REG - Phoenix Grp Hldgs - Phoenix Group Holdings - 2016 Annual Results <Origin Href="QuoteRef">PHNX.L</Origin> - Part 4
20/03/2017 07:07
- Part 4: For the preceding part double click ID:nRST8776Zc
The current assessment of the residual risk in respect of each of the Group's principal risks is illustrated in the chart
opposite.
The residual risk is the remaining risk after controls and mitigating actions have been taken into account.
The Group's senior management and Board also take emerging risks into account when considering potentially adverse outcomes
and appropriate management actions prior to the risk crystallising.
Some of the current emerging risks the Group considers are listed in the table below.
Risk Title Description Risk Universe Category
Regulatory Thematic The unknown consequences and the potential impact, including retrospective activity, as a result of Thematic Reviews conducted by the regulators. Customer
Reviews
Voluntary Charges The FCA has noted that they are seeking a 'voluntary solution' on exit charges for legacy products. Customer
Cap
Political Risk Unexpected changes in the legislative environment and the impacts on financial markets driven by the political agenda following the UK's decision to leave the European Union. Strategic
Market Disruptors The impact of alternative providers in the market or those with more comprehensive digital propositions. Strategic
Viability statement
In accordance with the provision of section C.2.2 of the 2014 revision of the UK Corporate Governance Code, the Board has
completed an assessment of the prospects and viability of the Group over a five-year period to December 2021. The Board has
determined that the five-year period to December 2021 is an appropriate period for the assessment, this being the period
covered by the Group's Board-approved annual operating plan ('AOP').
In making the viability assessment, the Board has undertaken the following process:
- it defined what is mandatory in the context of viability;
- it reviewed the AOP which considers profits, liquidity, solvency and strategic objectives and the impacts of
management actions on the Group;
- it completed stress testing to assess viability under severe but plausible scenarios, including two adverse stresses
which represent the key financial risks to the Group as follows:
1. Market stress - a 1 in 10-year event combined market stress incorporating a fall in equity, property values and
yields, with a widening of credit spreads.
2. Longevity stress - a 1 in 10-year event longevity and credit stress, which implies a 1.5 year increase in life
expectancy for a 65 year old male alongside a widening of credit spreads.
- it considered the principal risks facing the Group which have the potential to impact on viability as discussed in
the Risk report above; and
- it completed a qualitative assessment of all strategic risks to the Group and contingent actions available that
could be implemented should any risk materialise that threatens the Group's resilience.
The Board has also made certain assumptions when making the assessment and these include the following:
- the stress occurs on 1 January 2017 with no allowance for any recovery, but do take into account the impact of
transitionals recalculation; and
- that corporate acquisitions are not relevant, as any acquisition would only be progressed on the basis it was value
accretive.
Based on the results of the procedures outlined above, the Board has a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due over the five-year period of assessment.
Environmental reporting
Our Corporate Responsibility programme supports our commitment to monitoring and reducing our environmental footprint.
This section includes mandatory reporting of greenhouse gas ('GHG') emissions pursuant to the Companies Act 2006 (Strategic
and Directors' Reports) Regulations 2013. Emissions disclosed relate to facilities and activities where the Group has
operational control.
On 1 November 2016, the Group completed the acquisition of AXA Wealth's pension and protection business from AXA UK plc.
The acquisition resulted in two additional properties transferring to our operational control and being included in our
carbon footprint.
In addition, on 30 December 2016 the Group completed the acquisition of Abbey Life Assurance Company Limited, Abbey Life
Trustee Services Limited and Abbey Life Trust Securities Limited from Deutsche Bank Holdings No. 4 Ltd resulting in one
property in Bournemouth transferring to our operational control and being included in our carbon footprint on a pro-rata
basis.
In 2016 emissions have dropped principally through a reduction in the emission factor for consumption of purchased
electricity (Scope 2) and the closure of one property. Approximately 0.4% of 2016 emissions are estimated as full year data
is not yet available for all facilities. A sample of emissions from fuel use for company owned transport and back-up
generation and fugitive emissions from refrigerants were calculated and were determined to be non-material to the overall
footprint, so have not been included.
