The Combined Code on Corporate Governance 2003 (the Code) contains main principles, supporting principles and provisions concerning corporate governance. This report, together with the Directors’ Report and the Remuneration Report, provides a summary of the Group’s procedures for applying the main and supporting principles of the Code and the extent to which such principles have been applied. The Company is committed to high standards of corporate governance. The Group’s governance policies are monitored by the Board and kept under constant review and, in doing so, the Board has considered, in advance of the commencement date, the principles and provisions in the revised Combined Code published by the Financial Reporting Council in June 2006.
Throughout the year ended 31 December 2006 the Company has complied with all of the provisions of the Code with the exception of a short period in 2006 when the Company did not comply with the provisions on Board balance, as explained under the section ‘Board balance and independence’ in this report.
The Board’s primary role is to provide entrepreneurial leadership and to develop a coherent long term strategy for the Group. Its other roles are to supervise the management, to maintain control over the Group’s assets and to establish high ethical standards of behaviour, together with developing robust corporate governance and risk management practices and procedures.
The Board monitors the performance of management and aims to ensure that the strategy, policies and procedures adopted are not only in the long term interest of shareholders but also meet the needs of Rexam’s customers, employees, suppliers and the local communities in which Rexam operates.
Matters referred to the Board are considered by the Board as a whole and no one individual has unrestricted powers of decision. There are well documented procedures and controls, including a formal schedule of matters that require the Board’s specific approval and is reviewed annually. This provides the framework for the decisions to be taken by the Board and those which can be delegated to committees of the Board.
|All Board appointments and removals|
|The appointment and removal of principal advisers and external auditors|
|Changes to the Group’s management and control structure|
|Matters relating to the Company’s share listing|
|The Group’s strategy, including the acquisition and disposal of businesses|
|High level financial decisions|
|All capital expenditure projects over £10m or any capital expenditure project which, regardless of the amount, does not meet the Group’s financial criteria|
There were ten Board meetings during 2006. All directors were present at each meeting with the exception of the meeting in April when Noreen Doyle was unable to attend, the meeting in May when Carl Symon was unable to attend and the meeting in September when Michael Buzzacott was unable to attend. Where a member of the Board cannot be present at a meeting, he or she receives a full copy of the agenda and the accompanying papers in advance of such meeting and is given the opportunity to comment on the matters to be discussed.
The names of the members of the Board committees are set out in the Directors and officers section, together with details of their terms of reference and of the meetings held during the year. The Board committees have authority to make decisions according to their terms of reference which can be found online at www.rexam.com.
During the year Rolf Börjesson met with the non executive directors three times to discuss Board related issues on a less formal basis. The Chief Executive was present at two of the meetings. Their discussions covered areas including Group performance, strategy and succession planning.
The Group’s global insurance programme is reviewed annually and appropriate insurance cover has been obtained to protect the directors and senior management in the event of a claim being brought against any of them in their capacity as directors or officers of the Company or its subsidiaries.
Rexam has a non executive Chairman and a Chief Executive Officer. There is a clear division of responsibility between the positions, with the Chairman responsible for the running of the Board and the Chief Executive Officer responsible for the executive management of the Company and the running of the Group’s business.
The written job specifications for the roles of Chairman, Chief Executive Officer as well as that of the senior independent director, are reviewed annually by the Nomination Committee.
Rolf Börjesson spends, on average, two days per week in his role as Chairman. He is also Chairman of Ahlsell AB, and a non executive director of Avery Dennison Corporation and Svenska Cellulosa AB. The Board considers that his external directorships do not make conflicting demands on his time as Chairman.
As disclosed in the 2005 Report, Carl Symon became senior independent director when Christopher Clark retired on 8 February 2006. Carl Symon is available to talk to shareholders if they have any issues or concerns. He is Chairman of HMV Group plc and the BT Group Equality of Access Board, and a non executive director of BT Group plc and Rolls-Royce Group plc. The Board considers that his external directorships do not make conflicting demands on his time as senior independent director.
