Corporate Governance
Performance evaluation
In each financial year since 2003/04, the Board has undertaken a formal and thorough evaluation of its performance and that of its Committees and Directors.
As in previous years, in 2006/07 this took the form of a survey completed by all Directors in relation to the Board and any Committee of which they were a member at the time of the evaluation. In addition, one-to-one meetings were held between the Chairman and each Director. Additionally, certain regular attendees at specific Committee meetings were asked to complete a survey in relation to the relevant Committee.
In 2006/07, the Board considered, as it had in previous years, the merit of using an external body to manage the performance evaluation process. It concluded it remained most appropriate for the Company Secretary & General Counsel to issue the surveys and collate and analyse the results and for the Chairman to continue his practice of holding one-to-one review meetings with each of the Directors. The Board did, however, agree to reconsider this decision on an annual basis going forward.
The Board survey was revised in 2006/07 to reflect comments made in previous years and ensure the process remained fresh and relevant. The surveys covered broadly similar areas for both the Board and its Committees, as laid out in the table below.
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* This section of the Board survey was not completed to allow time for the Board to assess the performance of the new Chief Executive during 2007 given his appointment in January 2007
Based on the outcome of the various steps in the performance evaluation process, the Board considered itself to be performing effectively and to have successfully implemented the improvement action plans that followed from the previous year's review. However, the process continued to identify areas where further improvement could aid its overall effectiveness. Actions identified from the 2006/07 evaluation process include:
considering additional development areas for Directors as appropriate;
producing templates and guidance for Board and Committee papers and presentations to ensure information presented is clear and relevant; and
devoting additional time to debating long term succession plans, particularly in relation to the Non-executive Directors (a number of whom, in two to three years time, approach the nine year independence service limit outlined in the Combined Code), as a result of recent appointments to and resignations from the Board and the planned acquisition of KeySpan.
Following the 2005/06 evaluation process, a number of actions were implemented and these included:
reviewing and revising the Company's core values;
reviewing and revising the structure of Executive Committee meetings and relevant paperwork; and
arranging additional site visits for Non-executive Directors between scheduled Board meetings.
The Chairman's performance was reviewed by the Non-executive Directors, led by the Senior Independent Director, in November 2006. The results of this review were discussed with the Chairman, with his overall performance and leadership deemed to be satisfactory.