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Introduction |  |
Introduction
The policy of MWB Group Holdings Plc is to adhere to best practice standards in its business operations. These procedures are documented in considerable detail in Group manual, and Board papers, the more important of which are referred to below. This section, together with the section in the Annual Report and Financial Statements entitled “Report on Remuneration of Directors", describes how the Company has applied the principles set out in Section 1 of the Combined Code on Corporate Governance.
The Board fully supports the principles of good governance and the Company has a policy of seeking to comply with established best practice in the field of corporate governance. The Board has adopted core values and Group standards which set out the behaviours expected of staff in their dealings with shareholders, customers, colleagues, suppliers and other stakeholders of the Group. Through the operation of the Board and its Committees, the Board confirms that it has met the requirements of the Combined Code (July 2003) during the year ended 31 December 2009, subject to certain limited exceptions as outlined in the paragraph below entitled “Directors’ Independence”.
The Board fully supports the principles of good governance and the Company has a policy of seeking to comply with established best practice in the field of corporate governance. The Board has adopted core values and Group standards which set out the behaviours expected of staff in their dealings with shareholders, customers, colleagues, suppliers and other stakeholders of the Group. Through the operation of the Board and its Committees, the Board confirms that it has met the requirements of the Combined Code (July 2003) during the year ended 31 December 2009, subject to certain limited exceptions as outlined in the paragraph below entitled “Directors’ Independence”.
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The Board | |
The Board
Composition
The Company is run by the Board, which leads and controls the Group. The Board comprises three Executive Directors and three Non-Executive Directors including the Chairman. Robert Burrow is the Senior Independent Non-Executive Director of the Company. All of the Directors bring a wide range of experience and skills to the Company.
The division of responsibility between the Chairman of the Board Eric Sanderson, and the Chief Executive Richard Balfour-Lynn, in accordance with the provisions and good practice guidelines of the Combined Code on Corporate Governance, is clearly defined and has been set out in writing and approved by the Board. This division of responsibilities ensures there is a balance of power and authority within the Board.
The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda. The Chairman has no involvement in the day-to-day business of the Group. The Chairman facilitates the effective contribution of Non-Executive Directors and ensures that constructive relations exist between Executive and Non-Executive Directors. Through Jag Singh the Finance Director, he is also responsible for ensuring that Directors receive accurate, timely and clear information.
The Chief Executive is responsible for running the business and for formulating and implementing Board strategy and policy. He also has direct charge and overall control of the Group on a day-to-day basis and is accountable to the Board for the financial and operational performance of the Group.
The terms of appointment of the Executive and Non-Executive Directors are available for inspection during normal business hours from the Company Secretary at the Company’s registered office. They are also available for inspection at the place of the Company’s Annual General Meeting, both before and at the meeting.
The Company is run by the Board, which leads and controls the Group. The Board comprises three Executive Directors and three Non-Executive Directors including the Chairman. Robert Burrow is the Senior Independent Non-Executive Director of the Company. All of the Directors bring a wide range of experience and skills to the Company.
The division of responsibility between the Chairman of the Board Eric Sanderson, and the Chief Executive Richard Balfour-Lynn, in accordance with the provisions and good practice guidelines of the Combined Code on Corporate Governance, is clearly defined and has been set out in writing and approved by the Board. This division of responsibilities ensures there is a balance of power and authority within the Board.
The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda. The Chairman has no involvement in the day-to-day business of the Group. The Chairman facilitates the effective contribution of Non-Executive Directors and ensures that constructive relations exist between Executive and Non-Executive Directors. Through Jag Singh the Finance Director, he is also responsible for ensuring that Directors receive accurate, timely and clear information.
The Chief Executive is responsible for running the business and for formulating and implementing Board strategy and policy. He also has direct charge and overall control of the Group on a day-to-day basis and is accountable to the Board for the financial and operational performance of the Group.
The terms of appointment of the Executive and Non-Executive Directors are available for inspection during normal business hours from the Company Secretary at the Company’s registered office. They are also available for inspection at the place of the Company’s Annual General Meeting, both before and at the meeting.
Responsibility
The Board’s main roles are to define the Group’s strategic objectives, to provide entrepreneurial leadership for the Group, to create value for shareholders and to ensure that necessary financial and other resources are available to enable the Group and the Board to meet these objectives.
The specific responsibilities reserved to the Board include the management and performance of the Group’s Cash Distribution Programme; the approval of all information supplied to shareholders in the Annual Financial Statements, Half-Yearly Financial Reports and Circulars sent to Shareholders; the setting of Group strategy, approving annual budgets and medium term projections; reviewing operational and financial performance; approving major acquisitions, divestments and capital expenditure; the setting of borrowing limits; treasury policy; reviewing the Group’s systems of financial control and risk management; ensuring that appropriate management development and succession plans are in place; reviewing the environmental, health and safety performance of the Group; approving appointments to the Board and to the position of the Company Secretary; approving policies relating to Directors’ remuneration and the severance of Directors’ service contracts; and ensuring that a satisfactory dialogue takes place with shareholders over the Group’s results and its aspirations for the future.
The Board has delegated certain responsibilities to the Executive Directors of the following matters within defined parameters. These include development and recommendation of strategic plans for consideration by the Board reflecting the longer term objectives and priorities established by the Board including the Cash Distribution Programme; implementation of the strategies and policies of the Group as determined by the Board; monitoring the operating and financial results against plans and budgets; monitoring acquisitions and business operations against objectives; prioritising the allocation of capital, the management and control of borrowing limits and treasury policy; technical and human resources; performance of the boards of the Group’s three principal operating businesses; and developing and implementing risk management systems.
The Board’s main roles are to define the Group’s strategic objectives, to provide entrepreneurial leadership for the Group, to create value for shareholders and to ensure that necessary financial and other resources are available to enable the Group and the Board to meet these objectives.
The specific responsibilities reserved to the Board include the management and performance of the Group’s Cash Distribution Programme; the approval of all information supplied to shareholders in the Annual Financial Statements, Half-Yearly Financial Reports and Circulars sent to Shareholders; the setting of Group strategy, approving annual budgets and medium term projections; reviewing operational and financial performance; approving major acquisitions, divestments and capital expenditure; the setting of borrowing limits; treasury policy; reviewing the Group’s systems of financial control and risk management; ensuring that appropriate management development and succession plans are in place; reviewing the environmental, health and safety performance of the Group; approving appointments to the Board and to the position of the Company Secretary; approving policies relating to Directors’ remuneration and the severance of Directors’ service contracts; and ensuring that a satisfactory dialogue takes place with shareholders over the Group’s results and its aspirations for the future.
The Board has delegated certain responsibilities to the Executive Directors of the following matters within defined parameters. These include development and recommendation of strategic plans for consideration by the Board reflecting the longer term objectives and priorities established by the Board including the Cash Distribution Programme; implementation of the strategies and policies of the Group as determined by the Board; monitoring the operating and financial results against plans and budgets; monitoring acquisitions and business operations against objectives; prioritising the allocation of capital, the management and control of borrowing limits and treasury policy; technical and human resources; performance of the boards of the Group’s three principal operating businesses; and developing and implementing risk management systems.
Board effectiveness
The Board is supplied with management reports on the business of the Group to assist it in making informed decisions and to discharge its duties. Formal Board meetings were held for all Directors on 10 occasions during the year ended 31 December 2009. In addition, Board meetings were held dealing with the implementation of matters already approved at full Board meetings on a further 9 occasions during the same period. In total therefore, the Board met formally 19 times during the year ended 31 December 2009.