The data reported is based on the main requirements of the ISO14064 Part 1 and the GHG Protocol Corporate Standard (revised
edition). Data was gathered at facility level to compile the carbon footprint. The Government's 2016 Conversion Factors for
GHG Company Reporting have been used to convert energy data into carbon dioxide equivalent (CO2e) emissions.
2016 marks the first time Phoenix Group is reporting Scope 2 emissions using the GHG Protocol dual-reporting methodology.
This updated approach states that organisations should provide two figures to reflect the GHG emissions from purchased
electricity, using both:
- A location-based method that reflects the average emissions intensity of the electricity grids from which
consumption is drawn; and
- A market-based method that reflects emissions from electricity specific to each supply/contract
For market-based emissions there is a reporting quality hierarchy and Phoenix Group have used residual mix factors in the
absence of contractual instruments.
GREENHOUSE GAS EMISSIONS
Global GHG emissions data in tonnes of CO2e
2016 20151
(location-based) (market-
based)
Combustion of fuel and operation of facilities (Scope 1) 1,078 1,078 986
Electricity, heat, steam and cooling purchased for own use (Scope 2) 2,286 2,679 2,874
Total Carbon Footprint (Scopes 1 + 2) 3,364 3,757 3,860
PHOENIX GROUP'S CHOSEN INTENSITY MEASUREMENT2
2016 2015
(location-
based)
Emissions reported above on a per floor area intensity 81 88
kg CO2e/ kg CO2e/
m2 m2
Emissions reported above on a per full-time equivalent employee (FTE) intensity 4.3 5.3
tonnes CO2e/FTE tonnes of CO2e/FTE
1 Carbon footprint was restated to account for closure of a property mid-year that had previously been reported for a
full 12 month period.
2 Our intensity measurement calculations exclude the newly acquired AXA and Abbey Life subsidiaries to avoid skewed
intensity results.
Governance
The Directors of Phoenix Group Holdings support the high standards of corporate governance contained in the UK Corporate
Governance Code.
chairman's introduction
"All we do must be based on strong governance structures to provide protection for our shareholders and customers. I am
confident in the robust governance at Phoenix which we will ensure continues across our enlarged Group following the
acquisition OF THE AXA AND ABBEY LIFE BUSINESSES."
Henry Staunton
Chairman
SHAREHOLDERS
I am grateful for the strong support of our shareholders in 2016.
- Shareholders supported us at our AGM held on 11 May 2016 with a vote of at least 91% of votes cast for each
resolution. The resolution which received the lowest support (91.5%) was in respect of the authority to disapply
pre-emption rights of up to 10% of issued share capital. The negative voting reflected the stance being taken by certain
shareholders at AGMs generally, pending clarity around the wording of this resolution, and specifically the part of the
resolution for the use of 5% of issued share capital for acquisition purposes or a specified capital investment. I am
pleased that our use of this resolution in 2016 was as intended - for our share placing in connection with the acquisition
of the AXA Wealth businesses. At our May 2017 AGM, we will follow the new guidance from the Pre-Emption Group in respect of
the authority to disapply pre-emption rights.
- Shareholders supported us at our EGM held on 24 October 2016 for approval of our acquisition of Abbey Life and the
rights issue underpinning the acquisition, with a 99.9% vote in favour of both resolutions.
- Shareholders supported us by taking up 97.65% of the shares offered through the rights issue for the Abbey Life
acquisition with the remaining 2.35% of shares being placed quickly at a modest discount.
BOARD OF DIRECTORS
Our Board of Directors comprises the Chairman, eight independent Non-Executive Directors and two Executive Directors. The
Board considers that our optimum number of Directors is nine or ten and that number will occasionally be higher as the
Board is gradually renewed.
The appointment of three new Non-Executive Directors (Wendy Mayall, John Pollock and Nicholas Shott) from 1 September 2016
was the culmination of a thorough search started at the beginning of 2016, intended to respond to our 2015 Board skills
audit and address the skills being lost as Directors retire from the Board. In 2016 we lost the experience of Tom Cross
Brown and Rene-Pierre Azria, both after long periods of excellent service to Phoenix. However, I was pleased to see our
Board succession working so well with the enhancement to the Board dynamic provided by our three new Non-Executive
Directors with their mix of experience bringing skills very relevant to our future needs as follows:
- Wendy Mayall - Asset management
- John Pollock - Insurance, customer, FTSE 100 financial services board experience
- Nicholas Shott - M&A, corporate finance.
