Board Composition and Succession Plan
Purpose of Plan
a. To ensure that the Board is composed of persons who collectively are fit and proper to direct the Society's business with prudence, integrity and professional skills.
b. To define the Board Composition and Succession Policy which guides the size, shape and constitution of the Board and the identification and selection of suitable candidates for appointment to the Board.
c. To provide a framework (consistent with the Society's Rules and guidance from the Financial Services Authority) for appointment to and retirement from office as Chairman, Deputy Chairman, Director or member of a Board Committee with a view principally to securing the required quality and continuity of the Society's direction and purpose.
Methods
a. The Nomination Committee makes recommendations to the Board about appointments to the Board and its Committees.
b. Non-Executive Directors may be appointed by the Board, in which case they are required to seek election at the first opportunity as prescribed by Rule 29(b), or be elected by the Society's membership, and in either case must be re-elected every three years. In making an appointment the Board shall have regard to the personal criteria set out in this Plan, and the need for approval of the individual by the Financial Services Authority to fill the Controlled Function of Non-Executive Director.
c. Appointed Non-Executive Directors take office on terms (set out in a letter of appointment) consistent with the Board's Composition and Succession Policy. Elected Non-Executive Directors are invited upon taking office to accept, and then to conform individually as far as practicable to, the requirements of the Board's Composition and Succession Policy in the interests of the Society and its proper direction.
d. The offices of Chairman and Deputy Chairman are filled as appropriate and on an annual basis (under Rule 28(a)) on election by the Board.
e. Under Rule 29(d) a director must retire from office on reaching 70 years of age.
Composition and Succession Policy
a. The number of Directors (determined by the Board under Rule 27) must not be less than eight, (including the Chief Executive and Group Finance Director). Normally at least a third should be Executive Directors employed full time by the Society in key senior management positions.
b. The Board shall include at least two Non-Executive Directors (including the Chairman) having the requisite personal attributes for the office of Chairman and at least one other Non-Executive Director (whether or not a Deputy Chairman) potentially having such attributes (but possibly subject to further development) for the office of Chairman.
These attributes include:
- sufficient experience, stature and reputation in financial services, commerce, industry, public sector or professional life to command respect as Chairman of a major financial institution
- professional and/or business management skills, preferably gained in a large commercial, industrial or public sector organisation
- experience of relationships at Board level in one or more major companies or bodies
- intellectual strength, sound business acumen, integrity and an ability to consider and discuss issues laterally and strategically
- awareness of political, regulatory, market and consumerist issues together with an understanding about mutuality
- sound interpersonal skills and an ability to make good judgements of people
- a willingness and availability to serve as Chairman and sufficient time to devote to those duties for a minimum of 3 years
c. A director elected by the Board to the office of Chairman or Deputy Chairman should expect to serve between 3 and 6 years in such office, subject to annual re-election by the Board pursuant to Rule 28(a).
d. For the appointment of a Chairman, the nomination committee should prepare a job specification, including an assessment of the time commitment expected, recognising the need for availability in the event of crises. A Chairman's other significant commitments should be disclosed to the Board before appointment and included in the annual report. Changes to such commitments should be reported to the Board as they arise, and included in the next annual report.
e. The value of ensuring that committee membership is refreshed and that undue reliance is not placed on particular individuals should be taken into account in deciding Chairmanship and membership of committees.
f. Non-Executive Directors should be persons with similar attributes (although not necessarily to the same extent or level) as are required for the office of Chairman, coupled with relevant skills and knowledge within the following ranges, such that within the Board as a whole a balance is achieved in terms of age and experience appropriate to both the need for the Board to direct the general business activities of the Society (and its subsidiaries) and the need for the Board to be able to constitute specialist committees (e.g. Audit Committee) from amongst its own members:
Finance
Financial accounting and audit
Treasury - wholesale funding, capital markets
Retailing
Distribution
Marketing
Consumerism/fair trading
Banking and Insurance
Banking
General Insurance
Life Insurance
Investment management
Property - including valuation/surveying
Business Management
Planning and administration
Human resources including employee compensation systems and pension fund administration
Technology
Government and Public Affairs
Law, regulation and supervisory control
Corporate governance
Political science
Media communications
g. Non-Executive Directors should serve more than 9 years only in exceptional circumstances, except in the case of a serving Chairman or a Deputy Chairman who may seek election as a director for a third time at the request of the Board.
h. Any term beyond six years (e.g. two three-year terms) for a non-executive director should be subject to particularly rigorous review, and should take into account the need for progressive refreshing of the board. Non-executive directors may serve longer than nine years (e.g. three three-year terms), subject to annual re-election. Serving more than nine years could be relevant to the determination of a non-executive director's independence.
i. Individual directors must be free of any conflict of interest and are required to disclose their business interests (including other directorships) to the Board and Committees of the Board as appropriate from time to time.
j. Non-Executive Directors should be prepared to review their effectiveness (e.g. with the Chairman) and (if appropriate) to undertake any training and development that would help to enhance their contribution to the quality of direction by the Board.
k. The Chairman should act on the results of the performance evaluation by recognising the strengths and addressing the weaknesses of the Board and, where appropriate, proposing new members be appointed to the Board or seeking the resignation of directors.
l. Board members should maintain sufficient contact with Society members to understand their issues and concerns and keep in touch with member opinion in whatever ways are most practical and efficient. This is likely to include attending the Annual General Meeting, taking part in talkbacks and visiting branch offices.
Variation
The Plan will be reviewed by the Board annually (usually in conjunction with its consideration of the Corporate Plan) and at such other times as circumstances may require (e.g. a major corporate development or any unexpected resignation from the Board). The Plan may be amended, or its requirements varied in relation to individual circumstances, at the Board's discretion.