Corporate Governance
Board Proceedings
Governance framework
The Group’s key internal governance document is the Board Control Manual. This draws together the schedule of matters reserved to the Board, terms of reference for Board and Executive Committees as well as role descriptions and authority levels for Directors and senior executives. For those matters not specifically reserved to the Board, the Manual prescribes the cascade of authorities delegated throughout the Group. The Board Control Manual is refreshed regularly and the terms of reference of the Board’s principal Committees are reviewed on an annual basis.
At each meeting, the Board receives a financial and operational update from the Chief Executive and other Executive Directors before considering specific matters requiring approval and a rolling programme of strategic reviews. All matters requiring a decision are supported by formal analysis of all relevant aspects of the proposal. During 2007, the Board has monitored closely market developments as well as receiving regular progress updates on the implementation of the Basel II framework. The Board has also been kept up to date on the changes introduced by the Companies Act 2006, especially the statutory statement of directors’ duties.
Key activities of the Board include:
- Strategy and risk – the Board approves and oversees the Group’s strategic direction.
- Approving the Business Plan – which defines the Group’s strategic and operating objectives and the risk framework within which it operates.
- Management oversight – the Board routinely reviews operating, financial and risk performance and receives reports from divisional heads.
- Regulatory/legal activity – including the approval of the Company’s results, dividends, other key documents and any substantial transactions.
- Appointments – in 2007 the Board approved the appointments of Richard Cousins, John E Mack, Dan Watkins, Philip Gore-Randall and Mike Ellis.
- Approval of new or material changes to existing employee share schemes, subject to shareholder approval as appropriate.
- Approval of capital expenditure as well as guarantees, indemnities and securities, all above pre-defined limits.
- Ethics – the Board sets the standards to which the Group aspires in dealings with its key stakeholders in a statement ‘The Way We Do Business’.
Meetings
The Board held ten meetings during 2007. Details of Directors’ attendance at these meetings are set out in the table below.
| Board meetings attended |
Eligible to attend |
|
| Current Directors | ||
| Dennis Stevenson | 10 |
10 |
| Andy Hornby | 10 |
10 |
| Peter Cummings | 10 |
10 |
| Jo Dawson | 10 |
10 |
| Mike Ellis (from 25 September 2007) | 3 |
3 |
| Philip Gore-Randall (from 15 September 2007) | 3 |
3 |
| Phil Hodkinson (to 31 December 2007) | 10 |
10 |
| Colin Matthew | 10 |
10 |
| Dan Watkins (from 5 September 2007) | 3 |
3 |
| Richard Cousins (from 1 March 2007) | 6 |
8 |
| Charles Dunstone | 9 |
10 |
| Sir Ron Garrick | 10 |
10 |
| Anthony Hobson | 10 |
10 |
| Karen Jones | 9 |
10 |
| John E Mack (from 1 May 2007) | 6 |
6 |
| Coline McConville | 10 |
10 |
| Kate Nealon | 10 |
10 |
| Former Directors | ||
| Benny Higgins (to 10 August 2007) | 7 |
7 |
| Sir Brian Ivory (to 25 April 2007) | 4 |
4 |
| David Shearer (to 25 April 2007) | 4 |
4 |
Executive Committee
The Executive Committee, led by the Chief Executive Andy Hornby and consisting of all HBOS Executive Directors plus the Company Secretary & Group Counsel (Harry Baines) and the Group Risk Director (Peter Hickman), met 11 times during 2007 as well as holding two strategy days. The Executive Committee has no specific authority delegated to it by the Board, but provides advice and support to the Chief Executive, in particular in relation to strategy and matters having cross-divisional or Group-wide implications. The Committee also takes the lead role in preparing the Group’s Business Plan, for approval by the Board, and reviews all issues and papers requiring Board or Audit Committee approval (acting upon decisions of those bodies as appropriate).
Internal control
The Board, through the Audit Committee, has overall responsibility for the Group’s system of internal control and risk management and reviews its effectiveness annually. The review covers financial, operational, compliance and risk management controls. The implementation and maintenance of the risk management and internal control systems are the responsibility of the Chief Executive with support from the other Executive Directors and senior executives. Systems are designed to manage the risk of failure to achieve business objectives, and provide reasonable assurance against material misstatement or loss. The Audit Committee has received confirmation that management has taken, or is taking, the necessary action to remedy any failings or weaknesses identified through the operation of the HBOS framework of controls.
Further details of the Group’s internal controls are disclosed in the Risk Management report on pages 85 to 104.
Online – Find out even more…
You can find out more about our approach to corporate governance by accessing the following documents online at www.hbosplc.com
- Terms of reference for the Audit, Remuneration and Nomination Committees
- Schedule of matters reserved to the Board
- Memorandum and Articles of Association
- Biographies of HBOS Directors
- Corporate responsibility
- History of the Group