Strong governance is one of the core areas through which we create shareholder value and build and maintain a sustainable business. Part of the role of the Chairman and the Board is to ensure that Pennon Group operates to the highest standards of corporate governance.
The Board and its governance framework
The Group’s Board and Committee structure, together with its risk management and internal control systems, forms an effective and robust governance framework designed to manage and develop the Group in accordance with the Group’s strategy to maintain and grow shareholder value.
The Board of Directors comprises four Non-executive Directors (including the Chairman) and three Executive Directors. All of the Non-executive Directors are considered by the Board to be independent.
The Board has a schedule of matters reserved for its decision, which include:
- approval of the full year and half year results announcements;
- the approval of the Annual Report & Accounts (including the financial statements);
- all acquisitions and disposals;
- major items of capital expenditure;
- authority levels for other expenditure;
- risk management process and monitoring of risks;
- approval of the strategic plan and annual operating budgets;
- Group policies, procedures and delegations; and
- appointments to the Board and its Committees.
The Board delegates more detailed consideration of certain matters to Board Committees, to the Executive Management Boards of Pennon Group, South West Water or Viridor, as appropriate, or to the Group General Counsel & Company Secretary. Each Committee and Executive Management Board has detailed terms of reference setting out its responsibilities, accountabilities and reporting obligations to the Board.
The Board is responsible for maintaining the Group’s system of internal control to safeguard shareholders’ investment and the Group’s assets and for reviewing its effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. There is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group.
The Group has policies covering suspected fraud, anti-bribery and whistleblowing, and any allegations of misconduct and irregularity are investigated thoroughly.
Directors' Remuneration Policy
The Directors' Remuneration Policy was approved by shareholders at the Company's AGM held on 31 July 2014. It sets out the Company's forward-looking policy on Directors' remuneration and is subject to a binding shareholder vote every three years.
The Remuneration Policy tables were updated in 2015 to reflect Director changes; additional wording on malus, clawback and the holding period introduced in the year in the Group's Performance and Co-investment Plan; and minor and inconsequential changes. The Remuneration Committee will undertake a review of the policy during 2016/17, which will then be submitted for shareholder approval at the 2017 AGM.
Board Diversity Policy
The Board’s Diversity Policy confirms that the Board is committed to:
- the search for Board candidates being conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of gender and ethnic diversity on the Board
- satisfying itself that plans are in place for orderly succession of appointments to the Board and to senior management to maintain an appropriate balance of skills and experience within the Group and on the Board and to ensure progressive refreshing of the Board. In addition, within the spirit of Principle B.2 of the UK Code, the Board endeavours to achieve and maintain:
- a minimum of 25% female representation on the Board
- a minimum of 25% female representation on the Group’s senior management team.
Modern Slavery Act 2015 - read our statement on anti-slavery and human trafficking here.