Corporate governance
The directors continue to endorse and apply the principles of good corporate governance set out in the Combined Code. This statement describes how the principles of the 2006 FRC Combined Code on Corporate Governance have been applied by the Company.
The Board
The Board provides the Company with entrepreneurial leadership and effective controls. It sets the Company's strategic aims, and establishes the Company's values and standards. The Board currently consists of 14 directors whose names and other details are as set out in here. Six of the directors are executives, and eight including the Chairman are Non-executive Directors. Each of the Executive Directors has a combination of general business skills, and experience in the construction materials market. The Non-executive Directors represent a diverse business background complementing the Executive Director's skills. All of the directors bring an objective judgement to bear on issues of strategy, resources and standards of performance. The directors believe that the Board includes an appropriate balance of skills and ability to provide effective leadership and control to the Group.
The Board meets formally 10 times a year, as well as informally as and when required. Attendance at Board and committee meetings is set out in the table below. The Board reserves for itself a formal schedule of matters on which it takes the ultimate decision. These include adopting the Group's rolling five year strategic plan and the annual budget, approving all major capital expenditure and material contracts, acquisitions and disposals of businesses and other assets, and appointment of senior executives and succession planning, reviewing management's corporate and financial performance, and overall review of the Group's internal controls. Certain other matters are delegated to the Board committees, the roles and responsibilities of which are set out below. The Chairman also meets separately with the Non-executive Directors (without the Executive Directors present); and the Non-executive Directors met (without the Chairman) once during the year to appraise the workings of the Board.
The Chairman and Chief Executive
There is a clear division of responsibility set out in writing between the Non-executive Chairman, Eugene Murtagh, and the Chief Executive, Gene M. Murtagh. The Chairman is responsible for the leadership and effective working of the Board. He ensures that all members of the Board, including in particular the Non-executive Directors, have an opportunity to contribute effectively, and that there is appropriate and timely communication with shareholders. The Board has delegated executive responsibility for running the Group to the Chief Executive. He is responsible for the strategic direction and overall performance of the Group.
Board balance and independence
The Board has determined the following Non-executive Directors to be independent: Brian Hill, David Byrne, Tony McArdle and Helen Kirkpatrick. The Directors consider that there is a strong independent representation on the Board.
Appointments to the board
All appointments to the Board are made on the recommendation of the Nomination Committee. In addition the Nomination committee reviews the various committees and makes recommendations to the Board on the appointment of the chairman and the membership of each. The standard terms of appointment of Non-executive Directors are available, on request, from the Company Secretary.
The Company has procedures whereby directors (including Non-executive directors) receive formal induction and familiarisation about the Company's business operations and systems, and continuing training relating to the discharge of their duties as directors and (as appropriate) management.
Information and professional development
All directors are supplied with appropriate and timely information for Board and committee meetings, and are given the opportunity to probe and question the executives and to seek such further information as they consider appropriate. The Group's professional advisors are available for consultation with the Board and attend Board meetings as required. All directors have access to the advice and services of the Company Secretary who is responsible for ensuring that Board procedures are followed. He is also responsible for advising the Board, through the Chairman, on all governance matters. Individual directors may seek independent professional advice at the expense of the Company in furtherance of their duties as a director. The Group has arranged appropriate insurance cover in respect of legal action against its directors.
Performance evaluation
During the year the Chairman carried out a review of the performance of individual directors, and provided them with feedback gathered from other members of the Board. The Senior Independent Director through discussions with other directors conducted a review of the Board, its committees and its corporate governance.
Re-election of directors
The Company's Articles of Association provide that newly appointed directors are subject to election at the Annual General Meeting following their appointments. Excluding any such newly appointed directors, one third of the Board is subject to re-election at each Annual General Meeting. Non-executive Directors are appointed to the Board for an initial term of three years, renewable with the Board's agreement, but subject to re-election by the shareholders on the normal rotation basis. Any Non-executive Director who has served more than nine years from the time of first election is subject to annual re-election thereafter.
Acquisitions committee
The Acquisitions committee has been established by the Board to consider and appraise all acquisition proposals made by the Group within its authorised limits, and to approve any investments, joint ventures, and capital expenditure within those limits which it considers to promote the Group strategy. The committee also carries out a periodic review of investments made within the previous year to review actual performance against forecast targets.
Audit committee
The Board has established an Audit committee to monitor the integrity of the Company's financial statements, and the effectiveness of the Company's internal financial controls. The members of the Audit committee bring considerable financial and accounting experience to the committee's work, and in particular the Board considers that the chairman of the Audit committee has appropriate recent and relevant financial experience. The Board is satisfied that the combined qualifications and experience of the members give the committee collectively the financial expertise necessary to discharge its responsibilities.
Nominations committee
The Nominations committee assists the Board in ensuring that the composition of the Board and its committees is appropriate for the needs of the Group. The committee meets at least once a year, and additionally if required, to consider the Board's membership, to identify any Additional skills or experience which might benefit the Board's performance and recommend appointments to or, where necessary, removals from, the Board.
Board committees
The Board has established the following committees: Acquisitions, Audit, Nominations and Remuneration committees. All committees of the Board have written terms of reference setting out their authorities and duties and these terms are available on the Company's website www.kingspan.com.
Remuneration committee
The Remuneration committee has responsibility for setting remuneration for all Executive Directors and for the Chairman, including pension contributions and any compensation payments. The committee also monitors the level and structure of remuneration for senior management.
Communication with shareholders
The Company places great emphasis on maintaining regular and responsible dialogue with shareholders. This is achieved through meetings with institutional investors, presentations to brokers and analysts, and making relevant information available on the Company's website, www.kingspan.com in a timely fashion. The Company encourages communication with all shareholders, and welcomes their participation at Annual General Meetings. All shareholders who attend the Company's Annual General Meeting are given the opportunity to question the Chairman and other members of the Board, including the chairmen of the committees, on any aspect of the Group's business.
Statement of compliance
The directors confirm that the Company, except in the respects more fully described below, has throughout the accounting period ended 31 December 2007 complied with the provisions of the Combined Code:
- During the year less than half the Board, excluding the Chairman, were independent Non-executive Directors. It is the view of the Board that the range and blend of skills match the needs of the business and facilitate a sound decision-making process and control environment. It is also their view that there is sufficient balance in the Board, including a strong and independent non-executive element, so that no individual or group of individuals can dominate decision making. As a result it is not considered necessary to appoint an additional independent Nonexecutive Director.
