During the year the Committee appointed a new Senior Independent Director and, in line with its primary responsibility, focused on Board succession planning — ensuring that the Board is made up of individuals with the necessary skills, diversity and experience to lead the Company
John McDonough (Committee Chairman)
The Nomination Committee
The Nomination Committee is made up of any three of the Non-executive Directors. During the year I continued as Chairman of the Committee, though I would not act as Chairman when the Committee is considering the appointment of my successor. In this case, the Chairman would be an appropriate Non-executive Director. In addition to the Directors named above, Jan Oosterveld and John Sussens were also members of the Committee until their retirement from the Board at the AGM in June 2013. The Company Secretary is Secretary to the Committee. Members' biographies are set out on in the Board of Directors.
The Committee meets as and when required, which it did twice during 2013. Both meetings were convened with all Non-executive Directors present together with the Chief Executive, who was invited to attend both meetings. I reported the outcome of our meetings to the Board. Formal meetings are held to consider standing items of business. However, particularly when a recruitment exercise is taking place, there is also a significant level of ad hoc discussion between members of the Committee.
The Committee operates under formal terms of reference which were reviewed and updated during the year and approved by the Board. The terms of reference are available on the Group's website (www.vesuvius.com).
The Committee and its members are also empowered to obtain outside legal or other independent professional advice (at the cost of the Company) in relation to its deliberations (which rights were not exercised during the year) and to secure the attendance at its meetings of any employee or other parties it considers necessary.
Role and Responsibilities
The Nomination Committee's foremost priorities are to ensure that the Company has the best possible leadership and maintains a clear plan for both Executive and Non-executive Director succession. Its prime focus is therefore on the strength of the Board, for which appointments are made on merit, against objective criteria, selecting the best candidate for the post. The Nomination Committee advises the Board on the appointments, retirements and resignations from the Board and its Committees.
Activity in 2013
During the year, the Committee considered the appointment of a new Senior Independent Director to replace John Sussens who retired from the Board at the 2013 AGM. The Committee recommended to the Board that an external candidate was not required to fill this position as Jeff Hewitt was an outstanding candidate for the role, given his wide experience of Vesuvius and corporate governance.
During the year, as part of the annual corporate governance review, the Committee also reviewed the independence of the Board and the potential lengths of tenure of each of the independent Non-executive Directors.
The majority of the Board was appointed only recently. However, the Committee continues regularly to re-examine succession and the Board's balance of skills, experience and diversity. Succession planning, led by the Nomination Committee, forms an integral part of the Board's annual strategy review.
All Directors have served at a very senior level in global organisations, have international experience across a variety of industries, and most have spent a considerable amount of time resident outside the UK. At present, two of the seven Directors are women, and three are non-British citizens. The Nomination Committee continues to believe that this diversity underpins the successful operation of an effective Board. It should be noted that in Lord Davies' original recommendation on Women on Boards, he stated that listed companies in the FTSE 100 should aim for a minimum of 25% female board member representation by 2015. He also recommended that FTSE 350 companies should be setting their own, challenging targets and expected that, in time, many would achieve a much higher figure than this minimum. We are pleased to report that the Vesuvius Board has achieved this target.
Process for Board Appointments
When considering Board appointments, the Nomination Committee draws up a specification for the Director, taking into consideration the balance of skills, knowledge and experience of its existing members, the diversity of the Board, the independence of continuing Board members and the ongoing requirements and anticipated strategic developments of the Group. The search process is then able to focus on appointing a candidate with a balance of skills that enhance the Board's diversity. For example, whilst most of the work for the appointment of Jane Hinkley and Nelda Connors was undertaken in 2012, their appointments required global Chief Executive/CFO experience, an understanding of executive compensation and knowledge of, and experience in, project management, lean manufacturing and growing a business in Asia.
When considering Board appointments, the Committee utilises the services of search firms to identify appropriate candidates, ensuring that the search firm appointed does not have any other connection with the Company. In addition, the Committee will only use those firms that have adopted the Voluntary Code of Conduct addressing gender diversity and best practice in search assignments. A 'long list' of potential appointees will then be reviewed followed by the shortlisting of candidates for interview based upon the objective criteria identified at inception. Care is taken to ensure that all proposed appointees have sufficient time available to devote to the role and do not have any conflicts of interest. The Committee then recommends a preferred candidate and the Directors not on the Committee meet the candidate. Following this the Committee would make a formal recommendation to the Board on the appointment. The preferred candidate would also be supported in undertaking their own due diligence on the Company and with its advisers.
Senior Management Succession
During the year, each of the Vesuvius Business Units and head office functions submitted their succession plans in respect of senior executives to the Board for review. The Board also actively seeks to meet with key executives throughout the Group in order to gain a greater understanding of the breadth and depth of management talent. During 2014 this process will be augmented to include a series of presentations to the board by Business Unit and functional Presidents and the senior managers that work in their teams. In this way members of the Board and the Committee will be able to adopt a more informed approach to executive succession planning across the Group.
On behalf of the Nomination Committee
John McDonough CBE
4 March 2014