REG - ITV PLC - Annual Report and Accounts 2014 <Origin Href="QuoteRef">ITV.L</Origin> - Part 4

ITVAnnouncement

26/03/2015 10:30

- Part 4: For the preceding part double click  ID:nRSZ5364Ic 

the Board for decision which is available on our website. 
 
What we focused on in 2014 
 
·     Strategy evolution 
 
·     International content strategy 
 
·     Pension investment strategy 
 
·     Acquisition evaluation and management 
 
·     Risk appetite, profile and mitigation 
 
Our plans for 2015 
 
·     Broadcast strategy focusing on SOV 
 
·     International content strategy 
 
·     Online, Pay & Interactive strategy 
 
·     Retransmission fees and the regulatory environment 
 
Our meetings 
 
The number of meetings held during the year and attendance of Directors is set out in the table on page 70. The Board
agrees an annual schedule of matters it wishes to consider at each of its meetings and those of its committees. The
schedule ensures that all relevant matters are considered and receive appropriate attention. Meetings are normally held at
one of the London sites and at least once a year they are held at one of the regional or international offices. Board
meetings are structured around the following areas: 
 
·     Operational and functional updates 
 
·     Financial updates 
 
·     Strategy and risk 
 
·     Progress against strategy 
 
·     Other reporting and items for approval 
 
·     Feedback from committees 
 
Senior Executives and other colleagues are regularly invited to attend meetings for specific items. In addition to formal
Board and Committee meetings, meetings take place between: 
 
·     Board members and Management Board members 
 
·     Chairman and Non-executive Directors 
 
·     Senior Independent Director and Non-executive Directors (without the Chairman present) 
 
The diagram on page 68 shows our governance structure. 
 
The Board has approved a formal framework for the approval of expenditure within the Company around this governance
structure. 
 
Who is on our Board and how we work as a team 
 
Composition and appointments 
 
In July 2014 the Board appointed Mary Harris as a Non-executive Director. Mary was selected from a number of potential
candidates. The Board felt that Mary's experience in business strategy as well as media, television, and interactive media
investments and digital rights management would be an asset to the Board. Executive search firm Russell Reynolds were
engaged to assist with the rigorous selection process. Russell Reynolds have no other connection with ITV. 
 
Lucy Neville-Rolfe stepped down from the Board on 17 July 2014. 
 
As recommended by the Code, there will be resolutions to elect or re-elect each of the Directors at the AGM in May 2015. 
 
Non-executive Directors are expected to commit at least 18 to 20 days per annum and in practice spend considerably more
than this. The Board is satisfied that each of the Non-executive Directors commits sufficient time to the business of the
Company. An outline of the terms of engagement for the Non-executive Directors can be found on our website. 
 
Non-executive Directors are appointed for an initial three year term and are reappointed annually thereafter following a
formal, robust evaluation process. 
 
During the year both John Ormerod's and Andy Haste's appointments were extended for a further 12 months. John Ormerod's
appointment was again extended in January 2015.John Ormerod and Andy Haste have been Non-executive Directors for over six
years. The Board continues to believe that they bring a wealth of knowledge and experience to their deliberations and
provide a valuable contribution as Chairmen of the Audit Committee and Remuneration Committee respectively. 
 
Skills and experience 
 
There are job descriptions in place for each of the Chairman, the Chief Executive, and the Senior Independent Director
which have been agreed by the Board. 
 
Biographical details for the Directors are set out on page 59, with fuller biographies available on our website. 
 
The Board is still of the view that the Non-executive Directors are independent in both character and judgement. They
constructively challenge and help develop proposals on strategy, scrutinise the performance of management in meeting agreed
goals and objectives and monitor the reporting of performance. 
 
The Board works well together, bringing strong, independent, balanced judgement, knowledge and experience to its
deliberations. Each Non-executive Director has appropriate skills and experience so that their views carry significant
weight in the decision making. 
 