Lars Emilson retired as Chief Executive and an executive director of the Company on 1 February 2007. He was succeeded by Leslie Van de Walle who was appointed as an executive director on 17 January 2007 and became Chief Executive Officer on 1 February 2007. Leslie Van de Walle’s career summary can be found in the Directors and officers section and the Board believes that his global experience in beverage and food retail along with his international business to business background will be of great value to continue Rexam’s strategy for growth and leadership in its chosen markets. Leslie Van de Walle is a non executive director of Aegis Group plc and the Board believes that this external directorship does not make conflicting demands on his time as Chief Executive Officer.
Following the retirement of Christopher Clark on 8 February 2006 the number of non executive directors, excluding the Chairman, fell to three until the appointment of Noreen Doyle as a non executive director on 22 March 2006. The Company did not have a balance of independent non executive directors on the Board for the period 8 February to 22 March 2006 and therefore did not comply with provision A.3.2 of the Code during that period. At all other times during the year and at the date of this report the Board balance has been in compliance with the Code.
The Chairman, Rolf Börjesson, was not considered to be independent as at the date of his appointment on 25 May 2004 as he had previously been Chief Executive of the Company. The Company’s major institutional shareholders continue to be fully supportive of his appointment as Chairman.
|Chairman (with no executive responsibilities)||1|
|Non executive directors||6|
The Board works as a team, but independence of thought and approach is encouraged. Directors of different nationalities with international business backgrounds have been appointed as a majority of Rexam’s activities are overseas. Influence is balanced within the Board by virtue of the strong independent elements of a non executive senior independent director and a further five non executive directors whose skills and wide international business experience are invaluable in constructively challenging and developing the Group’s strategy and direction. The Board is aware of the other commitments of the non executive directors and considers that these commitments do not conflict with their duties as directors of the Company.
David Tucker was appointed as a non executive director on 22 May 1997. Following a performance evaluation and rigorous review in 2005, the Board strongly believed that David remained independent and that his extensive knowledge of institutional shareholder and governance related matters, and his insight into the strategic aims of the Company, enabled him to continue to provide an important and valued contribution to the Board. The Board recommended and shareholders approved at the Annual General Meeting (AGM) 2006 that David be re-elected as a non executive director for a further one year term. David will retire from office at the AGM 2007.
A biography of each member of the Board and details of their other directorships are given in the Directors and officers section.
The Board evaluates the membership of its individual Board committees on an annual basis and aims to ensure that the principal committees have different non executive directors as chairman.
Recommendations for appointments to the Board are the responsibility of the Nomination Committee. The majority of the members of the Committee are independent non executive directors. The Committee regularly reviews and considers the ongoing membership of the Board, sets job descriptions and objective criteria for Board and senior executive appointments and succession planning. The terms of reference set out more fully the responsibilities of this Committee and can be found online at www.rexam.com.
All new Board appointments are conducted through a formal, rigorous and transparent procedure between the Group Director Human Resources, the Nomination Committee and the Board. The Committee has responsibility for succession planning and, in doing so, identifies through the management review process any internal people whose skills, experience and contribution to the Group would potentially benefit the Board. The Committee reviews membership of the Board on a regular basis and will discuss possible internal candidates and Board positions with the Group Director Human Resources. If it is decided that an internal rather than an external appointment would be in the best interests of the Board, the Committee meets with the prospective candidates who are then considered and, if appropriate, one is recommended to the full Board for approval.
For the appointment of external candidates to the Board, the Nomination Committee instructs and works alongside recruitment consultants to evaluate and meet prospective candidates who are then considered and, if appropriate, are recommended to the full Board for approval. This procedure was followed in 2006 leading to the appointment of Leslie Van de Walle as Chief Executive Officer.
During 2006, a similar process was followed in conjunction with an independent search consultancy to identify potential non executive directors. The Committee recommended and the Board approved the appointments of Noreen Doyle, Jean-Pierre Rodier and Wolfgang Meusburger as non executive directors.
