The Board comprises seven Directors – the Non-executive Chairman, John McDonough CBE; the Chief Executive, François Wanecq; the Chief Financial Officer, Chris O'Shea; and four Non-executive Directors, three of whom are deemed to be independent for the purposes of the UK Corporate Governance Code. Jeff Hewitt is the Senior Independent Non-executive Director. Richard Malthouse served as Company Secretary until 1 September 2013 when Henry Knowles was appointed to the role.
The Board seeks to ensure that both it, and its committees, have the appropriate range of diversity, skills, experience, independence and knowledge of the Company to enable them to discharge their duties and responsibilities effectively. The Board's overall skills and experience, as well as Non-executive Director independence, were reviewed during the year as part of the annual corporate governance review, and Board composition formed part of the Board's evaluation process. The Board considers its diversity, size and composition to be appropriate for the requirements of the business. The Non-executive Directors are drawn from different nationalities and have significant experience of managing complex global businesses.
Committee composition is set out in the relevant committee reports. No one other than Committee Chairs and members of the Committees are entitled to participate in meetings of the Audit, Nomination and Remuneration Committees, but others may attend by invitation.
The Board considers that a majority of the Board, (excluding the Non-executive Chairman) namely Nelda Connors, Jeff Hewitt, and Jane Hinkley, are independent of management and free from any business or other relationship which could affect the exercise of their independent judgement. Christer Gardell is Managing Partner of Cevian
Capital which holds 21.02% of Vesuvius' issued ordinary share capital and is not considered to be independent. He brings a wealth of commercial acumen to the Board. The Chairman satisfied the independence criteria on his appointment to the Board. John Sussens served as Senior Independent Director until his retirement at the 2013 AGM, when Jeff Hewitt was appointed to the role. Biographical details of the Directors are set out on in the Board of Directors.
Appointments to the Board
Recommendations for appointments to the Board are made by the Nomination Committee. The Nomination Committee follows a formal, rigorous and transparent procedure for the appointment of new Directors to the Board. Board appointments are made on merit against objective criteria, selecting the best candidate for the post. Non-executive appointees are also required to demonstrate that they have sufficient time to devote to the role. The Nomination Committee is responsible for reviewing Board succession to ensure that plans are in place for the appropriate refreshing and orderly succession of Board directorships. Further information is set out in the Nomination Committee report.
Time Commitment of the Chairman and the Non-executive Directors
The Chairman and Non-executive Directors each have a letter of appointment which sets out the terms and conditions of their directorship. An indication of the anticipated time commitment is provided in any recruitment role specification, and each Director's letter of appointment provides details of the meetings that they are expected to attend, along with the need to accommodate travelling time (particularly for overseas trips). Non-executive Directors are required to set aside sufficient time to prepare for meetings, and regularly to refresh and update their skills and knowledge. In signing their letters of appointment, all Non-executive Directors have consequently agreed to commit sufficient time for the proper performance of their responsibilities, acknowledging that this will vary from year to year depending on the Group's activities. Directors are expected to attend all
scheduled Board and Committee meetings and any additional meetings as required. Each Director's other significant commitments are disclosed to the Board at the time of their appointment and they are required to notify the Board of any subsequent changes. The Company has reviewed the availability of the Non-executive Directors and considers that each of them is able to, and in practice does, devote the necessary amount of time to the Company's business.
Induction and Training
A comprehensive induction programme is in place for new Directors, and was used in 2013 on the appointment of Nelda Connors. This includes visits to manufacturing facilities, meetings with key Group executives and introductions to the Company's principal external advisers, as appropriate. Reference materials are provided, including information about the Board, its committees, Directors' duties, procedures for dealing in the Company's shares and other regulatory and governance matters, and Directors are advised of their legal and other duties and obligations as Directors of a listed company. The Company Secretary ensures that after a certain period of appointment, new Directors feel that they have received sufficient induction information, and supplies support for any subsequent requirements.
The Chairman, through the Company Secretary, continues to ensure that there is an ongoing process to review training and development needs. Directors are provided with details of seminars and training courses relevant to their role. They are encouraged to attend these as they consider appropriate and are supported by the Company in doing so. Where a general training need is identified, in-house training can be provided to the entire Board. Regulatory updates are provided as a standing item at each Board meeting in a Secretary's Report. In 2013, given the proximity of the demerger, no formal externally moderated update on corporate matters was undertaken. However, technical updates were delivered by certain of the Company's advisers and focused predominantly on changes to narrative reporting.