Our gradual Board renewal will continue in 2017, with the retirements from the Board of Isabel Hudson and David Woods at
our AGM in May 2017, both after over seven years on our Board. We are currently in the process of recruiting a further
Non-Executive Director, which will bring the Board back to ten Directors.
I would like to thank Isabel and David for their outstanding service to the Board since their appointments in 2010.
We responded to the Board's desire, stated in our previous year's 2015 Board evaluation review, to spend more time on
strategy, which supported the Board's focus in achieving the AXA and Abbey Life acquisitions in 2016. Our most recent Board
Evaluation Review, undertaken towards the end of 2016, revealed a continued desire to keep strategy high up the agenda at
each Board meeting, particularly given our growth ambitions. The review also stressed the Board's desire to provide strong
oversight of the operations of our business, especially the importance of the integration of the acquired AXA and Abbey
Life businesses, and to ensure that we continue to drive value as best as possible for our shareholders and customers. We
are fortunate to have a strong Board for our regulated life and pensions subsidiaries, chaired by Mike Urmston and with a
majority of Independent Non-Executive Directors who are not on the Board of our holding company, Phoenix Group Holdings.
This extra level of independence is an important aspect of our governance.
UK CORPORATE GOVERNANCE CODE
As detailed in the Corporate Governance Report on pages 47 to 57, we complied in 2016 with all the provisions of the UK
Corporate Governance Code ('the Code'), such that in the last five years we have had only one matter of non-compliance with
the Code.
The following sections provide more detail on our Board of Directors, Executive Management team, operation of governance
and remuneration practices as follows:
- Board and committee structure
- Board of Directors
- Executive Management Team
- Corporate Governance Report
- Directors' Remuneration Report
- Directors' Report.
board structure
Phoenix Group Holdings Board and Committees
The main focus of the Phoenix Group Holdings Board is on Group strategy and performance, with input from Board committees.
The chart below sets out the composition and main activities of the Phoenix Group Holdings Board and its committees. More
detailed operational and customer-focused matters are addressed at the subsidiary board and committee level.
Audit Committee
Alastair Barbour (Chair)
Isabel Hudson
Kory Sorenson
David Woods
Phoenix Group Holdings Board
Henry Staunton (Chair)
Ian Cormack - SID
Clive Bannister*
James McConville*
Alastair Barbour
Isabel Hudson
Wendy Mayall
John Pollock
Nicholas Shott
Kory Sorenson
David Woods
Remuneration Committee
Ian Cormack (Chair)
Isabel Hudson
Nicholas Shott
Kory Sorenson
Risk Committee
David Woods (Chair)
Alastair Barbour
Wendy Mayall
John Pollock
Nomination Committee
Henry Staunton (Chair)
Ian Cormack
Alastair Barbour
David Woods
Audit Committee
Financial Reporting
Internal Controls
External Audit
Internal Audit
Phoenix Group Holdings Board
Group Strategy
Group Budget
Group Risk Appetite
Performance Monitoring
External/Shareholder Reporting
External Debt
Major transactions
Remuneration Committee
Group remuneration framework
Executive Director remuneration
Employee share schemes
Risk Committee
Risk appetite and high-level risk matters
The Group's Risk Management Framework
Nomination Committee
Board appointments
Senior executive appointments
Board and senior executive succession planning
*Executive Directors
board of directors
The Group is governed by our Board of Directors. Biographical details of all Directors are shown below.
Henry StauntonCHAIRMAN
Committee membership(Chairman)
Appointed to the Board1 September 2015
ExperienceHenry Staunton was appointed Chairman of the Board of Directors with effect from 1 September 2015. Mr Staunton is Non-Executive Chairman of WH Smith plc, the leading FTSE 250 retail group, and a Non-Executive Director of Capital & Counties Properties plc. He is also Non-Executive Chairman of the privately owned BrightHouse Group, the rent-to-own company. From 2004 until 2013, Mr Staunton was a Non-Executive Director, Chairman of the Audit Committee and latterly Senior Independent Director and Vice
Chairman of Legal & General Group plc, where he gained significant insight into the life and pensions industry. From 2008 to 31 December 2014 he was a Non-Executive Director of Merchants Trust plc, where he was the Senior Independent Director. He was also a Non-Executive Director of Ashtead Group from 1997 to 2004 including as Chairman from 2001. During his executive career he was Finance Director of ITV plc from 2003 to 2006, and Finance Director of Granada plc from 1993 to 2003. Prior to that he joined
Price Waterhouse as a graduate trainee, rising to become a Senior Partner of the audit practice.