Board and Committee membership and attendance at meetings in 2014 
 
Scheduled meetings are shown in black and ad hoc meetings are shown in orange. 
 
 Peter Bazalgette    Independent           1  1 June 2013       1/8   1 June 2016      10  1  3  1  -  -  
 Adam Crozier        Executive             2  26 April 2010     4/10  n/a              10  -  -  -  -  -  
 Roger Faxon         Independent              31 October 2012   2/4   31 October 2015  10  1  -  -  -  -  
 Ian Griffiths       Executive             2  9 September 2008  6/5   n/a              10  -  -  -  -  -  
 Mary Harris         Independent           3  28 July 2014      0/7   28 July 2017     3   1  -  -  -  -  
 Andy Haste          Independent SID       4  11 August 2008    6/6   11 August 2015   9   1  6  1  5  2  
 Lucy Neville-Rolfe  Independent           5  3 September 2010  -     n/a              7   0  -  -  2  1  
 Archie Norman       Independent Chairman     1 January 2010    5/2   1 January 2016   10  1  6  1  -  -  
 John Ormerod        Independent              18 January 2008   7/1   18 January 2016  10  1  6  1  5  2  
 
 
5/2 
 
1 January 2016 
 
10 
 
1 
 
6 
 
1 
 
- 
 
- 
 
John Ormerod 
 
Independent 
 
18 January 2008 
 
7/1 
 
18 January 2016 
 
10 
 
1 
 
6 
 
1 
 
5 
 
2 
 
1.   Peter Bazalgette was appointed to the Remuneration Committee on 1 June 2014 and so did not attend the three meetings
held prior to his appointment. 
 
2.   Executive Directors have rolling service contracts that provide for 12 months' notice on either side.  For more
details see page 94. 
 
3.   Mary Harris was appointed to the Board on 28 July 2014. Seven of the ten scheduled Board meetings were held prior to
her appointment. 
 
4.   Andy Haste did not attend a scheduled Board meeting on 30 September 2014 due to other Board commitments. 
 
5.   Lucy Neville-Rolfe stepped down from the Board on 17 July 2014. 
 
Our committees 
 
The Board has delegated certain responsibilities to its committees. The terms of reference for each committee are reviewed
annually and the current versions are available on our website. 
 
Audit Committee 
 
See the Audit Committee Report on page 75. 
 
Remuneration Committee 
 
See the Annual Remuneration Report on page 82. 
 
Nomination Committee 
 
This committee is composed of the Non-executive Directors. 
 
The role of the Nomination Committee is to: 
 
·     review the structure, size, and composition of the Board, including skills, knowledge and experience; 
 
·     identify and nominate for Board approval candidates to fill Board vacancies; 
 
·     consider succession planning for Directors and other Senior Executives; and 
 
·     consider and review any conflicts of interest that may be reported by the Directors. 
 
In addition to considering matters under its terms of reference, the Committee considered candidates for a Non-executive
Director appointment. Further details are set out in the Composition and Appointments section on page 69. The Committee
also reviewed a detailed succession planning framework and undertook an annual review of conflicts of interest. 
 
Full details of attendance at committee meetings can be found in the table above. 
 
The Company also has the following committees: 
 
General Purpose Committee: the Committee is composed of the Executive Directors. The Committee meets as required to conduct
the Company's business within the clearly defined limits delegated by the Board and subject to those matters reserved to
the Board. 
 
Disclosure Committee: the Committee is composed of the Executive Directors and other members of the senior management team.
The function of the Committee, in accordance with the Company's Inside Information Policy, is to ensure compliance with
continuing obligations under the Disclosure and Transparency Rules and the Listing Rules. 
 
Tax and Treasury Committee: the Committee is composed of the Group Finance Director and other senior managers from Tax,
Treasury, Finance and Legal. The function of the Committee is to consider and approve (in line with authority delegated by
the Board) tax and treasury-related matters in respect of corporate transactions or activities such as bank account
management, borrowings, acquisitions, financing and hedging transactions, intercompany transactions,
incorporation/liquidation of Group subsidiaries and  guarantees. In addition, the Committee has a monitoring role over
general compliance with tax and treasury related policies and procedures. 
 