Information and Support
The Board ensures that it receives, in a timely manner, information of an appropriate quality to enable it to adequately discharge its responsibilities. Papers are provided to the Directors in advance of the relevant Board or Committee meeting to enable them to make further enquiries about any matters prior to the meeting should they so wish. This also allows Directors who are unable to attend to submit views in advance of the meeting.
Outside of the Board documents the Chief Executive provides written updates on important Company business issues together with certain financial and management information to keep Directors updated. Regular updates on shareholder issues and discussions are also provided to the Board, who also receive copies of significant analyst's notes issued on the Company. Directors have access to a secure online portal used for the distribution of all information.
All Directors have access to the advice and services of the Company Secretary. There is also an agreed procedure in place for Directors, in the furtherance of their duties, to take independent legal advice at the Company's expense.
In accordance with the provisions of the Code, the Chairman led a formal and rigorous evaluation of the Board's performance and effectiveness during the year, together with an evaluation of the performance of the Audit and Remuneration committees and an individual performance review of each of the Board members. In addition, the Senior Independent Director led an evaluation of the performance of the Chairman. The evaluation was externally moderated by Lintstock, who collated responses from participants and presented an analysis of the results to the Chairman. Lintstock examined the balance of individual skills and experience, independence, and knowledge of the Company amongst the Directors, together with Board diversity (including gender) and Board interaction and effectiveness as part of the evaluation. Lintstock's analysis was circulated to the Board and formed the basis of one-on-one discussions conducted by the Chairman with each member of the Board and the Company Secretary. These conversations also covered the output from the individual Director reviews.
The overall outcome of the evaluation was that the Board and its individual Directors are performing effectively, that the Board is well-supported in terms of information flow and presents an open forum for debate. The primary areas identified for future focus were succession planning, Board composition, and ensuring that the Board maintained its focus on strategy, particularly in the light of the increasing and evolving governance and compliance obligations placed on plc boards. As a result of the evaluation, Board and senior management succession will be addressed specifically at the Group strategy review to be held in July and a series of set piece business unit and functional presentations will be made to the Board to ensure that Group-wide strategy is being understood and interpreted in the Business Units and that direct feedback on strategy can come to the Board.
Appointment and Replacement of Directors
The Board membership should not be fewer than five nor more than 15, save that the Company may, by ordinary resolution, from time to time vary this minimum and/or maximum number of Directors. Directors may be appointed by ordinary resolution or by the Board. A Director appointed by the Board must retire from office at the first Annual General Meeting ("AGM") after his/her appointment. A Director who retires in this way is then eligible for reappointment. The Board may appoint one or more Directors to any executive office, on such terms and for such period as it thinks fit and it can also terminate or vary such an appointment at any time. The Articles specify that at every AGM, any Director who has been appointed by the Vesuvius Board since the last AGM and any Director who held office at the time of the two preceding AGMs and who did not retire at either of them, shall retire from office. Any Director who retires at an AGM may offer himself for reappointment. In accordance with the requirements of the Code, all the Directors will offer themselves for re-election at this year's AGM. The biographical details of each of the Directors, including details of their other directorships and relevant skills and experience, are set out on in the Board of Directors and in the 2014 Notice of AGM. The Board believes that each of the Directors standing for re-election is effective and demonstrates commitment to his/her respective role. Accordingly, the Board recommends that shareholders approve the resolutions to be proposed at the 2014 AGM relating to the re-election of Directors.
Directors' Conflicts of Interest
The Board has established a formal system to authorise situations where a Director has an interest that conflicts, or may possibly conflict, with the interests of the Company ("Situational Conflicts"). Directors declare Situational Conflicts so that they can be considered for authorisation by the non-conflicted Directors. In considering a Situational Conflict these Directors act in the way they consider would be most likely to promote the success of the Company, and may impose limits or conditions when giving authorisation or subsequently if they think this is appropriate. The Company Secretary records the consideration of any conflict and records any authorisations granted. The Board believes that the systems it has in place for reporting Situational Conflicts continues to operate effectively. No Situational Conflicts were brought to the Board for authorisation during the year under review.