Clive BannisterGROUP CHIEF EXECUTIVE OFFICER
Appointed to the Board28 March 2011
ExperienceClive Bannister joined the Group in February 2011 as Group Chief Executive Officer. Prior to this, Mr Bannister was Group Managing Director of Insurance and Asset Management at HSBC Holdings plc. He joined HSBC in 1994 and held various leadership roles in planning and strategy in the Investment Bank (USA) and was Group General Manager and CEO of HSBC Group Private Banking. He started his career at First National Bank of Boston and prior to working at HSBC was a partner in Booz Allen Hamilton in
the Financial Services Practice providing strategic support to financial institutions including leading insurance companies, banks and investment banks. Mr Bannister is also Chairman of the Museum of London.
James McConvilleGROUP FINANCE DIRECTOR
Appointed to the Board28 June 2012
ExperienceBetween April 2010 and December 2011, Mr McConville was Chief Finance Officer of Northern Rock plc. Prior to that, between 1988 and 2010, he worked for Lloyds Banking Group plc (formerly Lloyds TSB Group plc) in a number of senior finance and strategy related roles, latterly as Finance Director of Scottish Widows Group and Director of Finance for the Insurance and Investments Division. During 2011 and 2012, Mr McConville was a Non-Executive Director of the life businesses of Aegon UK. In 2014, Mr
McConville joined the board of Tesco Personal Finance plc as Non-Executive Director. Mr McConville qualified as a Chartered Accountant whilst at Coopers and Lybrand.
Alastair BarbourINDEPENDENT NON-EXECUTIVE DIRECTOR
Committee membership(Chairman - Audit Committee)
Appointed to the Board1 October 2013
ExperienceAlastair Barbour has over 30 years audit experience with KPMG where he worked across the full spectrum of financial services clients from large general insurers and reinsurers to the life insurance and investment management sector, working on a range of operational and strategic issues. Mr Barbour is the former Head of Financial Services, Scotland for KPMG. He retired from KPMG in 2011 to build a Non-Executive career. He is a Director and Audit Committee Chairman of RSA Insurance Group plc,
Standard Life Private Equity Trust plc and Liontrust Asset Management plc (all London Stock Exchange listed companies). He is also a Director and Audit Committee Chairman of CATCo Reinsurance Opportunities Fund Ltd, a Bermuda-based investment company listed on the London Stock Exchange and of The Bank of N. T. Butterfield & Son Limited, a company listed in both Bermuda and New York.
Ian CormackSENIOR INDEPENDENT DIRECTOR
Committee membership(Chairman - Remuneration Committee)
Appointed to the Board2 September 2009
ExperienceIan Cormack was appointed to the Board of Directors of the Company on 2 September 2009 and was appointed Senior Independent Director on 1 October 2013. Mr Cormack is Non-Executive Chairman of Maven Income & Growth VCT 4 plc and a Non-Executive Director of JRP Group plc and Hastings Group Holdings plc. Mr Cormack was Chief Executive Officer of AIG, Inc. in Europe from 2000 to 2002 and prior to that he spent 32 years at Citibank where he was Chairman of Citibank International plc and Co-Head of the
Global Financial Institutions Client Group at Citigroup.
Isabel HudsonINDEPENDENT NON-EXECUTIVE DIRECTOR
Committee membership
Appointed to the Board18 February 2010
ExperienceIsabel Hudson is Chairman of the National House Building Council and a Non-Executive Director of BT Group plc and RSA Insurance Group plc. Ms Hudson is a former Non-Executive Director of MGM Advantage, The Pensions Regulator, QBE Insurance and Standard Life PLC. Other roles previously held by Ms Hudson include Chief Financial Officer at Eureko BV and Executive Director of Prudential Assurance Company. Ms Hudson is an ambassador to Scope, a UK charity, and has 35 years of experience in the
insurance industry in the UK and mainland Europe.