The Chief Executive and other Executive Directors meet regularly outside formal Board meetings, as part of each Director’s continuing contribution to delivery of the Group’s corporate strategy and to enhance Gross Cash Returns for shareholders.
Board performance evaluation
The Chairman has reviewed the performance of the Executive Directors and concluded that they were all performing well, that they were operating in line with the Board’s declared strategy and, within the restrictions imposed by the recessionary economic cycle in the UK, they were enhancing value for the benefit of shareholders. The Senior Independent Director also discussed the performance of the Chairman with all other Directors, independently from the Chairman, at a separate meeting during the year.
During the year the Chairman formally reviewed the performance and capabilities of the Senior Executive Management of the operating businesses. These reviews were based on an assessment of personal performance, divisional KPIs, Group results measured through total comprehensive income and expense, the overall achievement of strategy and the achievement of the Group’s stated objectives.
Board attendance
Attendance at formal Board and Committee meetings during the year ended 31 December 2009 is set out in the table below. The column entitled “Dealing with matters already approved” relates to procedural Board meetings held to finalise matters that have previously been considered and approved at a full Board Meeting. Directors’ attendance shown as “–” denotes that the Director concerned is not a member of that Committee.
The Board is supplied with management reports on the business of the Group to assist it in making informed decisions and to discharge its duties. Formal Board meetings were held for all Directors on 10 occasions during the year ended 31 December 2009. In addition, Board meetings were held dealing with the implementation of matters already approved at full Board meetings on a further 9 occasions during the same period. In total therefore, the Board met formally 19 times during the year ended 31 December 2009.
The Chief Executive and other Executive Directors meet regularly outside formal Board meetings, as part of each Director’s continuing contribution to delivery of the Group’s corporate strategy and to enhance Gross Cash Returns for shareholders.
Board performance evaluation
The Chairman has reviewed the performance of the Executive Directors and concluded that they were all performing well, that they were operating in line with the Board’s declared strategy and, within the restrictions imposed by the recessionary economic cycle in the UK, they were enhancing value for the benefit of shareholders. The Senior Independent Director also discussed the performance of the Chairman with all other Directors, independently from the Chairman, at a separate meeting during the year.
During the year the Chairman formally reviewed the performance and capabilities of the Senior Executive Management of the operating businesses. These reviews were based on an assessment of personal performance, divisional KPIs, Group results measured through total comprehensive income and expense, the overall achievement of strategy and the achievement of the Group’s stated objectives.
Board attendance
Attendance at formal Board and Committee meetings during the year ended 31 December 2009 is set out in the table below. The column entitled “Dealing with matters already approved” relates to procedural Board meetings held to finalise matters that have previously been considered and approved at a full Board Meeting. Directors’ attendance shown as “–” denotes that the Director concerned is not a member of that Committee.
Full Board meetings | Dealing with matters already approved |
Audit Committee |
Conflicts Committee |
Remuneration Committee |
Nominations Committee | |
|---|---|---|---|---|---|---|
| Number of meetings | 10 | 9 | 3 | 1 | 1 | 1 |
| E.F. Sanderson | 10 | 3 | 3 | 1 | 1 | 1 |
| R.G. Balfour-Lynn | 10 | 3 | - | - | - | - |
| J. Singh | 9 | 8 | - | - | - | - |
| M.A. Bibring | 9 | 1 | - | - | - | - |
| R.P. Burrow | 9 | - | 3 | 1 | 1 | 1 |
| D.C. Marshall | 9 | - | 2 | 1 | 1 | 1 |
Directors’ independence
The names of the Directors, together with their biographical details, are set out in the section entitled "Directors" in the "About Us" tab. Mr. Burrow has been the Senior Independent Non-Executive Director of the Company since 2005. In this role, he constructively challenges the views of other members of the Board and has helped to develop proposals on strategy, bringing independent judgement, knowledge and experience to the Board’s deliberations.
Mr. Burrow was a Partner of S.J. Berwin LLP and its predecessor firm from 1985 until his retirement from S.J. Berwin LLP on 30 April 2007. Before proposing Mr. Burrow for appointment to the Board, the Nominations Committee carefully considered his independence and thereafter concluded that he was totally independent of the Group. The Nominations Committee considered his specialist legal and property skills were an important addition to the capabilities of the Board and that it was in order for him to be proposed for appointment as an Independent Non-Executive Director of the Company.
Details of Eric Sanderson’s other professional commitments are included in the Chairman’s biography on page 28 of the Group's 2009 Annual Report. The Chairman performs a number of other roles external to the Group but the Board is satisfied that these are not such as to interfere with the performance of his duties for the Group. His duties are based around a commitment of a minimum of 40 days per annum. As a Non-Executive Director, the Chairman is also required to maintain a continuing involvement in the Company’s activities, so that he can contribute effectively. He is required to devote a full amount of time to the affairs of the Group, so as to ensure proper performance of his duties as a Non-Executive Director and as Chairman. These also include the need as part of the general nature of his appointment as Chairman, to be available for meetings and discussions at short notice on major matters that involve the Group, its operations and its shareholders.
The Board has considered the independence of Eric Sanderson as Chairman of the Company. He holds no securities of any sort in the Company, he is not involved in the Executive functions of the Group and he does not participate in any bonus or incentive arrangements of the Company. Prior to being appointed Chairman of MWB Group Holdings, he had been Chairman of Marylebone Warwick Balfour Group for three years and a Non-Executive Director of Marylebone Warwick Balfour Group for 2½ years prior to that. He therefore has a good working knowledge of the Group. Having considered these and other matters carefully, the Board has re-confirmed that it is satisfied he brings a full level of independence to the position of Chairman of the Company.
David Marshall, a Non-Executive Director of the Company, is chairman of London Finance & Investment Group P.L.C. (“LFG”) in which he holds a beneficial interest of 7.4% and a non-beneficial interest of 33.9% in its issued share capital. Through its wholly owned subsidiary, LFG owns 2,000,000 Ordinary Shares in the Company, representing approximately 1.2% of the current issued share capital. David Marshall is deemed under the Combined Code not to be an Independent Non-Executive Director of the Company and his appointment to the Audit Committee is not in compliance with provision C.3.1 of the Combined Code. The Directors consider the alignments of interests of David Marshall as a Non-Executive Director in the manner referred above with the interests of the shareholders of the Company, is an advantage to the Group, and that these indirect interests do not affect his independence as a Non-Executive Director in any material way.
The Board believes that it is evident from consideration of the Non-Executive Directors’ biographies detailed on pages 28 and 29 of the Group's 2009 Annual Report that they are of integrity and stature to perform their roles as Independent Non-Executive Directors. In the opinion of the Board, the Independent Non-Executive Directors are of sufficient calibre and in sufficient number in relation to the Executive Directors, that their views carry weight in the Board’s decision making.
The Directors are given access to independent professional advice at the Group’s expense, if the Board deems this necessary in order to enable them to carry out their responsibilities.
In light of the above, Eric Sanderson and Robert Burrow are deemed to be wholly independent under the terms of the Combined Code, and in respect only of the two matters referred to above, David Marshall is deemed to not be an Independent Non-Executive Director of the Company under the Combined Code.
