Board composition and succession policy

1.1 To ensure that the Board is composed of persons who collectively:

1.1.1 are fit and proper to direct the Society's business with prudence, integrity and professional skills; and 

1.1.2 possess an appropriate range and balance of skills, experience, knowledge and behaviours.

1.2 To provide policy guidance on the structure, size and composition of the Board (and its Committees) and the identification and selection of suitable candidates for appointment to the Board (and its Committees).

1.3 To summarise the specific responsibilities of the Nomination and Governance Committee in regard to board composition and succession, as set out in the Nomination and Governance Committee Terms of Reference.

2.1 The Nomination and Governance Committee reviews all appointments to the Board and its Committees, as well as Executive Committee leaders and their direct reports and all Material Risk Takers.

2.2 The Nomination and Governance Committee ensures that a robust recruitment process is undertaken for all these appointments to deliver fair and effective selection outcomes.

2.3 In respect of Board appointments, the Committee ensures that any search agency used has no connection with the Company and that the directorships of appointed Board members are within Prudential Regulation Authority (PRA) advised limitations.

2.4 If a prospective Non Executive Director wishes to carry out due diligence on the Society to understand the business and appreciate the time commitment involved in the role, the Society will assist with the exercise to the extent that is reasonable and practicable.

2.5 Employees with the potential to progress to board level shall be given encouragement, support and development opportunities so that the Society has the widest possible talent pool from which to select prospective candidates.

2.6 Appointed Board Directors will take office on terms (set out in a service contract or letter of appointment, as appropriate) consistent with the Board Composition and Succession Policy.

2.7 The Society’s Rules require that Board Directors must be re-elected by the Society’s membership every three years. However, in accordance with the recommendation in the UK Corporate Governance Code, the Society’s Directors are re-elected every year. Before re-election, a Non Executive Director will be subject to a review by the Chairman of that Director’s continued effectiveness and independence.

2.8 All Board Directors are expected to devote sufficient time to the Society to discharge their responsibilities effectively. A Non Executive Director's other directorships should be disclosed to the Board before appointment and included in the annual report. Changes to such directorships should be reported to the Board as they arise, and be included in the next annual report. 

2.9 Any other matters or circumstances (including other business interests) which could result in a Director having a conflict of interest should be disclosed to the Board prior to appointment and thereafter as they arise. The Society manages this process in accordance with a policy agreed by the Board.

2.10 Before re-appointing the Board Directors, the Society will consider the value of ensuring that Board and Board Committee membership is refreshed and that undue reliance is not placed on particular individuals.

2.11 The office of Chairman is filled as appropriate and on an annual basis (under Society Rule 28(a)) on election by the Board.

3.1 The number of Board Directors (determined by the Board under Society Rule 27) must not be less than eight (including the Chief Executive Officer and the Chief Financial Officer). Normally at least one third of the Board should be Executive Directors employed full time by the Society in key senior management positions and the remaining Board should be comprised of Non Executive Directors.

3.2 The Board shall include at least two Non Executive Directors (including the Chairman and the Senior Independent Director) and at least one other Non-Executive Director potentially having the attributes (but possibly subject to further development) for the office of Chairman.

3.3 All Directors must meet the test of fitness and propriety laid down by the PRA or Financial Conduct Authority (FCA) and are normally required to be registered as an “approved person” in order to fulfil their “controlled function” as a Director.

3.4 The Nomination and Governance Committee will endeavour to ensure that the Board and Committees have the capabilities required to be effective and oversee the organisation’s strategic priorities. This will include an appropriate range and balance of skills, experience, knowledge and behaviours.

3.5 A Non Executive Director with recent and relevant financial experience will be appointed as a member of the Audit Committee.

3.6 Achieving a diversity and balance of skills, experience, knowledge and behaviours in the Board will be a key determinant of any new appointments. Selecting the best candidate, irrespective of background, is paramount. This will benefit the effectiveness of the Board by creating a breadth of perspective among Directors.

3.7 The Society has committed to increasing female representation to 33% by 2020 across the senior leadership population (Board, executive leaders and their direct reports). The Strategy also includes a target of between 8% to 15% for BAME representation across the senior leadership population. These targets are supported by the Equality, Diversity and Inclusion Strategy and action plans, which are refreshed annually and against which progress is reported by the Nomination and Governance Committee annually.

4.1 The Nomination and Governance Committee will give full consideration to succession planning for the Board and Executive Committee, taking into account the challenges and opportunities facing the Society and its leadership needs.

4.2 The Senior Independent Director will be responsible for the succession process for the Chairman.

4.3 In identifying suitable external board candidates, independent executive search consultants will normally be used. The Society will also develop internal talent and capability. 

4.4 The Nomination and Governance Committee will undertake a full review of board talent and succession at least once a year. Delivery of succession plans through appointments and development support will be continuous and proactive.

4.5 Talent and succession planning will be undertaken for all senior management roles in the Society and reported to the Board on an annual basis.

5.1 An independent evaluation of the Board will be held a minimum of every three years by an appointed specialist third party. In the interim years, an internal evaluation will be carried out. Annual evaluation of the principal Board Committees will also be undertaken.

5.2 The evaluation of board effectiveness will consider diversity of the Board. 

5.3 The Chairman should act on the results of the Board's evaluation by recognising the strengths and addressing the weaknesses of the Board, and recommending any areas for development. If appropriate, the Chairman will propose that new members are appointed to the Board or will seek the resignation of Board Directors.

6.1 On appointment, Directors will participate in a comprehensive and tailored induction programme and will acquire an understanding of the main areas of the Society's business activity through meetings with senior and middle managers.

6.2 Performance reviews will be conducted at least once a year with all Directors. The Chairman will review the effectiveness of the Non Executive Directors and the Chief Executive and the Senior Independent Director will review the effectiveness of the Chairman. Performance reviews for Executive Committee will be undertaken with the Chief Executive.

6.3 As part of the review process, Directors will plan relevant development to support their future performance and contribution. Individual development opportunities for Directors will normally include external conferences, seminars, coaching and mentoring. Collective learning needs will be met through subject specific master classes and other leadership development events organised by the Society. Organisational learning will be facilitated through internal networking departmental visits, regular Board Updates and the annual Strategy Conference.

6.4 Non Executive Directors 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 Member TalkBacks and visiting branch offices.

6.5 Development for identified key talent throughout the Society will also be supported in order to develop internal capability for succession. This provision will promote diversity and ensure that employees with potential have the opportunity to develop and progress through the corporate pipeline.

This policy will be reviewed by the Nomination and Governance Committee annually and at such other times as circumstances may require (e.g. a major corporate development or any unexpected resignation from the Board). This policy may only be amended, or its requirements varied, in relation to individual circumstances, with the approval of the Board.

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