For each scheduled Board meeting the Chairman and the Company Secretary ensure that, during the week before the meeting, the directors receive a copy of the agenda for the meeting, Group and business financial and operating information to ensure that they are properly apprised of the Group’s current performance and information on any other matter which is to be referred to the Board for consideration. The directors also have access to the Company Secretary for any further information they require. In the months where there is no scheduled Board meeting, the directors receive the prior month and cumulative Group and business financial and operating information. If there is any urgent business to be considered in these months and the subject of the business can be communicated by a written paper, the Board may be asked to give their approval by means of a written resolution.
All newly appointed directors participate in an extensive internal induction programme that introduces the director to the Group and includes visiting various Group businesses. Newly appointed directors who have not previously held a directorship in a UK listed company are also given external training which focuses on their role on the Board. They attend an Institute of Directors course, entitled ‘Understanding the Board’ which covers the role and effectiveness of a director, the role of the Board and the legal responsibilities of a director. The Company Secretary gives guidance on Board procedures and corporate governance. All directors receive ongoing training and members of the Committees receive specific updates in matters that are relevant to their role. For example, members of the Audit Committee have received information on the UK Listing Authority’s Disclosure and Transparency Rules.
The Chairman arranges for the directors to visit at least one of the Group’s business locations and customer sites each year to ensure that their technical knowledge, skills and familiarity with the Group’s operations are updated and maintained. During 2006, the Board visited the Beverage Can business in Recife, Brazil and the Make Up business in Jundiai, Brazil. Whilst in Brazil, the Board were invited to visit a Carrefour hypermarket and a Coca-Cola bottling plant. The Board also visited the Plastic Packaging Home & Personal Care businesses in the US in Chicago, Illinois and Hot Springs, Arkansas. Additionally, each member of the Group Management Committee (GMC) with responsibility for the Group’s businesses makes a presentation at a Board meeting about their businesses, suppliers, customers, markets and strategy.
The Company Secretary, who is appointed by the Board, is responsible for ensuring compliance with Board procedures. This includes taking minutes of the Board meetings and the recording of any concerns relating to the running of the Company or proposed actions arising therefrom that are expressed by a director in a Board meeting. He is also secretary to the Audit, Nomination and Remuneration Committees. Under the direction of the Chairman, he is responsible for the communication of relevant information between the Board, the GMC and senior management. The Company Secretary is available to give ongoing advice to all directors on Board procedures, corporate governance and regulatory compliance. Should a director reasonably request independent professional advice to carry out his duties, such advice is made available to him at the Company’s expense.
During 2006 the Board experienced various changes following the retirement and appointment of non executive directors and the announcement of a successor to Lars Emilson as the new Chief Executive Officer. The Chairman of the Board undertook a performance evaluation of the Board and its members during 2006 and, as part of the evaluation, the directors completed evaluation forms on the basis shown below.
The Chairman carried out a review of the completed evaluation forms and reported the results of the evaluation process to the Board. The Board discussed the results and confirmed their continuing satisfaction with the effectiveness of the directors’ contribution and commitment, and of the Board and Board Committees as a whole. It was agreed that the evaluation process had been both constructive and informative and that positive progress had been made on many of the issues raised in the 2005 evaluation process. Whilst the most recent review did not identify any significant issues of concern, some areas for development and improvement were raised; including the need for more time to be spent on in depth strategic debate, greater focus on succession planning and talent management and more external input on specific issues requiring more than an internal perspective. With regard to the Board Committees, it was agreed that now that the number of independent non executive directors has risen to six it is no longer necessary to have all non executive directors on all Committees. The directors’ assessment of the Chairman’s leadership of the Board continues to be positive.
It was agreed that a full performance evaluation of the Board would continue to be conducted annually and that the 2007 review would be the first opportunity to include all of the newly appointed directors who will by then have had an opportunity to form views as to the performance of the Board and Board Committees. It was agreed that Carl Symon, in his capacity as senior independent director, would carry out a fuller evaluation of directors’ views of the Chairman during the 2007 Board evaluation process.
