Nominations Committee report

Succession planning remains at the forefront of the Committee’s thinking.

Michael Dobson, Chairman (photo)

Michael Dobson
Chairman of the
Nominations Committee

Committee membership (meeting attendance is in chapter The Board and its Committees)

Michael Dobson (Chairman)

Robin Buchanan

Rhian Davies

Rakhi Goss-Custard

Lord Howard

Ian King

Philip Mallinckrodt

Nichola Pease

Bruno Schroder

I am pleased to present the Nominations Committee report for 2016.

As I outlined in my Chairman’s statement earlier, we have made a number of changes to the Board in 2016. The first part of the year was focused on managing the succession to me as Chief Executive and Andrew Beeson as Chairman. The process for succession to the Chief Executive was led by Andrew and succession to the Chairman was led by the Senior Independent Director, Philip Howard. The detail behind this process was set out in our 2015 Annual Report and Accounts.

I took over as Chairman of the Committee on 4 April 2016 and my priority was to lead the process to deliver on our commitment to appoint two additional independent non-executive Directors by the end of 2016. The process we followed is set out in more detail in this report and I am delighted that we were able to announce in December the appointments of Ian King and Rakhi Goss-Custard. Ian and Rakhi bring skills and experience that are complementary to those of the existing non-executive Directors. They will both make a significant contribution to our Board discussions.

Succession planning remains at the forefront of the Committee’s thinking. After nine years on the Board, Philip Howard will step down as a Director at the AGM in 2018. We are already giving consideration to his succession as Senior Independent Director and Chairman of the Remuneration Committee. We will begin a search for an additional independent non-executive Director later in the year.

The Committee considered Philip Mallinckrodt’s appointment as a non-executive Director at its meeting held in February 2017. The Committee fully supported his appointment which was approved by the Board on 1 March 2017.

Executive succession is also an important area of focus for the Board. We need to develop our talent such that we have a pipeline of executive management below Board level with the potential to lead the business in the future. Talent management and succession planning is considered by the full Board at least once a year.

Responsibilities of the Committee

The Committee is responsible for keeping under review the composition of the Board and its Committees and to ensure appropriate executive and non-executive Director succession plans are in place.

The Committee’s terms of reference are available on our website.

Board composition

Following the appointment of Ian King and Rakhi Goss-Custard and with Philip Mallinckrodt’s move to a non-executive Director role, the make up of the Board is illustrated below:

Board composition (pie chart)

We have three female Directors representing 27% of the Board.

As a multinational Company with offices staffed by local nationals in 27 different countries, diversity for us goes beyond gender or ethnic background. We look for a diversity of skills and experience, particularly international experience, which we believe is vital for an effective Board and this will continue to be the primary criterion by which we select candidates for the Board.

The Board is also supportive of the recommendations set out in the Parker Report on ethnic diversity.

Board policy on diversity

The Board recognises the importance of diversity and that it is a wider issue than gender. We believe that members of the Board should collectively possess a diverse range of skills, expertise, industry knowledge, business and other experience necessary for the effective oversight of the Group. The Nominations Committee considers diversity as one of many factors when recommending new appointments to the Board.

The Board aims to have 33% of Board positions held by women by 2020. We also endeavour to only use the services of executive search firms who have signed up to the Voluntary Code of Conduct on Gender Diversity.

Appointment of new independent non-executive Directors

In April 2016 we said we would increase the independent representation on the Board by appointing two additional independent non-executive Directors.

I met separately with each member of the Committee and the Group Chief Executive to discuss the desired skills and experience required in potential non-executive candidates. The Committee met in June and agreed the required skill sets which included:

  • Current or recent board level experience within a major UK-listed company
  • Broad international experience
  • Experience of multi-product and channel businesses
  • Experience of technological and digital change as a strategic enabler
  • A background in finance and risk would be useful to support the Chairman of the Audit and Risk Committee
  • Preferably one non-British national but with a strong preference that both are based in the UK
  • Diversity in all respects, but particularly gender.

To facilitate the search, we appointed MWM Consulting who assisted in formulating the role specification and provided us with a long-list of potential candidates for consideration. We also used Korn Ferry to identify potential candidates. Both firms are signatories to the Voluntary Code of Conduct on Gender Diversity and were independent of Schroders.

After initial screening, I interviewed several candidates and five went on to meet the Nominations Committee and the Group Chief Executive. In December we announced the appointment of Ian King and Rakhi Goss-Custard with effect from 1 January 2017. The appointments met many of the requirements we set out in our original specification. Ian brings extensive experience in leadership positions in major multi-national companies which will be of great value to us as we continue to grow our business internationally. Rakhi’s experience in the digital world, through her work at Amazon and, more recently, through her experience as a non-executive Director on other boards, will have a significant contribution to make as the impact of digital becomes increasingly important in the asset management industry. I look forward to their contribution over the coming years

Directors’ re-election to the Board

In accordance with the Company’s Articles of Association, Ian King and Rakhi Goss-Custard will be put forward for election at the 2017 AGM. The remaining Directors will retire from the Board and submit themselves for re-election at the AGM.

The Committee has assessed the independence, time commitment and effectiveness of the non-executive Directors and is satisfied that all non-executive Directors continue to fulfil their fiduciary responsibilities and statutory duties.

As Robin Buchanan, Philip Howard and Bruno Schroder have served on the Board for more than six years, the proposal for their re-election was given particular consideration. The Committee also considered Philip Mallinckrodt’s re-election as a non-executive Director. The Committee agreed that these Directors continue to provide a valuable contribution to the Board’s deliberations and recommends their re-appointment.

As required by the UK Listing Rules, the appointment of independent Directors must be approved by a simple majority of all shareholders and by a simple majority of the independent shareholders. Further details are set out in the 2017 Notice of AGM.

Evaluating the performance of the Committee

The evaluation process for 2016 is set out in chapter Governance framework. As part of that process I discussed with each Director how the Committee had performed in 2016. The overall feedback was that the Committee had performed its role well during the year. Establishing at the outset clear requirements in relation to the new independent non-executive Directors was seen as central in delivering a successful outcome. All members fully engaged in the process and they were updated regularly on progress in addition to the reports they received in Committee meetings.

Priorities for 2017

Succession planning is seen as a constant requirement. Over the next two years two non-executive Directors, Philip Howard and Robin Buchanan, will have completed nine years on the Board and our focus in 2017 will be to establish a pipeline of potential candidates who could succeed them. As stated above we will begin a search for a new independent non-executive Director later this year. 
Executive succession, vital to the future success of the Company, is considered annually by the full Board.

Michael Dobson
Chairman of the Nominations Committee
1 March 2017