Effectiveness 
 
Evaluation 
 
In 2012 the Board's effectiveness was externally reviewed by YSC, a global firm of business psychologists. One of the
outcomes was an ongoing programme facilitated by YSC.  The review focused on roles and responsibilities, culture, balance
of skills and experience, diversity, how the Board works together and how effective the Directors are in assisting the
executive team in achievement of the strategy. 
 
YSC have also been involved in supporting the review of the Board make-up and composition. They have no other connection
with the Company. 
 
The work of the Board and its committees is reviewed annually with the support of the Company Secretary. In 2014 particular
focus was on the effectiveness of our board committees. 
 
In accordance with the Code the Chairman will be undertaking an externally facilitated board and committee evaluation in
2015. 
 
Succession planning and diversity 
 
Board tenure 
 
All Directors are required by the Company's Articles of Association to be elected by shareholders at the first AGM
following their appointment by the Board. Subsequently, all Directors are subject to annual re-election by shareholders as
recommended by the Code. 
 
Succession planning 
 
The Board has agreed a succession planning framework to ensure that: 
 
·     Board tenure is appropriate and encourages fresh thinking and new ideas; 
 
·     the Board is sufficiently diverse but most importantly has the appropriate mix of generalist and specialist skills;
and 
 
·     Non-executive Directors have the appropriate level of independence, from the executive and each other. 
 
The Board keeps this under constant review. 
 
When planning succession within the Company consideration is given to emergency cover together with medium and long term
succession. There is particular emphasis on growing the internal leadership pipeline through the launch of the following
key programmes: 
 
Executive Development Programme 
 
Next generation potential Board successors, giving them an opportunity to develop their management potential and gain a
greater understanding of the business. 
 
Developing Future Leaders Programme 
 
Delegates selected from across the business identified as a result of the performance review process. Content includes
understanding what it means to be a leader at ITV, how to manage performance effectively, coaching skills and change
management. 
 
Graduate Programme 
 
Apprentice Programme 
 
A comprehensive portfolio of development courses and workshops for all colleagues which address common development needs is
in place. 
 
Diversity 
 
It is our policy to retain a strong but relatively small Board bringing a balance of in-depth commercial and creative
experience. It continues to be the Board's intention to increase the diverse make-up and representation as opportunities
arise, but given the size of the Board specific formulaic targets are not appropriate. 
 
Diversity within the organisation is integral to achieving our business aims. Reflecting the demographics of our customers
and understanding their needs ensures that our brand, services and products are accessible, inclusive and have wide appeal.
The Company's aim is to represent modern Britain both within the organisation and across our products and services.
Year-on-year progress has been achieved in working towards this target. Key activity in 2014 included: 
 
·     Introduction of the Social Partnership. A framework for all programme suppliers that outlines ITV's expectations when
it comes to diversity and inclusion within both the workforce and programme content. 
 
·     Sustaining programme portrayal monitoring across 75% of our programmes. ITV is also sharing best practice and leading
on the technical development of a pan-industry monitoring process to capture diversity data and areas for improvement
across the industry's supply chain. 
 
·     Continuation of programmes and initiatives to develop minority talent such as our 'Breaking through Talent' and
'Original Voices' scheme in drama to our continued support of the inaugural Asia Media Awards. 
 
·     Continued Chairmanship (Adam Crozier) of the Creative Diversity Network. The industry's network looks at joint action
and responsibility for addressing representation and inclusion across the industry. 
 
