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Nomination and Governance Committee members

David Roberts (Chair), Kevin Parry, Mai Fyfield, Tim Tookey and Gunn Waersted.


Nomination and Governance Committee Terms of Reference

19 May 2021

1. Purpose

1.1.1 The purpose of the Nomination and Governance Committee (“the Committee”) is to:

1.1.2 assist the Chair of the Board in keeping the composition of the Board under review, leading the appointments process for nominations to the Board and making recommendations to the Board on succession planning and executive level appointments.

1.1.3 review the Board’s governance arrangements and makes recommendations to the Board to ensure that the arrangements are consistent with best practice

1.1.4 oversee the implementation of the Society’s Inclusion and Diversity strategy and objectives.

2. Authority

The Committee is a committee of the Board from which it derives its authority and to which it regularly reports.

2.2 The Committee has delegated authority from the Board in respect of its functions and responsibilities as set out in these Terms of Reference.

2.3 The Committee may sub-delegate any or all of its powers and authority as it sees fit, including, without limitation, the establishment of sub-committees to analyse particular issues and to report back to the Committee.

2.4 The Committee has authority to oversee any investigation of activities relating to the Society which are within its Terms of Reference.

2.5 The Committee is authorised seek any information it requires from any employee of the Society in order to perform its duties or call any employee to be questioned at a meeting of the Committee as and when required.

2.6 The Committee may obtain, at the Society’s expense, external legal or other professional advice on any matter within its Terms of Reference.

3. Membership

3.1 Members of the Committee shall be appointed by the Board in consultation with the Chair of the Committee.

3.2 The Committee shall be made up of the Chair of the Board and at least three non-executive Directors of the Society including the Senior Independent Director. A majority of the members of the Committee shall be independent non-executive Directors of the Society.

3.3 The Board shall appoint the Committee Chair who shall be either the Chair of the Board or an independent non-executive Director. The Chair of the Board shall not chair the Committee when it is discussing matters on the Chair of the Board’s succession. In any such case, the Senior Independent Director will chair meetings of the Committee.

3.4 In the absence of the Committee Chair and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting.

3.5 Appointments to the Committee shall be for a period of up to three years, which may be extended for a further three- year period (or, in exceptional circumstances, two such periods), provided the director still meets the criteria for membership of the Committee.

3.6 Only the members of the Committee have the right to attend Committee meetings. Other individuals such as the Chief Executive Officer, the Chief People Officer and external advisers may be invited to attend all or part of any meeting as and when appropriate.

4. Secretary

4.1 The Society Secretary or their nominee shall act as the Secretary of the Committee and will ensure that the Committee receives information and papers in a timely manner to enable full and proper consideration to be given to the issues.

5. Quorum and mode of meetings

5.1 The quorum necessary for the transaction of business shall be two members one of whom shall be the Chair of the Board or the Senior Independent Director.

5.2 A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

5.3 In the event of difficulty in forming a quorum, independent non-executive Directors of the Society who are not members of the Committee may be co-opted as members for individual meetings.

5.4 A decision of the Committee may be taken by written resolution including electronic means. A decision may not be taken in accordance with this provision if the members of the Committee would not have formed a quorum at a meeting.

5.5 The members of the Committee shall be deemed to meet together if they are in separate locations, but are linked by conference telephone, video or other communication equipment. For the avoidance of doubt, a quorum in that event shall be as set out in 5.1 above. Such a meeting shall be deemed to take place where the largest group of members of the Committee participating is assembled or, if there is no such group, where the Chair is located.

6. Frequency of meetings

6.1 The Committee shall meet at least twice a year and otherwise as required.

7. Notice of meetings

7.1 Meetings of the Committee shall be called by the Secretary of the Committee at the request of the Committee Chair.

7.2 Meetings of the Committee shall be called by the Secretary of the Committee at the request of any of its members if they consider it necessary.

7.3 Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the Committee and any other person required to attend and all other non-executive Directors, no later than three working days before the date of the meeting.

7.4 Supporting papers shall be sent to Committee members and to other attendees as appropriate, at the same time.

8. Minutes of meetings

8.1 The Secretary of the Committee shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance.

8.2 The Secretary of the Committee shall record any conflict of interests reported at the meeting.

8.3 Draft minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once agreed, to all members of the Board (unless in the opinion of the Committee Chair it would be inappropriate to do so).

9. Duties and responsibilities

9.1 BOARD COMPOSITION

9.1.1 To keep under regular review, the structure, size and composition (including the skills, knowledge, experience, length of service and diversity) of the Board and its Committees, and, in accordance with the Society’s Board Composition and Succession Policy, to identify the current and likely future needs of the Board with appropriate emphasis on succession planning.