WENDY MAYALLINDEPENDENT NON-EXECUTIVE DIRECTOR
Committee membership
Appointed to the Board1 September 2016
ExperienceWendy Mayall has over thirty years of asset management experience, including as Group Chief Investment Officer and later consultant at Liverpool Victoria from 2012 to 2015, having previously been Chief Investment Officer for Unilever's UK pension fund from 1996 to 2011 and holding management responsibility for Unilever's pension funds globally. From 2006 to 2009, Mrs Mayall was the Chair of the Investment Committee of the Mineworkers Pension Scheme, a British government appointment to one of the
largest government backed pension schemes in the UK. Mrs Mayall is the non-executive Senior Independent Director of the Aberdeen UK Tracker Trust plc.
JOHN POLLOCKINDEPENDENT NON-EXECUTIVE DIRECTOR
Committee membership
Appointed to the Board1 September 2016
ExperienceJohn Pollock had a career in life assurance at the Legal & General Group from 1980 to 2015, including as an Executive Director of Legal & General Group plc from 2003 to 2015. Mr Pollock held numerous senior roles, gaining wide strategic and technical experience, finally as Chief Executive Officer of LGAS (L&G Assurance Society), one of Legal and Generals' three primary business units. Prior to Mr Pollock's retirement from Legal and General in 2015, he held positions as Deputy Chair of the FCA
Practitioner Panel, Chairman of investment platform Cofunds, and as a Non-Executive Director of the Cala Homes Group.
NICHOLAS SHOTTINDEPENDENT NON-EXECUTIVE DIRECTOR
Committee membership
Appointed to the Board1 September 2016
ExperienceNicholas Shott is an investment banker, who has been European Vice Chairman of Lazard since 2007 and Head of UK Investment Banking at Lazard since 2009. Mr Shott joined Lazard in 1991 and became a partner in 1997.
Kory SorensonINDEPENDENT NON-EXECUTIVE DIRECTOR
Committee membership
Appointed to the Board1 July 2014
ExperienceKory Sorenson is currently a Non-Executive Director of SCOR SE and its US subsidiaries, Pernod Ricard SA, Uniqa Insurance Group AG and Aviva Insurance Limited. Ms Sorenson has over 20 years of experience in the financial services sector, most of which has been focused on insurance and banking. She was Managing Director, Head of Insurance Capital Markets of Barclays Capital from 2005 to 2010, and also held senior positions in the financial institutions divisions of Credit Suisse, Lehman Brothers
and Morgan Stanley.
David WoodsINDEPENDENT NON-EXECUTIVE DIRECTOR
Committee membership(Chairman - Risk Committee)
Appointed to the Board18 February 2010
ExperienceDavid Woods is a Fellow of the Institute of Actuaries, Non-Executive Chairman of Standard Life UK Smaller Companies Trust plc and a Non-Executive Director of Murray Income Trust plc. He is also Chairman of the pension fund trustee companies responsible for the governance of all the UK defined benefits/pension schemes in the Sopra Steria Group.
Committee membership
Appointed to the Board1 July 2014
ExperienceKory Sorenson is currently a Non-Executive Director of SCOR SE and its US subsidiaries, Pernod Ricard SA, Uniqa
Insurance Group AG and Aviva Insurance Limited. Ms Sorenson has over 20 years of experience in the financial services
sector, most of which has been focused on insurance and banking. She was Managing Director, Head of Insurance Capital
Markets of Barclays Capital from 2005 to 2010, and also held senior positions in the financial institutions divisions of
Credit Suisse, Lehman Brothers and Morgan Stanley.
David Woods
INDEPENDENT NON-EXECUTIVE DIRECTOR
Committee membership(Chairman - Risk Committee)
Appointed to the Board18 February 2010
ExperienceDavid Woods is a Fellow of the Institute of Actuaries, Non-Executive Chairman of Standard Life UK Smaller
Companies Trust plc and a Non-Executive Director of Murray Income Trust plc. He is also Chairman of the pension fund
trustee companies responsible for the governance of all the UK defined benefits/pension schemes in the Sopra Steria Group.
Executive management team
Executive management of the Group is led by the Group Chief Executive Officer, Clive Bannister, who is supported by the
Executive Committee ('ExCo').