The Board considers the two Independent Non-Executive Directors under the Combined Code to be independent in character and judgement. In reaching this conclusion, the Board took into account that neither of them:-
The Non-Executive Directors including the Chairman, held formal meetings to discuss matters relating to the Group at which Executive Directors were not present, on two separate occasion during the year ended 31 December 2009. The Non-Executive Directors, excluding the Chairman, also met formally to discuss matters relevant to the Group, including, inter alia, the performance of the Chairman, on one occasion.
The names of the Directors, together with their biographical details, are set out in the section entitled "Directors" in the "About Us" tab. Mr. Burrow has been the Senior Independent Non-Executive Director of the Company since 2005. In this role, he constructively challenges the views of other members of the Board and has helped to develop proposals on strategy, bringing independent judgement, knowledge and experience to the Board’s deliberations.
Mr. Burrow was a Partner of S.J. Berwin LLP and its predecessor firm from 1985 until his retirement from S.J. Berwin LLP on 30 April 2007. Before proposing Mr. Burrow for appointment to the Board, the Nominations Committee carefully considered his independence and thereafter concluded that he was totally independent of the Group. The Nominations Committee considered his specialist legal and property skills were an important addition to the capabilities of the Board and that it was in order for him to be proposed for appointment as an Independent Non-Executive Director of the Company.
Details of Eric Sanderson’s other professional commitments are included in the Chairman’s biography on page 28 of the Group's 2009 Annual Report. The Chairman performs a number of other roles external to the Group but the Board is satisfied that these are not such as to interfere with the performance of his duties for the Group. His duties are based around a commitment of a minimum of 40 days per annum. As a Non-Executive Director, the Chairman is also required to maintain a continuing involvement in the Company’s activities, so that he can contribute effectively. He is required to devote a full amount of time to the affairs of the Group, so as to ensure proper performance of his duties as a Non-Executive Director and as Chairman. These also include the need as part of the general nature of his appointment as Chairman, to be available for meetings and discussions at short notice on major matters that involve the Group, its operations and its shareholders.
The Board has considered the independence of Eric Sanderson as Chairman of the Company. He holds no securities of any sort in the Company, he is not involved in the Executive functions of the Group and he does not participate in any bonus or incentive arrangements of the Company. Prior to being appointed Chairman of MWB Group Holdings, he had been Chairman of Marylebone Warwick Balfour Group for three years and a Non-Executive Director of Marylebone Warwick Balfour Group for 2½ years prior to that. He therefore has a good working knowledge of the Group. Having considered these and other matters carefully, the Board has re-confirmed that it is satisfied he brings a full level of independence to the position of Chairman of the Company.
David Marshall, a Non-Executive Director of the Company, is chairman of London Finance & Investment Group P.L.C. (“LFG”) in which he holds a beneficial interest of 7.4% and a non-beneficial interest of 33.9% in its issued share capital. Through its wholly owned subsidiary, LFG owns 2,000,000 Ordinary Shares in the Company, representing approximately 1.2% of the current issued share capital. David Marshall is deemed under the Combined Code not to be an Independent Non-Executive Director of the Company and his appointment to the Audit Committee is not in compliance with provision C.3.1 of the Combined Code. The Directors consider the alignments of interests of David Marshall as a Non-Executive Director in the manner referred above with the interests of the shareholders of the Company, is an advantage to the Group, and that these indirect interests do not affect his independence as a Non-Executive Director in any material way.
The Board believes that it is evident from consideration of the Non-Executive Directors’ biographies detailed on pages 28 and 29 of the Group's 2009 Annual Report that they are of integrity and stature to perform their roles as Independent Non-Executive Directors. In the opinion of the Board, the Independent Non-Executive Directors are of sufficient calibre and in sufficient number in relation to the Executive Directors, that their views carry weight in the Board’s decision making.
The Directors are given access to independent professional advice at the Group’s expense, if the Board deems this necessary in order to enable them to carry out their responsibilities.
In light of the above, Eric Sanderson and Robert Burrow are deemed to be wholly independent under the terms of the Combined Code, and in respect only of the two matters referred to above, David Marshall is deemed to not be an Independent Non-Executive Director of the Company under the Combined Code.
The Board considers the two Independent Non-Executive Directors under the Combined Code to be independent in character and judgement. In reaching this conclusion, the Board took into account that neither of them:-
- has ever been an employee of the Group;
- has ever had a business relationship with the Group;
- receives remuneration other than a Director’s fee, details of which are set out on page 57 of the Group’s 2009 Annual Report, other than Mr. Sanderson for whom the Company pays private health insurance as also referred to on page 57 of the Group’s 2009 Annual Report;
- has close family ties with any other Director, Senior Management or Adviser to the Group;
- holds cross-directorships or has links with any other Directors through involvement in other companies or bodies;
- represents a significant shareholder; or
- has served on the Board for more than nine years.
The Non-Executive Directors including the Chairman, held formal meetings to discuss matters relating to the Group at which Executive Directors were not present, on two separate occasion during the year ended 31 December 2009. The Non-Executive Directors, excluding the Chairman, also met formally to discuss matters relevant to the Group, including, inter alia, the performance of the Chairman, on one occasion.
Business and professional development of Directors
On appointment, Directors receive information about the Group, the role of the Board and the matters reserved for its decision, the terms of reference and membership of the principal Board Committees and divisional boards, the powers so delegated, the Group’s corporate governance practices and procedures, and up to date financial information on the Group. The Company advises Directors in writing on their appointment of their legal and other duties and obligations as a director of a listed company. These duties are also formally set out to each Director by the Company’s Legal and Financial Advisers when the Company issues circulars to its shareholders. The Directors also receive updates from the Group’s Stockbrokers and Financial Advisers on changes to legal and governance requirements that affect the Group and themselves as Directors throughout the year.
The above procedures are supplemented by visits by Directors to key operating locations of the Group on a regular basis and meetings with members of the Boards of the three operational businesses and other Senior Executives of the Group. The Directors are updated on the groups’ business, the competitive and regulatory environments in which it operates, other changes affecting the Group and the sectors in which it operates, by written briefings to members of the Board by the management teams of those businesses and by regular meetings with Senior Executives.
Detailed reports and supporting papers are circulated to Directors approximately one week prior to Board Meetings and Committee Meetings. The Non-Executive Directors also receive regular management information which enables them to scrutinise the Group’s and management’s performance against agreed objectives and to provide incisive views on these activities at meetings of the Board.
On appointment, Directors receive information about the Group, the role of the Board and the matters reserved for its decision, the terms of reference and membership of the principal Board Committees and divisional boards, the powers so delegated, the Group’s corporate governance practices and procedures, and up to date financial information on the Group. The Company advises Directors in writing on their appointment of their legal and other duties and obligations as a director of a listed company. These duties are also formally set out to each Director by the Company’s Legal and Financial Advisers when the Company issues circulars to its shareholders. The Directors also receive updates from the Group’s Stockbrokers and Financial Advisers on changes to legal and governance requirements that affect the Group and themselves as Directors throughout the year.
The above procedures are supplemented by visits by Directors to key operating locations of the Group on a regular basis and meetings with members of the Boards of the three operational businesses and other Senior Executives of the Group. The Directors are updated on the groups’ business, the competitive and regulatory environments in which it operates, other changes affecting the Group and the sectors in which it operates, by written briefings to members of the Board by the management teams of those businesses and by regular meetings with Senior Executives.