Induction 
 
The Company has a policy and programme for induction and continuing professional development of Directors. On appointment,
each Director takes part in a comprehensive induction programme where they: 
 
·     receive information about the Group in the form of presentations by Executives from all parts of the business and on
the regulatory environment; 
 
·     meet representatives of the Company's key advisers; 
 
·     receive information about the role of the Board and the matters reserved for its decision, the terms of reference and
membership of Board committees and the powers delegated to those committees; 
 
·     receive information about the Company's corporate governance practices and procedures and the latest financial
information about the Group; and 
 
·     are advised of their legal and other duties and obligations as a director of a listed company. 
 
This is supplemented by visits to key locations, including studios and regional sites, and meetings with key senior
executives and with major shareholders where appropriate. 
 
The key stages of the induction programme are: 
 
Stage 1 
 
Provision of documents 
 
Duties of a director, Board procedures, Board and strategy papers and corporate governance 
 
Stage 2 
 
Meeting with Chief Executive and Group Finance Director 
 
Business overview, strategy, current trading and key commercial issues 
 
Meetings with Non-executive Directors 
 
Open discussion forums 
 
Meetings with Management Board members and other Senior Executives 
 
Commercial issues and projects 
 
Stage 3 
 
Site visits 
 
Understanding of the business and operations 
 
Additional specific induction programmes are in place when Non-executive Directors join committees. 
 
Continuing professional development 
 
During their period in office, the Directors are continually updated on the Group's businesses and the competitive and
regulatory environments in which they operate. This is done through: 
 
·     updates and papers which cover changes affecting the Group and the market in which it operates; 
 
·     meetings with senior executives across the Group and key advisers; 
 
·     regular updates on changes to the legal and governance requirements of the Group and in relation to their own
position as Directors; and 
 
·     presentations given at board and committee meetings on business matters and technical update sessions from external
advisers where appropriate. 
 
As part of their professional development Executive Directors may accept external appointments as Non-executive Directors
of other companies and retain any related fees paid to them. Details of positions held and fees received by Executive
Directors in 2014 can be found on page 94. 
 
Conflicts of interest 
 
The Board has delegated the authorisation of conflicts to the Nomination Committee and has adopted a Conflicts of Interest
Policy. 
 
The Board has considered in detail the current external appointments of the Directors which may give rise to a situational
conflict and has authorised potential conflicts where appropriate. 
 
This authorisation can be reviewed at any time but will always be subject to annual review. The Board is confident that
these procedures operate effectively. 
 
Insurance and indemnities 
 
The Company maintains liability insurance for its Directors and officers which is renewed on an annual basis. The Company
has also entered into deeds of indemnity with its Directors. A copy of the indemnity can be found on our website. 
 
Relations with shareholders 
 
The Board attaches a high priority to effective communication with shareholders and has regular and open dialogue with
investors. The Board believes that continued engagement with shareholders is beneficial to both ITV and its stakeholders as
it helps to build a greater understanding of investors' views, opinions and concerns.
Adam Crozier, Ian Griffiths and our
investor relations team meet with many institutional investors throughout the year to keep them updated on the Company's
performance against our strategy. These range from one-to-one meetings to group presentations including the Full Year and
Interim results and the AGM. Specifically, following the Full Year and Interim results one-to-one meetings are held with
our largest institutional investors. 
 
The Chairman also responds to shareholder queries and holds meetings where appropriate. 
 
The Company maintains a programme of engagement with the investment community, including results presentations, briefings
to brokers and other sales forces and attendance at a number of investor conferences. 
 
We regularly seek feedback on the perception of the Company amongst shareholders and the investor community more broadly
via our corporate brokers. Investor comments are fed back to the Board and its committees regularly. 
 
Private shareholders represent more than 92% of our shareholders, holding 2.93% of our shares. We encourage shareholders to
register their email addresses to receive information from us in a timely manner. 
 
AGM 
 
The AGM will be held on Thursday, 14 May 2015 (further details can be found on page 65). The Notice of Meeting sets out the
resolutions being proposed. The Notice, together with any related documents, is made available to shareholders on our
website or is mailed to them, if they have elected to receive hard copies, at least 20 working days before the mee