CLIVE BANNISTERGROUP CHIEF EXECUTIVE OFFICER
Roles and responsibilities- Leads the development of the Group's strategy for agreement by the Board- Leads and directs the Group's businesses in delivery of the Group's strategy and business plan- Leads the Group to safeguard returns for policyholders and grow shareholder value- Embeds a risk-conscious Group culture which recognises policyholder obligations in terms of service and security - Manages the Group's key external stakeholders.
JAMES MCCONVILLEGROUP FINANCE DIRECTOR
Roles and responsibilities- Develops and delivers the Group's financial business plan in line with strategy- Ensures the Group's finances and capital are managed and controlled- Develops and delivers the Group's debt capital strategy and other treasury matters- Ensures the Group has effective processes in place to enable all reporting obligations to be met- Supports the Group Chief Executive Officer in managing the Group's key external stakeholders- Maximises shareholder value through clear, rigorous
assessment of business opportunities.
Fiona ClutterbuckHEAD OF STRATEGY, CORPORATE DEVELOPMENT AND COMMUNICATIONS
Roles and responsibilities- Supports the Group Chief Executive Officer in the formulation of the strategy and the business planning for the Group- Leads implementation of the Group's strategy as regards any potential acquisitions or disposals - Leads external Group Communications in liaison with the Group Finance Director and Head of Investor Relations.
STEPHEN JEFFORDGROUP HUMAN RESOURCES DIRECTOR
Roles and responsibilities- Leads the implementation of the Group's employee strategy in order to recruit, retain, motivate and develop high quality employees- Provides guidance and support on all HR matters to the Group Chief Executive Officer, ExCo and the Group Board and Remuneration Committee - Delivers HR services to the Group.
Andy MossCHIEF EXECUTIVE, PHOENIX LIFE
Roles and responsibilities- Leads the development and delivery of the Phoenix Life business strategy, including the continued integration of life businesses- Leads the Phoenix Life business to optimise outcomes for customers in terms of both value and security - Ensures Phoenix Life deploys capital efficiently and effectively, with due regard to regulatory requirements, the risk universe and strategy.
Wayne SnowGROUP CHIEF RISK OFFICER
Roles and responsibilities- Leads the Group's risk management function, embracing changes in best practice and regulation including Solvency II - Oversees and manages the Group's relationship with the FCA and PRA- Supports the Group Board Risk Committee in the oversight of the Group's risk framework, in line with risk strategy and appetite.
Simon TrueGROUP CHIEF ACTUARY
Roles and responsibilities- Ensures capital is managed efficiently across the Group- Manages the Group's solvency position- Leads the development of the Group's investment strategy - Identifies and delivers opportunities to enhance shareholder value across the Group.
Quentin ZentnerGENERAL COUNSEL
Roles and responsibilities- Leads provision of legal advice to the Group Board, other Group company Boards, ExCo and senior management- Oversees and co-ordinates maintenance of, and adherence to, appropriate corporate governance procedures across the Group - Designs and implements a framework to manage legal risk within the Group, including compliance by Group companies and staff with relevant legal obligations.
Simon True
GROUP CHIEF ACTUARY
Roles and responsibilities- Ensures capital is managed efficiently across the Group- Manages the Group's solvency
position- Leads the development of the Group's investment strategy - Identifies and delivers opportunities to enhance
shareholder value across the Group.
Quentin Zentner
GENERAL COUNSEL
Roles and responsibilities- Leads provision of legal advice to the Group Board, other Group company Boards, ExCo and
senior management- Oversees and co-ordinates maintenance of, and adherence to, appropriate corporate governance procedures
across the Group - Designs and implements a framework to manage legal risk within the Group, including compliance by Group
companies and staff with relevant legal obligations.
Corporate governance report
INTRODUCTION
The Board is committed to high standards of corporate governance and the Group's Corporate Governance policy is aligned to
compliance with the UK Corporate Governance Code ('the Code') which sets standards of good practice for UK listed
companies. It is the Board's view that the Company has been fully compliant during 2016 with the provisions set down in the
Code.
THE BOARD
The Board comprises the Non-Executive Chairman, the Group Chief Executive Officer, the Group Finance Director and eight
independent Non-Executive Directors. Biographical details of all Directors are provided on pages 44 to 45.