Detailed reports and supporting papers are circulated to Directors approximately one week prior to Board Meetings and Committee Meetings. The Non-Executive Directors also receive regular management information which enables them to scrutinise the Group’s and management’s performance against agreed objectives and to provide incisive views on these activities at meetings of the Board.
Rotation of Directors
The appointment, rotation and retirement of Directors is subject to the Company’s Articles of Association, the Companies Acts and satisfactory performance by the Director concerned. All Directors are appointed for an initial term which terminates on the first Annual General Meeting after the date of his or her appointment. Prior to setting the date for the first and third Annual General Meeting after he or she was elected, the Board discusses with the Director concerned whether it is appropriate for a further term to be served. If re-election is agreed, that Director will be proposed for re-election at the next Annual General Meeting of the Company.
The re-election of Non-Executive Directors who have been on the Board for more than nine years is also subject to annual review by the Board and annual approval by shareholders. The re-election of Directors who are over 70 years of age is subject to annual review by the Board and to annual approval by shareholders. There are currently no Directors of the Company who are over 70 years of age.
The appointment, rotation and retirement of Directors is subject to the Company’s Articles of Association, the Companies Acts and satisfactory performance by the Director concerned. All Directors are appointed for an initial term which terminates on the first Annual General Meeting after the date of his or her appointment. Prior to setting the date for the first and third Annual General Meeting after he or she was elected, the Board discusses with the Director concerned whether it is appropriate for a further term to be served. If re-election is agreed, that Director will be proposed for re-election at the next Annual General Meeting of the Company.
The re-election of Non-Executive Directors who have been on the Board for more than nine years is also subject to annual review by the Board and annual approval by shareholders. The re-election of Directors who are over 70 years of age is subject to annual review by the Board and to annual approval by shareholders. There are currently no Directors of the Company who are over 70 years of age.
The Company Secretary and external professional advice
The Company Secretary is responsible, amongst other duties, for advising the Board through the Chairman on all governance matters. All Directors have access to the advice and services of the Company Secretary. The Company’s Articles of Association and the schedule of matters reserved to be decided only by the Board, provide that the appointment and removal of the Company Secretary is a matter for the Board. Subject to prior written approval and due consideration at a meeting of the Board, the Directors are given access to secondary external professional advice at the Group’s expense, if the Board deems this necessary in order to enable them to carry out their responsibilities.
The Company Secretary is responsible, amongst other duties, for advising the Board through the Chairman on all governance matters. All Directors have access to the advice and services of the Company Secretary. The Company’s Articles of Association and the schedule of matters reserved to be decided only by the Board, provide that the appointment and removal of the Company Secretary is a matter for the Board. Subject to prior written approval and due consideration at a meeting of the Board, the Directors are given access to secondary external professional advice at the Group’s expense, if the Board deems this necessary in order to enable them to carry out their responsibilities.
Internal control and risk management
The Directors operate the Company in accordance with its Articles of Association which set out the overall operating framework for the Company and its investment in its subsidiaries. The Board is fully aware of its responsibility to maintain sound systems of internal control which safeguard shareholder investment in the Company and which control the Company’s assets.
The Group’s overriding corporate objective is to maximise shareholder value, whilst matching the expectations of its customers, employees, business partners and other stakeholders in the business. In so doing, the Directors recognise that creating value is the reward for taking and accepting risk. The Board has overall responsibility for the Group’s approach to assessing risk, for the related systems of internal control, and for monitoring their effectiveness in providing shareholders with a return that is consistent with a responsible assessment and mitigation of risks. This includes reviewing financial, operational and compliance controls and risk management procedures throughout the Group. The Senior Executive team is charged with implementing the Board’s policies on risk and control, and to provide assurance on compliance with these policies. Members of Management are aware that they are accountable for operating within these policies at all times.
The Board has established internal control procedures across a wide range of the Group’s operations and has implemented procedures that monitor the effectiveness of those controls. These also include risk management and the review of internal controls by Directors at Board and management meetings. The results of these reviews are documented and monitored throughout the year. Ongoing reporting, monitoring and improvement of internal controls is performed by the Finance Departments of the Group Head Office and of the three operating businesses of the Group, under the overall control of the Finance Director of the Company and the Group Financial Controller.
The Board is responsible for the Group’s systems of internal control and risk management and for reviewing the effectiveness of those systems. These systems are designed to manage, rather than to eliminate, the risks within each division, as the Board considers that a balanced level of risk can enhance the rate of return achieved for the benefit of shareholders. These systems are structured to enable business objectives to be met, whilst accepting that any system can provide only reasonable and not absolute assurance against material error, loss or misstatement. Within that environment, the Board places reliance on adherence to the Group’s control framework by employees and Senior Executives of the Group.
The Directors are also responsible for the Group’s internal financial controls. These are structured to ensure that transactions are executed in accordance with management authority, transactions are appropriately recorded to permit the preparation of reliable financial statements that are free from material misstatement, the Company’s assets are protected, and that fraud should be prevented or detected.
The Group’s management structure involves delegated authority levels, functional reporting lines and accountability within the Group and within ServCo. The Group operates a comprehensive budgeting and financial reporting system, which compares actual performance to budget on a monthly, quarterly and half yearly basis. These comparisons are undertaken both at Divisional and at Group levels. Variances against forecasts and budgeted performance are examined and business enhancements are implemented where appropriate. This allows Management to monitor financial and operational performance on a continuing basis and to identify and respond to business risks both before, and as, they arise.
The Group has policies for health and safety which ensure that appropriate standards are maintained. These policies, together with environmental considerations, have been integrated into the day to day business management of the Group, its operating businesses and in the management of its properties. Further details of these can be found in the section entitled "Environmental Responsibility" in the "About Us" tab.
The Executive Directors review management controls and internal controls at their management meetings and major elements of the Group’s operations are also subject to significant independent checking and review. The Directors have also reviewed the Group’s systems of internal control and the framework with regard to their appropriateness for the Group in succeeding years. Systems have been established for many years in respect of the principal financial areas of the Group. These systems are monitored and reviewed by members of the Audit Committee in their meetings during the year, at meetings of the Board in their roles as Non-Executive Directors, and in meetings with the external auditors. Further details of these procedures are set out in the section entitled "Board Committees" in the "About Us" tab.
The principal financial controls that are in operation across the Group are as follows:-
The Directors operate the Company in accordance with its Articles of Association which set out the overall operating framework for the Company and its investment in its subsidiaries. The Board is fully aware of its responsibility to maintain sound systems of internal control which safeguard shareholder investment in the Company and which control the Company’s assets.
The Group’s overriding corporate objective is to maximise shareholder value, whilst matching the expectations of its customers, employees, business partners and other stakeholders in the business. In so doing, the Directors recognise that creating value is the reward for taking and accepting risk. The Board has overall responsibility for the Group’s approach to assessing risk, for the related systems of internal control, and for monitoring their effectiveness in providing shareholders with a return that is consistent with a responsible assessment and mitigation of risks. This includes reviewing financial, operational and compliance controls and risk management procedures throughout the Group. The Senior Executive team is charged with implementing the Board’s policies on risk and control, and to provide assurance on compliance with these policies. Members of Management are aware that they are accountable for operating within these policies at all times.