Article 57 of the Company’s Articles of Association states that a director should be proposed for election if he or she has been appointed to the Board since the date of the last AGM, or proposed for re-election if he or she has held office for more than 30 months at the date of the notice convening the next AGM. The Board ensures that each executive and non executive director be required to submit himself or herself for re-election by shareholders at least every three years.
Non executive directors serve the Company under letters of appointment which are generally for an initial three year term. On appointment, an undertaking is requested from the non executive director to ensure that he has sufficient time to fulfil his role on the Board. The continued appointment of any non executive director who has served on the Board for a period in excess of nine years will be subject to annual re-election at the AGM.
The Board will only recommend to shareholders that executive and non executive directors be proposed for election or re-election at an AGM, in accordance with the Articles of Association, after evaluating the performance of the individual director. At the AGM 2007, the following directors are being recommended by the Board and will be proposed for election or re-election.
|Leslie Van de Walle||Chief Executive Officer||Election|
|Michael Buzzacott||Non executive director||Re-election|
|Wolfgang Meusburger||Non executive director||Election|
|Jean-Pierre Rodier||Non executive director||Election|
|Carl Symon||Non executive director||Re-election|
The directors being recommended for election at the AGM 2007 all have invaluable knowledge and experience to influence the Group’s strategy for growth and leadership in the consumer packaging industry. Leslie Van de Walle is being proposed for election as he has experience in beverage and food retail along with an international business to business background. Wolfgang Meusburger has many years experience in the fast moving consumer goods industry and a good understanding of how to develop businesses. Jean-Pierre Rodier has international business experience and an extensive knowledge of the packaging and aluminium industries.
Michael Buzzacott and Carl Symon are being recommended for re-election at the AGM 2007 following a performance evaluation. Both directors bring to the Board a respected knowledge of the manufacturing and service industries in which they participate and they continue to make a valuable contribution to the Rexam Board.
The following sections on directors’ remuneration should be read in conjunction with the Remuneration Report.
The Board recognises the importance of executive directors’ remuneration not only to motivate and retain the individuals concerned, but also in the wider context both within the Group and in comparable geographic and business areas. In addition to basic salary, benefits in kind and retirement benefits, executive directors’ remuneration is composed of both short term and long term elements that are related to Group and business performance. There is also a requirement in accordance with their contract of employment for executive directors to build up shareholdings in the Company following the exercise of share options to encourage them to align with the interests of shareholders.
Fees for non executive directors are determined having regard to current market practice and the time spent on Rexam’s behalf. They are not required to hold shares in the Company and do not participate in any incentive or share option schemes. Information as to directors’ basic salary, benefits in kind, short and long term incentive arrangements and retirement benefits is disclosed in the Remuneration Report.
The Remuneration Committee, which is chaired by the senior independent director, consists of independent non executive directors and determines remuneration levels and specific packages appropriate for each executive director, taking into account the Group’s annual salary negotiations. No director is permitted to be present when his own remuneration is being discussed, nor to vote on his own remuneration. The Remuneration Committee considers that the procedures in place provide a level of remuneration for the directors which is both appropriate for the individuals concerned and in the best interest of shareholders.
The remuneration of the Chairman and senior independent director is determined by the Remuneration Committee (the Chairman or senior independent director absenting himself from the discussions and vote) and non executive directors’ fees are recommended by the Chairman and Chief Executive Officer and approved by the Board.
The intention of the Annual Report and the Interim Report is to provide a clear assessment of the performance and prospects of Rexam. The Company prepares a full Annual Report and an Annual Review. The Annual Review qualifies as a Summary Financial Statement and condenses the information contained in the Annual Report. Shareholders who have not requested the Annual Report will receive the Annual Review. In the Annual Report, following their annual audit, the Company’s auditor includes an independent report to members. The Interim Report includes a review report to the Company prepared by the Company’s auditor.
For 2006 the Annual Report contains a Business Review which aims to summarise the Group’s business strategy, objectives, strategic risks and financial and non financial performance. Read the Business Review.
