In this section, we
describe how the Company's governance operated during
2010
Martin Murray
Group Company Secretary
Approach to governance
Old Mutual views good governance as a vital ingredient of
operating a successful business, so that we can provide assurance
to shareholders, customers and regulators that the Group's
businesses are being properly managed and controlled.
During 2010, the Group completed its transition from a highly
decentralised federal model of group governance to a more
centralised "strategic controller" model steered from our head
office, facilitated by the roll-out of our new Group Operating
Model.
The new Model establishes clear principles of delegation and
escalation that are designed to provide appropriate levels of
assurance about the control environment, while retaining
flexibility for our businesses to operate efficiently.
Compliance with the UK Corporate Governance Code
As the Company's primary listing (now known in the UK as a
premium listing) is on the London Stock Exchange, this report
mainly addresses the matters covered by the UK Corporate Governance
Code, but the Company also has regard to governance expectations in
the four other territories where its shares are listed (South
Africa, Malawi, Namibia and Zimbabwe). The Company's major South
African subsidiaries are also subject to applicable local
governance expectations, including those contained in King III and,
in the case of Nedbank Group Limited, the Listings Requirements of
the JSE Limited.
Throughout the year ended 31 December 2010 and in the
preparation of this Annual Report and these Accounts, the Company
has complied with the main and supporting principles and provisions
set out in the UK Corporate Governance Code as described in the
following sections of this Report save in respect of the matter
discussed below under the heading "rotation and re-election of
directors". The Company's compliance with UK Corporate Governance
Code provisions C1.1, C2.1, C3.1 to C3.7, and the statement
relating to the going concern basis adopted in preparing the
financial statements set out at the end of this section of this
report, have been reviewed by the Company's auditors, KPMG Audit
Plc, in accordance with guidance published by the Auditing
Practices Board.
Board of Directors
Membership
The Old Mutual Board currently has 13 members, two of whom are
executive and eleven of whom are non-executive directors. All of
the current directors, except for Roger Marshall (who was appointed
to the Board on 5 August 2010), Alan Gillespie (who was appointed
to the Board on 3 November 2010) and Eva Castillo (who was
appointed to the Board on 2 February 2011), served throughout the
year ended 31 December 2010. Richard Pym resigned from the Board at
the end of his first three-year term in August 2010 because of the
presence of his other commitments.
Responsibilities of the Board
The Board's role is to exercise stewardship of the Company
within a framework of prudent and effective controls that enables
risk to be assessed and managed. The Board sets the Company's
strategic aims, reviews whether the necessary financial and human
resources are in place for it to meet its objectives and monitors
management performance. It is kept informed about major
developments affecting the Group through the Group Chief
Executive's monthly reports and also holds one or more strategy
sessions each year at which high-level strategic matters are
debated.
The Board has overall authority for the conduct of the business
of the Group and there are a number of matters that have been
specifically reserved for the Board to decide, including:
- Approval of financial reporting, such as interim and annual
results, the Annual Report and Accounts of the Group, payment of
dividends and accounting policies;
- Monitoring of the cash and capital
resources, and overall liquidity, of the Group and authorising any
significant acquisitions, disposals of core businesses,
investments, capital expenditure or other material projects or
transactions;
- Monitoring and managing of the relationships between the Group
and its regulators;
- Reviewing and implementing of effective systems of delegation
and internal control, and the carrying out of an annual review of
their effectiveness;
- Overall review and approval of Group strategy and the setting
of long-term objectives and/or changes in strategic direction;
and
- Monitoring of the overall performance of the Group in relation
to its objectives, plans, targets and the implementation of
projects and decisions.
2010 operations
Board meetings were held regularly during 2010. Scheduled
meetings were coordinated with the Company's reporting calendar to
allow for detailed consideration of interim and final results and
interim management statements. Sessions were also devoted to
strategy and business planning and the Board met ad hoc, as
required, to deal with specific matters requiring its
consideration. In all, 19 Board meetings (of which eight were
scheduled and 11 convened ad hoc) were held during 2010.
Monthly management accounts were circulated to each member of
the Board within three weeks of the month end, containing detailed
analysis of the businesses' financial performance, including
comparisons against budget. Any issues arising from these are
addressed at Board meetings or can be raised directly with
management.
The Board calendar ensures that all key matters are scheduled
for attention over the course of the year, including presentations
on the Group's major businesses. During 2010, the Board held
meetings at the Group's South African, Wealth Management and Nordic
businesses' premises.
In addition to its normal agenda items, the Board also addressed
the following matters, among others, during the year:
- Approval of the Group's strategic targets for the end of 2012
that were announced in March 2010 and review of progress against
those targets. The Board also held various follow-up discussions
about strategy for the Group as a whole and for particular business
units;
- Oversight of the sale process for the US Life business and of
negotiations for a possible sale of the Group's stake in
Nedbank;
- Approval of the introduction of a scrip dividend alternative
scheme for future dividends;
- Monitoring progress of the iCRaFT project, which is designed to
prepare the Group for the introduction of Solvency II;
- Updates on the embedding of the new Group Operating Model;
and
- Consideration of scenario-planning for the Old Mutual Bermuda
business.
In addition, the Board received briefings on a number of topics
from internal and external experts during the year, as part of its
continuing training, including risk in the financial services
industry, compliance procedures required for the new UK Bribery Act
2010, and the role of models in bridging risk and capital.
New directors received induction upon their appointment to the
Board, including information about matters of immediate importance
to the Group, such as the current strategy and operating
performance. During 2010, these induction arrangements were put on
to a more formal footing, with an extensive list of briefing
sessions about the Group's businesses being made available to new
appointees in conjunction with other directors, members of senior
management and external advisers (such as the auditors).
All directors have access to the Group Company Secretary, who is
responsible to the Board for ensuring that Board procedures are
complied with.
Facilities are available for the directors to take independent
professional advice at the Company's expense for the furtherance of
their duties, whether as members of the Board or of any of its
committees.
The Company maintains directors' and officers' liability
insurance in respect of legal action against its directors and
senior managers.
Delegation of certain responsibilities
The Board has delegated its executive powers to the Group Chief
Executive, with power to sub-delegate, and to the Approvals
Committee. In his coordination and stewardship of the Group, the
Group Chief Executive is advised by the Group Executive Committee,
a consultative management committee. In addition to the executive
directors of the Company (Julian Roberts and Philip Broadley), the
other current members of the Group Executive Committee are: Peter
Bain (President and Chief Executive Officer of US Asset
Management), Andrew Birrell (Group Risk and Actuarial Director),
Mike Brown (Chief Executive of Nedbank Group), Paul Hanratty (Chief
Executive Officer of the Long-Term Savings division), Don Hope
(Head of Strategy Development) and Don Schneider (Group Human
Resources Director). Additional details of members of the Group
Executive Committee accompany their photographs on pages 42 and 43
of this Annual Report.
The Board has also delegated specific responsibilities for
certain matters to Board committees. The principal Board committees
have responsibility for Nomination, Remuneration, Group Audit and
Board Risk matters, subject to their respective terms of reference.
The Board receives reports from these committees on the subjects
that they have covered. The matters addressed by the principal
Board committees in 2010 are outlined below under the heading
'Board Committees' and, for the Remuneration Committee, in the
Remuneration Report.