The Board has established internal control procedures across a wide range of the Group’s operations and has implemented procedures that monitor the effectiveness of those controls. These also include risk management and the review of internal controls by Directors at Board and management meetings. The results of these reviews are documented and monitored throughout the year. Ongoing reporting, monitoring and improvement of internal controls is performed by the Finance Departments of the Group Head Office and of the three operating businesses of the Group, under the overall control of the Finance Director of the Company and the Group Financial Controller.
The Board is responsible for the Group’s systems of internal control and risk management and for reviewing the effectiveness of those systems. These systems are designed to manage, rather than to eliminate, the risks within each division, as the Board considers that a balanced level of risk can enhance the rate of return achieved for the benefit of shareholders. These systems are structured to enable business objectives to be met, whilst accepting that any system can provide only reasonable and not absolute assurance against material error, loss or misstatement. Within that environment, the Board places reliance on adherence to the Group’s control framework by employees and Senior Executives of the Group.
The Directors are also responsible for the Group’s internal financial controls. These are structured to ensure that transactions are executed in accordance with management authority, transactions are appropriately recorded to permit the preparation of reliable financial statements that are free from material misstatement, the Company’s assets are protected, and that fraud should be prevented or detected.
The Group’s management structure involves delegated authority levels, functional reporting lines and accountability within the Group and within ServCo. The Group operates a comprehensive budgeting and financial reporting system, which compares actual performance to budget on a monthly, quarterly and half yearly basis. These comparisons are undertaken both at Divisional and at Group levels. Variances against forecasts and budgeted performance are examined and business enhancements are implemented where appropriate. This allows Management to monitor financial and operational performance on a continuing basis and to identify and respond to business risks both before, and as, they arise.
The Group has policies for health and safety which ensure that appropriate standards are maintained. These policies, together with environmental considerations, have been integrated into the day to day business management of the Group, its operating businesses and in the management of its properties. Further details of these can be found in the section entitled "Environmental Responsibility" in the "About Us" tab.
The Executive Directors review management controls and internal controls at their management meetings and major elements of the Group’s operations are also subject to significant independent checking and review. The Directors have also reviewed the Group’s systems of internal control and the framework with regard to their appropriateness for the Group in succeeding years. Systems have been established for many years in respect of the principal financial areas of the Group. These systems are monitored and reviewed by members of the Audit Committee in their meetings during the year, at meetings of the Board in their roles as Non-Executive Directors, and in meetings with the external auditors. Further details of these procedures are set out in the section entitled "Board Committees" in the "About Us" tab.
The principal financial controls that are in operation across the Group are as follows:-
- A defined control environment. There is a clear organisational structure with defined lines of responsibility, authorisation procedures and delegation of authority. Formal policies, including the documentation of key systems and procedures, are in place and are properly controlled.
- The assessment of risk and the improvement of returns therefrom. The Board is responsible for identifying business risks affecting the Group, and for assessing the likelihood of their impact. The Board’s approach to risk management and internal control aims to assist the Group in meeting the challenge of balancing commercial success with cost efficiency. This is managed by the Executive Directors through regular and formal decision making processes for each major operating business within the Group. The Board identifies key business risks and manages these in accordance with the Group’s business plans; the principal risks are summarised on pages 31 to 36 of the Group’s 2009 Annual Report.
- In-depth capital expenditure appraisals. The Group has defined guidelines for capital expenditure. Before investing in any major property asset, assessments of maximum capital expenditure, maximum cash requirements, forecast levels of profitability to be derived from the investment and risk profile of the asset to be acquired are quantified and analysed by the Executive Directors. Where actual results are materially different from those previously forecast remedial action is taken, which may if necessary involve the early disposal of the asset concerned or cancellation of the proposal prior to major cost being incurred.
- Financial management and results. Monthly budgets and annual forecasts are prepared for each operating business of the Group, against which actual results are monitored and controlled by the Executive Directors. Where variances arise, these are investigated, business initiatives are implemented and process changes made to improve performance.
- Control of the Group’s cash requirements. Rolling 18 month forward cash flow forecasts are prepared by Senior Executives of each of the Group’s three operating businesses. These are reviewed by the Board prior to commencement of each financial year, and are regularly reviewed and contrasted during each year. In addition, the Executive and Non-Executive Directors use rolling 18 month forward forecasts that monitor material aspects of the operating businesses and central functions to control the Group’s total cash requirements.
- Group financial reporting. Detailed reports are provided to all members of the Board. These reports provide full analyses of monthly, quarterly and year to date financial performance, asset allocation, growth expectations and related KPI based information for each operating business in the Group, with comparison against budgets and prior year results. These appraisals enable the Board to ensure that control within pre-determined levels of performance of each operating business is achieved, both financially and operationally. Where this is not being achieved, appropriate financial decisions are implemented to enable results achieved to be close to those originally forecast.
- Divisional financial reporting. The Executive Directors receive reports on the operations of each principal division within the Group on a monthly basis. These include divisional analyses and projections, cash flow and profitability projections, financial position analyses and treasury management. This enables members of the Board to appraise actual and projected performance for the current and future years and to consider improvements where appropriate.
- Employment. The Board recognises that its senior management, the Group’s employee resource and its overall HR capabilities are a highly important area in the Group’s performance. Experienced and qualified staff take responsibility for human resource requirements in each of the Group’s operating businesses. Annual appraisal procedures assess performance against agreed objectives. Where these appraisals identify changes to improve Group performance, these are implemented by Divisional Executives.
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Investor relations | |
Investor relations
The investor relations activities of the Group are designed to provide a balanced level of communication between the Company and its stakeholders. Established procedures are in place within the Group to ensure timely release to the Stock Market and financial press of price sensitive information relating to the Group as soon as the matter concerned has been finalised. The Group also publishes its half-yearly financial report and annual financial statements well within the time periods stipulated by the Listing Rules issued by the Financial Services Authority and relevant legislative requirements. The Group’s public relations activities ensure that all press releases and related announcements issued by the Group are provided to existing and potential Institutional shareholders, to financial analysts and to the press, at the same time as they are released to the Stock Market, thus improving the wider investment markets’ awareness of the objectives and achievements of the Group.
The Board promotes the use of electronic communication and all Company announcements are made available on a real-time basis on the Company’s website. The website also contains corporate information which is updated on a regular basis, including details of the Group’s corporate governance procedures and the full terms of reference for its four Committees of the Board.
The Chief Executive Richard Balfour-Lynn, and the Finance Director Jag Singh, meet with shareholders, analysts and other stakeholders to explain the Group in further detail. These meetings provide explanations and commentary on matters that are of benefit to Shareholders in assessing the Group’s performance, its operations, the aspirations and strategy being adopted by the Board, the results of the Group for the half year and full year, transactions proposed to be undertaken by the Group and the Board’s expectations for the future. In addition, the Group responds to individual requests for discussions from Institutional and private stakeholders throughout the year in the form of separate meetings or written responses to the parties concerned.