BOARD COMPOSITION
A Chairman 9%
B Executive Directors 18%
C Independent Non-Executive Directors 73%
The Board considers that the following Directors are independent: Alastair Barbour, Ian Cormack, Isabel Hudson, Wendy
Mayall, John Pollock, Nicholas Shott, Kory Sorenson and David Woods. The Board has considered the criteria proposed by the
Code in assessing the independence of the Directors.
BOARD SUCCESSION PLANNING AND CHANGES
The Board skillset must be aligned to the Group strategy of enhancing value for shareholders and policyholders and taking
forward the Group's M&A agenda.
The Board responded to the skills audit undertaken in 2015 by recruiting three new Non-Executive Directors (Wendy Mayall,
John Pollock and Nicholas Shott, all appointed from 1 September 2016) to replace skills and experience being lost during
2016 and 2017 on account of expected Board departures as follows: Tom Cross Brown (May 2016 AGM), Rene-Pierre Azria
(November 2016), David Woods (May 2017 AGM).
The 2016 recruitment provided a strong mix of experience and skills (as outlined in the Chairman's Corporate Governance
introduction on page 42) and demonstrated the effectiveness of the succession planning.
The Nomination Committee and Board are now undertaking a skills audit at two-year intervals. The latest skills audit was
undertaken in February 2017 and is being utilised in respect of expected 2017 and 2018 Board changes (including Isabel
Hudson who is also retiring from the Board at the May 2017 AGM).
BOARD EFFECTIVENESS
In accordance with the Code, an evaluation of the performance of the Board and that of its committees and individual
Directors was undertaken in the latter part of 2016. The process was led by the Chairman and internally facilitated by the
Company Secretary. The process involved completion by Directors of a questionnaire covering various aspects of Board,
Committee and Director effectiveness followed by individual meetings between the Chairman and each Director, concluding in
a Board report which was discussed by the Board in November 2016.
A strong theme from the previous year's 2015 Board Evaluation Review had been the desire to spend more time on strategy.
This was actioned with strategy at the forefront of each Board meeting agenda and contributed to the successful Board focus
on acquisitions in 2016. The Chairman has reported on the main outputs of the November 2016 Board Evaluation Review in his
Corporate Governance introduction on page 42, in particular the Board's wish for continued focus on strategy and also the
integration of the businesses acquired in 2016. The Board, whilst commenting favourably on the quality of Board papers,
also provided helpful suggestions to improve the clarity and focus of the papers, which have been actioned.
The output from the November 2016 Board and individual Director reviews informed the review of the Board composition and
succession planning undertaken by the Board Nomination Committee in February 2017, leading to the Board's recommendations
to shareholders regarding re-election of Directors at the 2017 Annual General Meeting ('AGM').
All Directors receive a tailored induction on joining the Board in accordance with a process approved by the Board. The new
Non-Executive Directors, Wendy Mayall, John Pollock and Nicholas Shott, undertook a comprehensive induction, including
detailed strategic and operational briefings and information, before and following their appointments in September 2016.
To ensure that the Directors maintain up-to-date skills and knowledge of the Company, all Directors receive regular
presentations on different aspects of the Company's business and on financial, legal and regulatory issues.
THE CHAIRMAN, GROUP CHIEF EXECUTIVE OFFICER AND SENIOR INDEPENDENT DIRECTOR
Henry Staunton is Chairman of the Board of Directors of the Company, having joined the Board as Chairman on 1 September
2015. There is a division of responsibility, approved by the Board, between the Chairman, who is responsible for the
leadership and effective operation of the Board and the Group Chief Executive Officer, Clive Bannister, who is responsible
to the Board for the overall management and operation of the Group. The Chairman's other commitments are set out in his
biographical details on page 44. The Chairman was appointed on the basis of committing two days per week to Phoenix.
The Senior Independent Director, appointed by the Board, is Ian Cormack. His role is to be available to shareholders whose
concerns are not resolved through the normal channels or when such channels are inappropriate. He is also responsible for
leading the annual appraisal of the Chairman's performance by the Non-Executive Directors, which occurred in November
2016.
OPERATION OF THE BOARD
The Board is responsible to the shareholders for the overall performance of
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