There is an ongoing process which has been in place during 2006 and up to the date of this report for identifying, evaluating, managing, monitoring and reporting the risks faced by the Group. This formal process, managed through the use of Audit and Risk Committee (ARC) meetings, is the responsibility of all of the Group’s businesses and is overseen by the Finance Director and head of Internal Audit. ARC meetings are held with management to review the results of their internal risk assessments and such meetings include the continuing evaluation and development of the process for reviewing the effectiveness of the Group’s system of internal control which includes all aspects relating to financial, environmental, social and governance related matters.
During 2006 the process was further refined with the introduction of risk register forms to give more detailed reporting of the methodology used to quantify the risks identified, trend analysis and the use of key performance indicators (KPIs) to help measure and assess the benefits of mitigation steps taken to manage the risks.
ARC meetings also include the results of internal audit activity covering the financial controls and risks as well as the physical risks (health, safety and environment) of all operations in the Group. The results of this process are reported to the Audit Committee by the Finance Director and the head of Internal Audit providing an opportunity for that Committee to discuss and analyse the risks reported.
In particular, and in accordance with the Turnbull Report guidance referred to below, the ARC was advised of the discovery of a leak in the underground system for a solvent used for cleaning metal parts at the Rexam plant in Annecy, France. Following a detailed assessment of the situation remedial action has been taken as detailed in the Corporate Responsibility section of the Business Review. Through the reporting of the Rexam Audit System the circumstances which gave rise to this incident have been examined. A process has been put in place for the regular examination of pipework used for solvents to reduce the likelihood of this type of leak happening again and all incidents of this nature are to be reported fully at the earliest opportunity so that remedial action can be taken without delay.
Further details of the main risks encountered by the Group are included in the Business Review.
All directors are responsible for establishing and maintaining an effective system of internal control. Whilst all elements of risk can not be eliminated, the system aims to identify, assess, prioritise and, where possible, mitigate the Group’s risks. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group’s systems are designed to provide the Board with reasonable assurance that assets are safeguarded, transactions are authorised and recorded properly and that material errors and irregularities are either prevented or detected within a timely period.
The Board, in reliance upon the detailed work performed by the Audit Committee, confirms that it carried out a review of the effectiveness of the system of internal control operated within the Group during 2006 in accordance with the requirements of the Code and the revised guidance issued in October 2005 ‘Internal Control: Guidance for Directors on the Combined Code’ (the Turnbull Report). The Board will continue to carry out such reviews on an annual basis. This review covers all controls, namely financial, operational, compliance and risk management. In order to discharge its responsibilities in this regard the Board has established and regularly reviews the procedures necessary to implement the internal control requirements of the Code.
The framework which the Board has established with a view to providing effective internal control is supported by the following key areas:
The Group has a comprehensive system for reporting financial results to the Board. An annual budget and strategic review are prepared for each business and are consolidated for review by the Board before being formally adopted. During the year, monthly management accounts, including cash flow and capital expenditure reporting, are prepared with a comparison against budget and prior year. Forecasts are revised in the light of this comparison and also reviewed by the Board.
There are clearly defined lines of responsibility and levels of authority in operation throughout the Group, with specific matters reserved for the Board. Businesses are decentralised with operating autonomy and financial responsibility delegated to corporate and local management to the extent that they have approval to operate within acceptable levels of authority and risk.
There are formal written Group financial procedures and controls in operation, including specific procedures for treasury matters and the approval of significant contracts. Corporate and local management are required to complete year end and half year representation letters formally confirming that their businesses comply with the Group’s financial reporting policies and other Group policies and procedures.
An internal audit function monitors the accounting and financial risks faced throughout the Group and the control systems in operation to manage these. The findings are reported to the Audit Committee.
An internal risk management function together with operational management are responsible for monitoring the processes within the Group which identify, evaluate and manage the significant health, safety and environmental risks faced by Group businesses. All businesses have introduced an externally verified system of auditing and assessing the ability of their operations to identify, measure, reduce, control and review these physical risks. The results of these audits are reported upon and reviewed by local management, corporate management and the Audit Committee in order to ensure that appropriate action plans are developed and implemented.