During the year ended 31 December 2009, and to the date of this report, the Group provided updates to shareholders dealing with the expansion of the Group and the outlook for its future in the Annual Report and Financial Statements for the year ended 31 December 2008, in the Half-Yearly Financial Report covering the results for the six months ended 30 June 2009 and in Circulars to Shareholders issued in February, May and December 2009 and in the Prospectus issued in December 2009. Copies of these documents are made available to all interested parties from the Company Secretary, and from the date of their publication are also available on the Company’s website at www.mwb.co.uk/mwb/reports.jsp
The Annual General Meeting is normally attended by all Directors, and shareholders are invited to ask questions during the meeting on any resolutions proposed at the meeting and to meet with Directors after the formal proceedings have been concluded. The 2009 Annual General Meeting was held in June 2009 and the 2010 Annual General Meeting is due to be held on 10 June 2010. All shareholders on the register at the time that notice is given of the Company’s Annual and General Meetings are formally invited by formal notice to attend those meetings.
The Directors appreciate the importance of private shareholders of the Company and use the Company’s Annual and General Meetings as further opportunities to communicate with private investors. The Company provides private client stockbrokers, fund managers and financial publications with copies of its Half-Yearly Financial Report, Annual Financial Statements, Circulars and Press Releases, in order that these are available to the wider investing market.
It is the Company’s policy to involve shareholders fully in the affairs of the Group and to give them the opportunity at Annual General Meetings and other General Meetings called during the year to ask questions about its activities and prospects. The Board also structures these meetings so that shareholders can vote separately on each matter, by proposing separate resolutions and receiving votes for each separate item to be considered. It is the Board’s opinion that the re-appointment of the auditors and the fees payable to the auditors are inter-related issues and these are therefore dealt with as part of one resolution.
The proxy votes for and against each resolution are counted immediately prior to each Annual or other General Meeting of the Company. Each resolution is voted upon by shareholders and only after they have voted are the results of the proxy votes provided to the meeting. This enables shareholders present to vote independently of the results of proxy votes already received.
As in previous years, the Chairmen of the Audit Committee, the Conflicts Committee, the Remuneration Committee and the Nominations Committee, as well as other Directors, will be available to answer questions from shareholders at the 2010 Annual General Meeting, which will be held on 10 June 2010.
In accordance with the provisions of the Combined Code and the procedure followed by the Company in previous years, the notice of the 2010 Annual General Meeting is being sent to shareholders at least 20 working days before the meeting. Shareholders will have the opportunity to vote separately on each proposal at the Annual General Meeting, either in person or by proxy.
The Group maintains a corporate website at www.mwb.co.uk. This contains a wide range of information relating to the Group that is of interest to existing and potential Institutional and Private Investors, and is regularly updated.
The Board promotes the use of electronic communication and all Company announcements are made available on a real-time basis on the Company’s website. The website also contains corporate information which is updated on a regular basis, including details of the Group’s corporate governance procedures and the full terms of reference for its four Committees of the Board.
The Chief Executive Richard Balfour-Lynn, and the Finance Director Jag Singh, meet with shareholders, analysts and other stakeholders to explain the Group in further detail. These meetings provide explanations and commentary on matters that are of benefit to Shareholders in assessing the Group’s performance, its operations, the aspirations and strategy being adopted by the Board, the results of the Group for the half year and full year, transactions proposed to be undertaken by the Group and the Board’s expectations for the future. In addition, the Group responds to individual requests for discussions from Institutional and private stakeholders throughout the year in the form of separate meetings or written responses to the parties concerned.
During the year ended 31 December 2009, and to the date of this report, the Group provided updates to shareholders dealing with the expansion of the Group and the outlook for its future in the Annual Report and Financial Statements for the year ended 31 December 2008, in the Half-Yearly Financial Report covering the results for the six months ended 30 June 2009 and in Circulars to Shareholders issued in February, May and December 2009 and in the Prospectus issued in December 2009. Copies of these documents are made available to all interested parties from the Company Secretary, and from the date of their publication are also available on the Company’s website at www.mwb.co.uk/mwb/reports.jsp
The Annual General Meeting is normally attended by all Directors, and shareholders are invited to ask questions during the meeting on any resolutions proposed at the meeting and to meet with Directors after the formal proceedings have been concluded. The 2009 Annual General Meeting was held in June 2009 and the 2010 Annual General Meeting is due to be held on 10 June 2010. All shareholders on the register at the time that notice is given of the Company’s Annual and General Meetings are formally invited by formal notice to attend those meetings.
The Directors appreciate the importance of private shareholders of the Company and use the Company’s Annual and General Meetings as further opportunities to communicate with private investors. The Company provides private client stockbrokers, fund managers and financial publications with copies of its Half-Yearly Financial Report, Annual Financial Statements, Circulars and Press Releases, in order that these are available to the wider investing market.
It is the Company’s policy to involve shareholders fully in the affairs of the Group and to give them the opportunity at Annual General Meetings and other General Meetings called during the year to ask questions about its activities and prospects. The Board also structures these meetings so that shareholders can vote separately on each matter, by proposing separate resolutions and receiving votes for each separate item to be considered. It is the Board’s opinion that the re-appointment of the auditors and the fees payable to the auditors are inter-related issues and these are therefore dealt with as part of one resolution.
The proxy votes for and against each resolution are counted immediately prior to each Annual or other General Meeting of the Company. Each resolution is voted upon by shareholders and only after they have voted are the results of the proxy votes provided to the meeting. This enables shareholders present to vote independently of the results of proxy votes already received.
As in previous years, the Chairmen of the Audit Committee, the Conflicts Committee, the Remuneration Committee and the Nominations Committee, as well as other Directors, will be available to answer questions from shareholders at the 2010 Annual General Meeting, which will be held on 10 June 2010.
In accordance with the provisions of the Combined Code and the procedure followed by the Company in previous years, the notice of the 2010 Annual General Meeting is being sent to shareholders at least 20 working days before the meeting. Shareholders will have the opportunity to vote separately on each proposal at the Annual General Meeting, either in person or by proxy.
The Group maintains a corporate website at www.mwb.co.uk. This contains a wide range of information relating to the Group that is of interest to existing and potential Institutional and Private Investors, and is regularly updated.
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Group Remuneration Policies | |
Group Remuneration Policies
Management philosophy
MWB Group Holdings Plc is managed by the Board, utilising the services of its experienced management team.
The Executive Directors and Senior Management of each of the Group’s Operating Businesses work closely together to ensure that the Company’s strategy is implemented and monitored on a continuous basis. The Executive Directors and the separate Boards of the three Operating Businesses of the Group are responsible for operating day to day management control, acquisitions, disposals, equity and debt funding. They also co-ordinate the performance, assessment and reporting of results, financial disciplines and controls.
The Executive Directors have ensured that, in addition to the expertise at Board level, there is also a strong team below Board level to ensure the Group’s day-to-day activities are properly managed and controlled. The Board is confident that the Group continues to have strength in depth, both at Senior Executive and at middle management levels.
MWB Group Holdings Plc is managed by the Board, utilising the services of its experienced management team.
The Executive Directors and Senior Management of each of the Group’s Operating Businesses work closely together to ensure that the Company’s strategy is implemented and monitored on a continuous basis. The Executive Directors and the separate Boards of the three Operating Businesses of the Group are responsible for operating day to day management control, acquisitions, disposals, equity and debt funding. They also co-ordinate the performance, assessment and reporting of results, financial disciplines and controls.
The Executive Directors have ensured that, in addition to the expertise at Board level, there is also a strong team below Board level to ensure the Group’s day-to-day activities are properly managed and controlled. The Board is confident that the Group continues to have strength in depth, both at Senior Executive and at middle management levels.