9.1.2 In determining the Board’s needs, the Committee shall have regard to a range of factors including the current and future challenges and opportunities facing the Society and the need to balance continuity and knowledge of the Society with the need to progressively refresh membership of the Board and its Committees. Based on this review, the Committee will make recommendations to the Board as to any changes required.

9.1.3 To review membership of each of the Board Committees and, in consultation, with the Chairs of the relevant Committees as appropriate, make recommendations to the Board as to any changes required to ensure that the Committees possess the necessary capabilities to provide effective oversight of the Society’s strategic priorities including an appropriate range and balance of skills, experience, knowledge and behaviours.

9.2 NEW APPOINTMENTS

9.2.1 To assist the Chair in keeping the composition of the Board under review and leading the appointments process for nominations to the Board including:

  • conducting an evaluation, prior to any Board appointment being made, of the balance of skills, knowledge, experience and diversity on, and future needs of, the Board; based on this evaluation, preparing a role description including a specification of the skills, capabilities and expected time commitment for the appointment in question;
  • agreeing the process and criteria for selection including the use of open advertising or the services of external advisers to facilitate the search as appropriate, ensuring that the agreed process pays due regard to the interests of diversity including as to gender, ethnicity and background;
  • considering candidates on merit and against objective criteria, but with due regard to the benefits of diversity, paying due regard to other interests so as to avoid conflicts and to ensure that appointees are able to devote sufficient time to the role;
  • assessing the suitability of candidates by reference to the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) ‘fit and proper’ test including competence and capability criteria; and
  • agreeing any special requirements that should apply to the selection and appointment of the Chair and Chief Executive Officer, including, if appropriate, the establishment of a special committee. In keeping with best practice governance standards, any such committee will comprise solely non-executive Directors. In relation to Chair succession, the search will be led by the Senior Independent Director or other non-executive Director nominated by the Committee for that purpose. Neither the Chair of the Board nor any director seeking appointment as Chair will be eligible to participate in the process.
  • ensuring that prospective non-executive directors undertake that they will have sufficient time to fulfil their duties and that any significant new appointments outside the Society are subsequently disclosed to the Board for approval prior to their acceptance ensuring that prospective non-executive Directors disclose any other business interests that may result in a conflict of interest and be required to report any future business interests that could result in a conflict of interest.

9.3 SERVING DIRECTORS

9.3.1 To recommend to the Board, the re-appointment of any non-executive director at the conclusion of his/her specified term of office having regard to his/her performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required.

9.3.2 To recommend to the Board for re-election by members, any director under the annual re-election provisions recommended by the UK Corporate Governance Code having due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required and the need for progressive refreshing of membership of the Board and Committees.

9.3.3 To assess at least annually and make recommendations to the Board concerning the independence of each of the non-executive Directors (excluding the Chair) to ensure that they continue to meet the independence requirements of the UK Corporate Governance Code.

9.3.4 To conduct an annual review of the time commitments required of the non-executive Directors.

9.3.5 To consider and authorise subject to ratification by the Board, any situational or potential conflict in which a Director may have a direct or indirect interest that conflicts or potentially may conflict with the interests of the Society.

9.3.6 To consider any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of any executive director as an employee of the Society subject to the provisions of the law and his/her service contract

9.4 SUCCESSION PLANNING

9.4.1 To keep the leadership needs of the Society under review, including formulating succession plans for the Board and the Nationwide Leadership Team , having regard to the needs of the Society based on current and future challenges and opportunities and readiness for succession.

9.4.2 To oversee the development of a diverse pipeline for succession at Board and Nationwide Leadership Team levels.

9.4.3 To review and make recommendations to the Board regarding plans for succession for both executive and non- executive Directors (including emergency plans) and in particular for key roles such as Chair of the Board and Chief Executive Officer.

9.4.4 To conduct a full review of Executive talent and succession at least once a year, identifying development needs and succession considerations.

9.4.5 To approve the appointment of members of the Nationwide Leadership Team and review the appointments of all senior leaders and Senior Management Function (SMF) holders.

9.4.6 On convening of the Resolution Committee, up and until the Resolution period ends, the Committee shall delegate authority to the Resolution Committee to implement the Emergency Chair Succession Plan and Nationwide Leadership Succession Plan (collectively in Resolution the ‘Resolution Succession Plan’) subject to any material changes which would be brought back to the Committee for review.

9.5 BOARD EFFECTIVENESS

9.5.1 To determine and lead the process for the annual Board Effectiveness Review including:

  • setting the criteria for the evaluation of the performance and effectiveness review of the Board, its committees and each non-executive Director;
  • engaging external facilitators as required for an independent evaluation of the effectiveness of the Board at least every three years.
  • agreeing and overseeing progress against action plans addressing the results of the Board effectiveness review particularly in relation to any recommendations regarding succession planning and Board composition.
  • ensuring that the conclusions and recommendations arising from these reviews and evaluations of the Chair of the Board and Chief Executive Officer are reported to the Board.