The Board has delegated responsibility to the Audit Committee for reviewing an effective system of internal control and compliance, accurate external financial reporting, fulfilling its obligations under law and the Code, and managing the relationship with the Company’s external auditor. The Committee members comprise independent non executive directors. The Board is satisfied that David Tucker, chairman of the Committee, who is a chartered accountant with extensive financial experience through his past and present involvement with various listed companies and pension trustee bodies, and Michael Buzzacott, a qualified accountant who has held a number of senior financial positions in BP p.l.c., have recent and relevant financial experience to enable them to discharge fully the duties of the Committee. Michael Buzzacott will succeed David Tucker as Chairman of the Audit Committee on 3 May 2007. Should it be requested, the Committee has access to independent expert advice at the Company’s expense.
The Committee approves the appointment of the head of Internal Audit. The annual programme of internal audit assignments is reviewed and approved by the Committee which also ensures that the involvement of the internal and external auditors is co-ordinated.
In 2006 the internal audit function and its performance, effectiveness and relationship with the Company’s external auditor was assessed by the Committee and a report was made to the Board. This assessment included both an internal survey of the internal audit’s performance and an external review by KPMG LLP of a number of internal audit reviews carried out at significant operations within the Group.
During 2006, the Committee met independently with the Company’s external auditor to discuss informally matters of interest. The Chairman of the Committee had meetings with the head of Internal Audit without any other member of management being present.
The terms of reference of the Audit Committee, which are reviewed annually, set out more fully the responsibilities of the Committee and can be found online at www.rexam.com. The performance and effectiveness of the Committee is reviewed as part of the main performance appraisal of the Board and all its Committees.
The Committee meets at least four times a year with representatives of the Company’s external auditor. At the request of the Committee’s Chairman, the Chief Executive Officer, Finance Director and head of Internal Audit attend for part of each meeting. The first meeting within the annual audit cycle is to consider the nature and scope of the audit and to consider any additional special reviews that may be necessary. Further meetings are held prior to the approval of the interim results and the final results to consider the annual audit, any special reviews undertaken, the business risks facing the Company and findings from the ARC meetings.
The Committee is responsible for reviewing in detail the Annual Report and Interim Report and all other published financial information for statutory and regulatory compliance with a view to their recommendation and submission to the Board. The Committee reports its findings on the audit process and on the wider aspects of internal control to the Board. Additionally, the director of physical risk management and head of Internal Audit meet with the Committee to review and discuss the risk management policy and the commercial, physical and financial control risks faced by the Group.
The Committee has primary responsibility and advises the Board on the appointment, re-appointment and the remuneration of the Company’s external auditor. PricewaterhouseCoopers LLP (PwC) has been the Company’s external auditor since 2003. During 2006, PwC asked key people in the businesses and at corporate level to assess PwC's ongoing relationship with the Company by completing an online survey. All comments that raised any issues were followed up by PwC through a person independent of the audit function and the findings were reported back to the Committee. The Committee has reviewed the effectiveness of the Company’s external auditor and has recommended to the Board that a resolution to re-appoint PwC be proposed at the AGM 2007. The Committee will continue to keep under review the independence and objectivity of the Company’s external auditor and the rotation of the audit partners from time to time.
The policy on the provision of non audit services by the Company’s external auditor determines the procedures for the pre-approval of such services and the fees paid for those services. The scope and extent of non audit work undertaken by the Company’s external auditor is monitored by and, above certain thresholds, requires prior approval from the Committee to ensure that the provision of the non audit services does not impair their independence or objectivity. The Company’s external auditor is prohibited from providing services to the Company that would be considered to jeopardise their independence such as financial systems design and implementation, actuarial services, internal audit outsourcing services and investment services.
The Committee also reviews the Company’s external auditors’ reports on accounting and control matters, the Company’s statement on internal control systems and, if requested to do so, the annual financial statements of the relevant Group pension funds.
