetings of the Committee are arranged to coordinate with the Group’s financial reporting timetable to ensure appropriate scrutiny by the Committee of such announcements, including, in particular, review of year end and interim financial reports, in addition to other trading updates made during the year. A summary of its principal activities is set out on page 70 of the Annual Report.
During 2015, in addition to its usual schedule of work, the Committee focused on three key elements:
- The effectiveness of the Group’s internal audit processes, which was supported by an independent quality assessment by PwC;
- Contribution to the Risk Appetite Framework and wider review of the Group’s risk management and internal controls; and
- Consideration of the longer term Viability Statement mandated by the revised version of the UK Corporate Governance Code (the Code).
The membership of the Committee was unchanged during the year, save for the resignation of MJ Lamb from the Committee following his appointment as Chairman in April 2015. All Committee members are independent non-executive directors. LM Bell and JE Nicholas hold professional accounting qualifications and the Board considers both to have recent and relevant financial experience. Biographies of each member of the Committee can be found on pages 60 to 61 of the Annual Report. The Chairman, Chief Executive, Group Finance Director, Group Financial Controller, Internal Audit Coordinator and external Auditor also regularly attend meetings by invitation.
The Committee operates under formal Terms of Reference which are reviewed annually. Principal responsibilities are to review and report to the Board on:
- The integrity of financial reporting;
- Significant accounting policies and judgements;
- Internal control and risk management systems including monitoring the effectiveness of internal audit;
- The appointment, independence and effectiveness of the external Auditor, including the policy relating to non-audit work and policy relating to employment of former staff of the external Auditor;
- The external Auditor’s remuneration; and
- Whistleblowing and other Group policies as relevant.
Chairman: MJ Lamb
Members: LM Bell, GB Bullard, PI France, SA James, JE Nicholas
The Nomination Committee is responsible for leading the process for Board appointments and making recommendations to the Board: ensuring succession planning is in place; regularly reviewing the structure, size and composition of the Board, including its balance of skills, knowledge and experience; and making recommendations as appropriate.
Chairman: GB Bullard
Members: SA James, IG King, JE Nicholas
The Directors’ Remuneration Report is split into two parts:
- The Policy Report, which sets out the Company’s policy on Directors’ remuneration. The policy was approved by shareholders at the 2014 AGM for a period of three years; and
- The Annual Report on Remuneration which discloses the payments and awards made to the Directors under the policy and shows the link between remuneration and the Group’s performance.
The Policy Report is not subject to a shareholder vote this year. The Annual Report on Remuneration, together with this introductory statement, is subject to an advisory shareholder vote at the 2016 AGM.
During 2015, the Remuneration Committee (Committee) continued to monitor developments relating to remuneration. Throughout the year, the Committee has considered updates on best practice from relevant providers of corporate governance guidance. The Group supports the continued drive for improvement of best practice and for greater focus on transparency, moderation, simplicity and a closer alignment of the interests of the Directors with those of the shareholders.