Employment policies
It is Group policy to keep employees informed of the aims, objectives, activities and financial performance of the Group and to encourage them to take a wider interest in its affairs. This is achieved in a variety of ways, including divisional reporting, briefing sessions and distribution of information by electronic media. Copies of all half-yearly and annual financial statements of the Company, circulars to shareholders, press releases, press commentary and shareholder presentations are also made available to members of staff. In addition, Directors and Senior Management regularly visit the Group’s hotels and business centres and discuss with employees matters relating to the operation of the business.
The health and safety of employees is important to the Group. Safety awareness is promoted in the Group working environment and is reviewed in light of good practice and developing legislation. Further details relating to the Group’s health and safety policies are set out in the section entitled "Environmental Responsibility" in the "About Us" tab.
MWB Group is an equal opportunities employer and is committed to maintaining a working culture which enables all employees to make their own distinctive contribution. Employment policies are designed to be fair and equitable, and to be consistent with the abilities of employees and the needs of the Group. Applications for employment by disabled persons are fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of any member of staff becoming disabled whilst employed by the Group, effort is made to enable their employment with the Group to continue. It is Group policy that training, career development and promotion of disabled persons should, as far as possible, be similar to that of other employees. Where the needs of the Group change, or an individual’s capability becomes different from those required by the Group, Senior Management would endeavour to amend working practices to accommodate all existing employees. Where this is not possible, separate arrangements are made to ensure that employees who are departing the Group are fairly treated, both financially and in providing assistance to them in finding alternative employment.
It is Group policy to keep employees informed of the aims, objectives, activities and financial performance of the Group and to encourage them to take a wider interest in its affairs. This is achieved in a variety of ways, including divisional reporting, briefing sessions and distribution of information by electronic media. Copies of all half-yearly and annual financial statements of the Company, circulars to shareholders, press releases, press commentary and shareholder presentations are also made available to members of staff. In addition, Directors and Senior Management regularly visit the Group’s hotels and business centres and discuss with employees matters relating to the operation of the business.
The health and safety of employees is important to the Group. Safety awareness is promoted in the Group working environment and is reviewed in light of good practice and developing legislation. Further details relating to the Group’s health and safety policies are set out in the section entitled "Environmental Responsibility" in the "About Us" tab.
MWB Group is an equal opportunities employer and is committed to maintaining a working culture which enables all employees to make their own distinctive contribution. Employment policies are designed to be fair and equitable, and to be consistent with the abilities of employees and the needs of the Group. Applications for employment by disabled persons are fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of any member of staff becoming disabled whilst employed by the Group, effort is made to enable their employment with the Group to continue. It is Group policy that training, career development and promotion of disabled persons should, as far as possible, be similar to that of other employees. Where the needs of the Group change, or an individual’s capability becomes different from those required by the Group, Senior Management would endeavour to amend working practices to accommodate all existing employees. Where this is not possible, separate arrangements are made to ensure that employees who are departing the Group are fairly treated, both financially and in providing assistance to them in finding alternative employment.
Longer Term Incentive – The Long Term Incentive Plan
The Long Term Incentive Plan (“LTIP”) was closed in May 2002 for the making of further awards. The Trustees of the Employee Share Ownership Plan that operated the LTIP have a remaining holding of 766,006 Units in the Company, that are now not required for the specific purpose of the LTIP. These Units are retained by the Trustees and are used for incentive arrangements for employees of the Group and of ServCo, including potentially the Executive Directors. Since closure of the LTIP, no ordinary shares in MWB have been issued to the Executive Directors under the LTIP and no Units were issued to Senior Executives of the Group during the year ended 31 December 2009.
The Long Term Incentive Plan (“LTIP”) was closed in May 2002 for the making of further awards. The Trustees of the Employee Share Ownership Plan that operated the LTIP have a remaining holding of 766,006 Units in the Company, that are now not required for the specific purpose of the LTIP. These Units are retained by the Trustees and are used for incentive arrangements for employees of the Group and of ServCo, including potentially the Executive Directors. Since closure of the LTIP, no ordinary shares in MWB have been issued to the Executive Directors under the LTIP and no Units were issued to Senior Executives of the Group during the year ended 31 December 2009.
Longer term incentive – The Incentive Scheme
Longer term incentive is provided to ServCo employees and to the Executive Directors through the Incentive Scheme, which is based on Gross Cash Returns to Shareholders under the Cash Distribution Programme approved by shareholders in May 2002 (“the 2002 Incentive Scheme”). Details of the extension of the Scheme and the revised terms were circulated to Shareholders in the Prospectus issued in December 2009. As the Group’s business plan was extended the Scheme was also extended to 31 December 2016 in line with original shareholder approved agreements. Property sales totalling more than £600m have been successfully achieved by the Group since commencement of the Cash Distribution Programme. As a result, the majority of Group debt from the time of its implementation has been repaid and a further £80.4m has been distributed to shareholders.
Gross Cash Returns are the aggregate gross distributions or deemed distributions to shareholders by the Company in the form of cash or readily realisable assets such as shares in demerged and listed companies, where those companies were previously subsidiaries of the Group. These amounts are adjusted by adding back any corporation tax payable by the Company on any disposals, and include the aggregate gross cash or cash equivalent paid to shareholders by a third party on a takeover of the Company. The Gross Cash Return used in these calculations is before any payments due under the Incentive Scheme.
The following table illustrates the potential returns under the terms of the 2002 Incentive Scheme compared to the reduced potential returns under the Revised Incentive Scheme which was approved by Shareholders in January 2010 (“the Revised Incentive Scheme”).
Longer term incentive is provided to ServCo employees and to the Executive Directors through the Incentive Scheme, which is based on Gross Cash Returns to Shareholders under the Cash Distribution Programme approved by shareholders in May 2002 (“the 2002 Incentive Scheme”). Details of the extension of the Scheme and the revised terms were circulated to Shareholders in the Prospectus issued in December 2009. As the Group’s business plan was extended the Scheme was also extended to 31 December 2016 in line with original shareholder approved agreements. Property sales totalling more than £600m have been successfully achieved by the Group since commencement of the Cash Distribution Programme. As a result, the majority of Group debt from the time of its implementation has been repaid and a further £80.4m has been distributed to shareholders.
Gross Cash Returns are the aggregate gross distributions or deemed distributions to shareholders by the Company in the form of cash or readily realisable assets such as shares in demerged and listed companies, where those companies were previously subsidiaries of the Group. These amounts are adjusted by adding back any corporation tax payable by the Company on any disposals, and include the aggregate gross cash or cash equivalent paid to shareholders by a third party on a takeover of the Company. The Gross Cash Return used in these calculations is before any payments due under the Incentive Scheme.
The following table illustrates the potential returns under the terms of the 2002 Incentive Scheme compared to the reduced potential returns under the Revised Incentive Scheme which was approved by Shareholders in January 2010 (“the Revised Incentive Scheme”).
|
Cumulative incentive payment | ||
|---|---|---|
|
Future Gross Cash Returns |
Aggregate maximum |
Aggregate maximum |
|
£25.0m |
£0.0m | £0.0m |
|
£50.0m |
£1.3m | £0.0m |
|
£75.0m |
£3.7m | £2.1m |
|
£100.0m |
£6.3m | £4.6m |
|
£150.0m |
£12.7m | £9.6m |
|
£200.0m |
£20.2m | £14.6m |
Under the terms of the Revised Incentive Scheme, the Remuneration Committee may, at its discretion, grant awards up to 10% of the Issued Share Capital of the Company to Executive Directors and other employees.