The Board believes that good communication with shareholders is a priority. There are programmes for the Chief Executive Officer and Finance Director to meet with the Company’s investors in the UK, US and Europe and presentations are made on the operating and financial performance of the Group, including corporate governance related matters, and its longer term strategy. Roadshows are held in the UK, US and Europe immediately after the announcement of the final and interim results. If it is not possible to arrange face to face meetings, meetings are held by telephone conference. The slide presentations made to representatives of the investment community following the announcement of the final and interim results are available online at www.rexam.com, as is a webcast of the related results presentation.
The non executive directors are given regular updates as to the views of institutional shareholders. A report on investor views and comments about the Company is prepared by a third party researcher, normally from the Company’s brokers, after investor meetings and a summary report is presented to the Board for information.
The Chairman and senior independent director are available to meet with institutional shareholders should there be unresolved matters that such shareholders believe should be brought to their attention. The non executive directors meet with shareholders at the AGM and may attend analyst presentations made by the Chief Executive Officer and Finance Director following the final and interim results announcements. On the appointment of a new non executive director, institutional shareholders may request an opportunity to meet with the new non executive director.
The Board fully supports the principle of the Code which seeks to encourage more active interest and contribution from institutional shareholders.
The principal communication with private shareholders is through the Annual Review, the Annual Report, the Interim Report and the AGM which is held at a central London location. The notice of the AGM and any related papers are posted to shareholders with the Annual Review or, if requested, the Annual Report at least twenty working days before the date of the AGM to ensure that shareholders have sufficient time in which to consider the items of business to be approved. All shareholder documents can be viewed online at www.rexam.com.
A presentation is made at the AGM to facilitate greater awareness of the Group’s activities. Shareholders are given the opportunity to ask questions of the Board and the Chairman of each Board committee during the AGM and meet all the directors informally after the AGM. Separate resolutions are proposed for each item of business and the ‘for’, ‘against’ and ‘vote withheld’ proxy votes cast in respect of each resolution proposed at the Meeting are counted and announced after the shareholders present have voted on each resolution. A summary of the number of proxy votes cast in respect of each resolution is available to shareholders at the conclusion of the AGM and it is also published on the Company’s website. Following the Annual General Meeting 2006, a summary of the questions and answers raised at the Meeting was posted on the Company’s website. An announcement confirming whether each of the resolutions were passed at the AGM is made through the London Stock Exchange.
Financial and other information is available online in a comprehensive Investors section at www.rexam.com.
The Company’s ADR programme trades through Nasdaq. Rexam is subject to minimum disclosure requirements as the ADR programme has been in existence for numerous years and is not required to file a 20-F with the US Securities and Exchange Commission (SEC) or to comply with other SEC reporting requirements.
During 2006 the Group reviewed its reporting of environmental, social and governance policies and performance and created a comprehensive Corporate Responsibility (CR) section on its website. The website gives access to policy documents, case studies and facts and figures underlining Rexam’s involvement and commitment in this area. The Group has identified four main areas – Environment, Our People, the Community and Governance – as the basis of its CR programme going forward.
Historically, and underpinning its approach to CR, Rexam has a longstanding set of environmental management programmes and policies in place and is committed to the protection of the environment and the minimisation of the environmental impact of its operations and products. Additionally, the social impacts of its business on employees, surrounding communities, suppliers, customers and stakeholders, and its responsibilities towards society in general have the highest priority. The continuing focus by institutional investors, the Government, charitable institutions and the media on CR encompassing social, environmental and ethical issues is acknowledged by the Board.
More specific details of the Group’s initiatives and commitment to CR can be found in the Corporate Responsibility section of the Business Review and in the CR section of the Rexam website, www.rexam.com.
A worldwide code of conduct, which applies to all the Company’s employees, has been agreed with the Board and provides a clear statement for the benefit of stakeholders involved with or impacted by Rexam’s activities. The code of conduct was communicated throughout the Group during 2005 and continues to be communicated through the new starter induction process, as part of the team briefings in the Group’s businesses, and on the Group’s intranet and website. The Board is kept informed regarding the maintenance of the code of conduct.
Rexam’s whistle blowing policy is supported by an external confidential telephone helpline, available to all employees for the submission of any concerns, including those of a financial nature.