9.6 OVERSIGHT OF THE SOCIETY’S GOVERNANCE ARRANGEMENTS

9.6.1 To keep the Board’s governance arrangements under review and make recommendations to the Board to ensure that the arrangements are consistent with the Society’s strategic objective of being an exemplar organisation and the Society’s mutual status. In so doing, the Committee shall have regard to best practice governance standards and principles including those set out in the UK Corporate Governance Code and related guidance issued by the Building Societies Association from time to time, regulatory pronouncements and other relevant standards and codes applicable to mutual societies.

9.6.2 To monitor and make recommendations to the Board on board governance issues including the establishment of appropriate policies and practices to enable the Board to operate effectively and efficiently. In support of this, the Committee will on behalf of the Board, review and approve the Nationwide Governance Manual (NGM).. It will also review and approve the Delegated Authorities Framework (DAF) on behalf the Board.

9.6.3 To review and recommend to the Board for approval, the Directors’ Report on Corporate Governance for inclusion in the Annual Report & Accounts.

9.6.4 To receive and review, on an annual basis, an assessment of the continued fitness and proprietary of Senior Management Function (SMF) holders (including notified non–executive Directors) together with the Responsibilities Map.

9.6.5 To review and recommend to the Board for approval, the Society’s Board Composition and Succession Policy.

9.7 OTHER DUTIES

9.7.1 To conduct an annual review of the Directors’ Register of Interests and, if appropriate, recommend to the Board the authorisation of interests shown in the Register.

9.7.2 To approve in principle any loan to a Director or connected person of a director in accordance with the Society’s policy on loans to directors.

9.7.3 To receive reports on the progress against Nationwide’s Inclusion & Diversity (I & D) strategy and objectives.

9.7.4 To challenge management to improve policies and processes in place wherever the Society’s diversity targets are not being achieved or progressed.

10. Reporting responsibilities

10.1 The Committee Chair shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.

10.2 The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.

10.3 The Committee shall make a statement in the annual report and accounts about its activities, including the process for appointments, explaining whether external advice or open advertising has been used. Where an external search agency has been used, it shall be identified in the annual report and accounts and a statement made as to whether it has any connection with the Society.

10.4 The annual report and accounts will including a statement on the Board’s policy on diversity any measurable objectives that it has set for implementing the policy, how the policy has been implemented and progress on achieving the objectives.

11. Senior manager regime prescribed responsibilities and key functions

11.1 Assist the Senior Manager Function (SMF) role holder in respect of his / her escalation of the following Prescribed Responsibilities to the Committee:

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Senior manager regime prescribed responsibilities and key functions
Prescribed Responsibility Description SMF SMF Committee Status

F

Responsibility for leading the development and monitoring effective implementation of policies and procedures for the induction, training and professional development of all members of the firm’s governing body.

Chair of the Board

Member (Chair)

U

Responsibility for the firm’s performance of its obligations under Fitness and Propriety in respect of its Notified Non-Executive Directors

Chair of the Board

Member (Chair)

11.2 Where matters are being discussed in relation to a prescribed responsibility, the relevant SMF role holder should attend and participate in the discussion, or if they are unable to attend to ensure that they are suitably represented. If the Committee makes a decision relating to their prescribed responsibility that they are not supportive of, then the SMF should escalate this to the Board, or in the Chair’s case, the Senior Independent Director.

12. Annual General Meeting

12.1 The Chair of the Committee or a deputy chosen from the Committee membership shall attend the Annual General Meeting, prepared to respond to any member questions on the Committee's activities or any matter within the remit of the Committee.

13. Miscellaneous

13.1 The Committee shall:

13.1.1 give due consideration to applicable laws and regulations, including the PRA and FCA’s Principles and Rules, the UK Listing Authority’s Listing Rules and Disclosure Guidance and Transparency Rules, the Building Societies Act 1986 and to the recommendations of the UK Corporate Governance Code, as appropriate;

13.1.2 be cognisant of the conduct risks arising (or increasing) as a result of their judgements, taking proactive steps to avoid or prevent these where possible;

13.1.3 work and liaise as necessary with all other Board committees as required;

13.1.4 have access to sufficient resources in order to carry out its duties, including access to Nationwide’s Secretariat for assistance as required;

13.1.5 receive appropriate and timely training relevant to its activities, both in the form of induction training for new members and on an ongoing basis for all members; and

13.1.6 at least once a year, to review its own performance, constitution and Terms of Reference to ensure it is operating effectively and report the results of this review and recommend any changes necessary to the Board for approval.

13.2 For the purposes of these Terms of Reference, “the Society” shall mean Nationwide Building Society and “Nationwide” shall mean Nationwide Building Society and its subsidiaries.