The Remuneration Committee has granted awards under the Revised Incentive Scheme to the Executive Directors immediately following the Placing which successfully completed in January 2010 as follows:-
The Remuneration Committee has granted awards under the Revised Incentive Scheme to the Executive Directors immediately following the Placing which successfully completed in January 2010 as follows:-
|
|
|
|
|---|---|---|
|
Richard Balfour-Lynn |
35.8% | 5,872,565 |
|
Jagtar Singh |
25.8% | 4,232,184 |
|
Michael Bibring |
18.4% | 3,018,301 |
|
Total of awards granted |
80.0% | 13,123,050 |
The Remuneration Committee, in consultation with the Executive Directors, may make awards of the remaining 20% of unallocated Units available under the Scheme, to other employees.
In the event of a takeover of the Company which becomes unconditional in all respects (resulting in more than 50% of the Units being owned by one party but which may or may not involve acceptance in respect of 100% of the shares in issue), Gross Cash Returns to shareholders will be calculated on the basis of the value offered for the whole Company. If there is a demerger by the Group of its listed subsidiaries or any of its other assets in the form of listed shares, the demerger will be deemed a cash distribution for the purposes of calculating payments under the Incentive Scheme. Since approval of the Scheme in May 2002, Gross Cash Returns to shareholders have totalled £80.4m.
The Incentive Scheme will continue until the earlier of:-
(i) 31 December 2016;
(ii) a general offer for all the issued ordinary shares of the Company becomes or is declared unconditional in all respects; and
(iii) the Company has disposed of all of its property assets and businesses.
In the event of a takeover of the Company which becomes unconditional in all respects (resulting in more than 50% of the Units being owned by one party but which may or may not involve acceptance in respect of 100% of the shares in issue), Gross Cash Returns to shareholders will be calculated on the basis of the value offered for the whole Company. If there is a demerger by the Group of its listed subsidiaries or any of its other assets in the form of listed shares, the demerger will be deemed a cash distribution for the purposes of calculating payments under the Incentive Scheme. Since approval of the Scheme in May 2002, Gross Cash Returns to shareholders have totalled £80.4m.
The Incentive Scheme will continue until the earlier of:-
(i) 31 December 2016;
(ii) a general offer for all the issued ordinary shares of the Company becomes or is declared unconditional in all respects; and
(iii) the Company has disposed of all of its property assets and businesses.
Incentive arrangements in Subsidiaries
Incentive arrangements have been put in place to incentivise certain executive directors of Malmaison and Hotel du Vin and MWB Business Exchange Plc, to realise value for MWB Group and other shareholders in those companies in cash or cash equivalents at levels significantly in excess of current book values. For each of these Operating Businesses, a minimum level of cash realisation has to be achieved before a minimum level of bonus becomes payable. Thereafter, varying levels of bonus become payable after the achievement of further target amounts of cash realisation.
None of the directors who participate in these arrangements in subsidiaries are Directors of MWB Group Holdings Plc and none of the Directors of MWB Group Holdings Plc are eligible to participate in any of these arrangements. The bonuses are based on realisation of the Group’s respective investments in its two operating divisions in cash or cash equivalents as follows:-
Incentive arrangements have been put in place to incentivise certain executive directors of Malmaison and Hotel du Vin and MWB Business Exchange Plc, to realise value for MWB Group and other shareholders in those companies in cash or cash equivalents at levels significantly in excess of current book values. For each of these Operating Businesses, a minimum level of cash realisation has to be achieved before a minimum level of bonus becomes payable. Thereafter, varying levels of bonus become payable after the achievement of further target amounts of cash realisation.
None of the directors who participate in these arrangements in subsidiaries are Directors of MWB Group Holdings Plc and none of the Directors of MWB Group Holdings Plc are eligible to participate in any of these arrangements. The bonuses are based on realisation of the Group’s respective investments in its two operating divisions in cash or cash equivalents as follows:-
Base value £m |
Incentive Pool as percentage of realised value in excess of base value |
Value to be received by shareholders at which cap reached £m |
Total incentive payable if cap reached £m | |
|---|---|---|---|---|
| Malmaison and Hotel du Vin | 400.0m | 5% | 700.0m | 15.0m |
| MWB Business Exchange Plc | £50.0m (being 76p per Business Exchange share) |
10% | £150.0m (being 229p per Business Exchange share) | 10.0m |
The Group has an interest of:
(i) 82.5% in Malmaison and Hotel du Vin; and
(ii) 71.5% in Business Exchange;
and, accordingly, only these percentages of amounts paid under the incentive arrangements, would be attributable to Shareholders.
Pensions and life assurance
Since 1998, the Group has offered Defined Contribution Personal Pension Plans and life assurance cover to employees of the Group, with separate pension fund reports being provided to all members on an annual basis. There have been no major changes to the Group’s pension scheme arrangements during the year ended 31 December 2009 which is summarised below.
Contributions by employees to the Defined Contribution Personal Pension Plans are set at a minimum level of 3% of basic salary for employees. The employer’s contribution can increase with service from 4.25% of basic monthly salary at the date of joining the scheme, to 5.25% after one year’s membership and to 6.25% after two years’ membership and thereafter. Only basic salary is pensionable; other forms of remuneration are not pensionable. The same rates of contributions are paid into Personal Pension Plans on behalf of the Directors or in the case of Richard Balfour-Lynn, are made available to him in the form of benefits in kind.
The Personal Pension Plans provide employees with a pension and lump sum on retirement, the value of which is dependent on the contributions made and the rate of return achieved by the Pension Plan throughout the life of the Plan. These combine to produce a value of the fund for each individual that is accumulated until retirement of the employee concerned.
A separate life assurance scheme paid for by the Group provides a lump sum of four times basic salary to an employee’s estate and a dependant’s pension of 25% of a member’s basic salary, in the event of death in service. Other than the employee contributions referred to above, all costs of the defined contribution pension scheme and the life assurance arrangements are borne by the Group.
Since 1998, the Group has offered Defined Contribution Personal Pension Plans and life assurance cover to employees of the Group, with separate pension fund reports being provided to all members on an annual basis. There have been no major changes to the Group’s pension scheme arrangements during the year ended 31 December 2009 which is summarised below.
Contributions by employees to the Defined Contribution Personal Pension Plans are set at a minimum level of 3% of basic salary for employees. The employer’s contribution can increase with service from 4.25% of basic monthly salary at the date of joining the scheme, to 5.25% after one year’s membership and to 6.25% after two years’ membership and thereafter. Only basic salary is pensionable; other forms of remuneration are not pensionable. The same rates of contributions are paid into Personal Pension Plans on behalf of the Directors or in the case of Richard Balfour-Lynn, are made available to him in the form of benefits in kind.
The Personal Pension Plans provide employees with a pension and lump sum on retirement, the value of which is dependent on the contributions made and the rate of return achieved by the Pension Plan throughout the life of the Plan. These combine to produce a value of the fund for each individual that is accumulated until retirement of the employee concerned.
A separate life assurance scheme paid for by the Group provides a lump sum of four times basic salary to an employee’s estate and a dependant’s pension of 25% of a member’s basic salary, in the event of death in service. Other than the employee contributions referred to above, all costs of the defined contribution pension scheme and the life assurance arrangements are borne by the Group.