The Board considers that good corporate governance is an essential element of achieving its overall objectives. The Group’s corporate governance policies and practices continue to be reviewed by the Board on a regular basis. The Board report on corporate governance, which can be found in the Alliance Boots Annual Report 2013/14, together with the audit and risk committee report and the Board report on remuneration, sets out the governance structures adopted by the Board.
At 31 March 2014 the Board comprised the Executive Chairman, three other executive Directors, three Directors representing KKR, three Directors representing Walgreens and four non-executive Directors. Alex Gourlay, Chief Executive, Health & Beauty Division resigned from the Board on 30 September 2013 following his appointment as Walgreens Executive Vice President, President of Customer Experience and Daily Living.
During the year the Board reviewed the composition of the Board and the balance of skills, knowledge and experience its members bring, and concluded that the Board has the appropriate balance for the Company.
Non-executive Directors are appointed for an initial term of three years which is then renewed and extended for not more than two further three year terms. Nick Land, Tony De Nunzio, Chris Britton and Etienne Jornod were all first appointed to the Board in 2008 and reappointed for further three year terms in 2011. Following a review of their performance by the Executive Chairman, it was concluded that each continued to contribute effectively and with proper commitment, devoting adequate time to carry out their duties. The Board approved the recommendation that each of the non-executive Directors be re-elected for a further term of up to three years, the period being dependent on whether and when Walgreens exercises its option to merge with the Group.
The Board has a programme which enables it to discharge its responsibility to provide leadership to the Company within a framework of prudent and effective controls and to assess and manage risk. The Board has five regular meetings scheduled in the year, including one strategy meeting, with other meetings convened as required.
There is an approved schedule of matters reserved for decision by the Board with related delegated authorities. These matters cover strategy and business plans, share capital and dividends, Board committees, remuneration and employment benefits, corporate reporting, capital and revenue commitments, corporate governance, internal control and risk management, and corporate social responsibilities.
For all Board meetings an agenda is established. For regular Board meetings this generally comprises reports on the financial performance of the Group and its Divisions, approval of major items of capital expenditure and acquisitions, and significant policy issues. The Board receives reports from the committees of the Board to enable it to be informed of and supervise the matters within their remit. Appropriate papers are provided to the Directors in advance of each meeting. In addition, the Board considers at least annually the strategic plans of the Group and its Divisions and, from time to time, Directors receive presentations from management concerning key areas of the Group’s operations. The Annual Report, which includes the consolidated financial statements, is reviewed by the audit and risk committee and approved by the Board prior to publication.
In the furtherance of their duties, the Directors have full access to the services of the Company Secretary and may take independent professional advice at cost to the Company. In addition, each committee of the Board is entitled to take independent professional advice as appropriate. The Company maintains appropriate directors and officers insurance in respect of legal action against its Directors.
The Company provides a tailored induction programme for all Directors on appointment. The induction programme includes details of Board and Group policies and procedures, information and briefings by members of management on the Group’s businesses and operations, and visits to retail stores, distribution centres, manufacturing facilities and other operations on a selective basis.
The Board is regularly updated on developments relating to the Group’s activities, corporate governance and other matters of relevance, and non-executive Directors visit the Group’s operations periodically.