The telephone helpline, known as Raise Your Concern, has been beneficial as an independent point of contact for employees and, if requested, the anonymity of the employee is maintained. During 2006, 34 concerns have been logged and investigated, raising matters, in the majority of cases, related to company issues and practices concerning the Group’s code of conduct, none of which have related to fraud.
Any concerns reported are investigated at the earliest opportunity by the head of Internal Audit, in conjunction with the Company Secretary and, if appropriate, by management of the respective business.
The head of Internal Audit provides reports to the Audit Committee on the concerns raised and the action that has been taken. This report forms part of the Committee’s annual evaluation and review of the whistle blowing policy.
The directors, having made appropriate enquiries, are satisfied that Rexam PLC and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the consolidated financial statements.
In addition to regular scheduled Board meetings, the Company operates through various Board committees. The Chief Executive Officer’s Committee, whose members are the Chief Executive Officer and any two other directors, has responsibility to approve certain matters above established financial limits other than those specifically reserved for the Board. The other committees and their main terms of reference are set out below.
Membership of the Audit and Remuneration Committees is restricted to the independent non executive directors. Where applicable, the date on which a member was appointed to or resigned from a committee is given.
The main terms of reference of this Committee are set out in the section Audit Committee and Auditor. The Committee met four times in 2006 and all members of the Committee in office at the date of each meeting were present.
The main terms of reference of this Committee are to oversee and report to the Board on financial risk management strategy, policy and treasury transactional matters. Additionally, the Committee assists the Board in reviewing and approving major financial transactions, including currency exposures and interest rate management. The Committee holds at least two scheduled formal meetings each year with full attendance to discuss matters of policy. Additional meetings are held during the year as necessary for which the quorum is three members, one of whom must be either the Finance Director or the Director Group Treasury. In 2006, the Committee held three formal meetings and also met several times each month for routine business. All members of the Committee in office at the date of each formal meeting were present.
The main terms of reference of this Committee are to review regularly the structure, size and composition of the Board and make recommendations to the Board on the role and nomination of directors for appointment to the Board, Board committees and as holders of any executive office. The Committee is also responsible for assessing the role of the Chairman and making appropriate recommendations to the Board, and assisting the Chairman with the annual performance evaluation to assess the overall and individual performance and effectiveness of the Board and Board Committees.
The Committee met seven times in 2006 and all members of the Committee in office at the date of each meeting were present, with the exception of the September meeting when Michael Buzzacott was unable to attend. He received a copy of the agenda and the papers for the meeting and had an opportunity to comment in advance of the meeting.
The main terms of reference of this Committee are set out in the Remuneration Report. The Committee met seven times in 2006 and all members of the Committee in office at the date of each meeting were present, with the exception of the September and October meetings when Michael Buzzacott was unable to attend. He received a copy of the agenda and the papers for the respective meetings and had an opportunity to comment in advance of the meetings.
The main terms of reference of this Committee are to review and make recommendations to the Board on the Group’s retirement and post retirement benefit arrangements including the control and funding of such arrangements. It considers and reviews external advice received in respect of investment strategy, global asset allocation and funding levels. It also works with and assists the Remuneration Committee in determining individual pension packages for the executive directors and other senior executives.
The Committee met four times in 2006 and all members of the Committee in office at the date of each meeting were present, with the exception of the March 2006 meeting when Rolf Börjesson and Frank Brown were unable to attend. Both received a copy of the agenda for the meeting and had an opportunity to comment in advance of the meeting.
The main terms of reference of this Committee are to grant options to employees over ordinary shares in the Company under the savings related share option schemes and to allot shares under the savings related share option schemes and the executive share option scheme.
A Chairman is elected at each meeting and the quorum is two members, one of whom must be a director. The Committee met at least fortnightly in 2006.
The Board delegates the management of the Group to the Chief Executive Officer and the executive directors. The Chief Executive Officer chairs the GMC which consists of the executive directors and senior corporate and business management as shown in the Directors and officers section. Whilst the GMC is not a committee of the Board, the Chief Executive Officer reports on its work and activities to the Board. The GMC met seven times in 2006.