The Board has Audit, Nomination and Remuneration Committees as well as an Environmental, Social and Governance (‘ESG’) Committee. Each Committee has formal, written terms of reference which are available. All Committees have at least three independent non-executive directors within their composition with the exception of the ESG Committee which has at least three Board directors (two being non-executive and one being the Chief Executive) and two members of the Rotork Management Board (being the Strategy and M&A Director and the Group HR Director in the first instance). The Company Secretary advises and acts as secretary to the Committees.
In addition to the principal Committees outlined above, the Board also maintains a Disclosure Committee to ensure that Rotork complies with its obligations in relation to the control and disclosure of inside information under the Market Abuse Regulation. Membership of the Disclosure Committee currently comprises the Chief Executive, the Finance Director and the Company Secretary and it operates under formal, written terms of reference.
The Committees have authority to take external, independent professional advice at Rotork’s expense for matters relating to the discharge of their duties.
Chair: Sally James
Members: Peter Dilnot, Ann Christin Andersen, Tim Cobbold, Janice Stipp
The Audit Committee assesses the effectiveness of the external audit process, the scope of the Group audit and the quality of the audit work throughout the year.
The assessment considers:
- Any issues arising from the prior year external audit
- The proposed external audit plan, including identification of risks specific to Rotork
- External audit scope and materiality thresholds
- Matters arising during the external audit and the communication of these to the Audit Committee
- Private meetings with the external auditor without management being present
- The independence, objectivity and scepticism of the external auditor
- The FRC audit quality review report on selected audits undertaken by Deloitte
Having completed this review, the Audit Committee agreed that the audit process, independence and quality of the external audit were satisfactory.
Chair: Martin Lamb
Members: Sally James, Peter Dilnot, Ann Christin Andersen, Tim Cobbold, Janice Stipp
The role of the Committee
The Committee evaluates and examines the skills and characteristics needed to ensure the Board has the right balance, knowledge and attributes to operate effectively to deliver the long-term success of the Company, in a culture that is aligned with the company Purpose and business strategy, and promotes integrity. It also reviews the succession needs of the organisation and puts in place the appropriate processes for nominating, training and evaluating directors, bearing in mind the need for diversity.
Activities of the Nomination Committee during the year
During the year, the Committee undertook the following main activities:
Following the appointment of Ann Christin Andersen and Tim Cobbold in 2018, there were no new Board appointments 2019.
Gary Bullard, who would have been in office for nine years in June 2019, did not stand for re-election at the 2019 AGM and Tim Cobbold was appointed as Chair of the Remuneration Committee, having satisfied the Nomination Committee that he had the requisite experience to perform the role.
Sally James is in her eighth full year of service and will complete nine years’ service on 11 May 2021. The Nomination Committee intends to appoint an external search consultant (with which the Company has no other connection) to assist with the process of recruiting a successor. In formulating the candidate profile for the appointment the Board will look at candidates with a growth mindset, international experience, previous governance experience as well as Board experience, preferably from a diverse background.
Succession planning for the Board and senior management is continuous and during the year the Nomination Committee considered the need to maintain an appropriate balance of skills and experience within the Company and on the Board and to ensure progressive refreshing of the Board and senior management.
The Board seek to attain a diverse mix of skills, experience, knowledge and background. In considering diversity, gender plays an important role but the Board also takes into account social and ethnic background, and other cognitive and personal strengths. As reported on page 73 of the Annual Report, the Board updated its Board Diversity and Inclusion plan and are a partner to the Women in Engineering Society. Details of the percentage of women on the Board, in senior leadership positions and within the Group can be found on page 66 of the Annual Report.
The Board performed an external review of its effectiveness in 2019. The review included an assessment of the effectiveness of the Committee including how it discharged its responsibilities. Further details on the results of this review and any resulting actions can be found at page 68 of the Annual Report.
Chair: Tim Cobbold
Members: Sally James and Ann Christin Andersen, Janice Stipp
The work of the Remuneration Committee is described in the Remuneration Report on page 82 to 102 of the Annual Report.
Environmental, Social and Governance
Chair: Ann Christin Andersen
Members: Tim Cobbold, Kevin Hostetler (Chief Executive), Vijay Rao (Strategy and M&A Director), Kathy Callaghan (Group HR Director)
The role of the Committee
A key role of the Committee is to recommend the overarching Environmental, Social and Governance vision and strategy road map to the Board in order to ensure that ESG priorities are anchored at the top of the Company.