Provident Financial is committed to high standards of corporate governance and this section provides an overview of how the company has applied the principles and supporting principles of Section 1 of the Combined Code published by the Financial Reporting Council in June 2006.
Further information is available in the 2012 Annual report PDF (8.37Mb), which includes the review of Key Governance Principles and the Directors’ Remuneration Report.
The board comprises two executive directors, three non-executive directors and a non-executive Chairman. The board has previously approved a statement of the division of responsibilities between the Chairman and the Chief Executive and all three non-executive directors are considered to be independent.
The Chairman is responsible for chairing the board, monitoring its effectiveness and ensuring that an effective strategy is approved by the board.
The Chief Executive is primarily responsible for implementing the company’s strategy, as well as being a focal point for communication with shareholders.
There are five principal board committees: the Executive Committee, the Remuneration Committee, the Audit Committee, the Nomination Committee and the Risk Advisory Committee. All committees have written terms of reference that define their duties, authorities and membership, and these are reviewed annually.
The performance of the board is evaluated annually and the Chairman is primarily responsible for this evaluation. A questionnaire is completed by all directors which contains questions on different aspects of the operation of the board and its committees and the performance of individual directors. The board considers the results of the evaluation and agrees proposals to address any issues identified. The chairman’s performance is also reviewed annually and the Senior Independent Director is responsible for this evaluation.
The board has overall responsibility for the company’s system of control, including risk management, and for reviewing its effectiveness. Certain responsibilities have been delegated by the board to the Audit Committee, and the Risk Advisory Committee, which oversees the company’s risk management framework. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives and any system can provide only reasonable and not absolute assurance against material misstatement or loss.
We are committed to maintaining good communications with shareholders. The Chairman is responsible for ensuring that appropriate channels of communication are established and that the views of shareholders are made known to the board. Shareholders are encouraged to attend the Annual General Meeting of the company where the chair of each of the board committees is available to answer any questions.
The board continues to be the body accountable for the company’s corporate responsibility programme. The board reviews corporate responsibility performance on an annual basis and discusses specific issues throughout the course of the year. A senior management committee is in place to supplement the role of the board and oversee the company’s corporate responsibility.