We are committed to the very highest standards of corporate governance – those systems and processes through which our organisation is managed, controlled and held accountable.
During the financial year ending 31 March 2014, we complied fully with the principles and the spirit of the UK Corporate Governance Code, which sets out universal standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders.
Good governance is not just the responsibility of our board and executive team. As a board, we aspire to apply the highest standards of governance to our conduct around the board table and we strive to ensure that these standards are applied by the executive team and cascaded throughout the group. In support of this, we have in place internationally accredited management systems governing quality, environment and health and safety to ensure consistently high standards.
Our Business Principles brings to life the five areas we believe are key to being a responsible business. It affirms our commitment to integrity in our dealings with customers, suppliers, employees, regulators and investors.
Over the past year we have been monitoring the considerable change in the areas of governance and narrative reporting and we have aimed to adopt a more transparent approach in our 2014 annual report. We will continue to monitor developments in this field.
Over the past year:
Board evaluation: we carried out the annual board evaluation, which assesses the performance of individual board members, and the effectiveness and performance of the board as a whole. Action points from our 2012/13 review were addressed over the past 12 months. These included:
- Improving the standard of presentations given to the board to ensure information was more focussed on the key issues the board needs to be aware of.
- Maintaining and improving the opportunities for the board to meet with members of the executive and wider senior management team.
- Developing the focus of executive succession planning and encouraging female senior managers to pursue non-executive positions in other companies.
- Improving the board’s knowledge of the company’s regulators, with particular focus on market reform.
Appointment of new non-executive directors: we continued to review the succession plans for our board and appointed a new independent non-executive director, Mark Clare on 1 November 2013.
Mark was recruited to replace Nick Salmon, who stepped down from the board in July 2014 after over nine years as a director. Mark also replaces Nick as our senior independent director and on appointment became a member of our audit committee. With effect from 1 September 2014, Mark stepped down from the audit committee and was appointed to the remuneration committee.
Mark has been group chief executive at Barratt Developments plc since October 2006 and is also a trustee of the Building Research Establishment and the UK Green Building Council. He is a former executive director of Centrica plc and held a number of senior roles both within Centrica plc and British Gas. Mark has also been a non-executive director of BAA plc, the airports operator.
As part of his United Utilities directors’ induction, Mark visited our head office where he met with members of the executive team and other senior managers and visited our largest wastewater treatment works at Davyhulme in Manchester.
Additionally, with effect from 1st September 2014 Lord Carter of Barnes CBE was appointed as an independent non-executive director and member of the audit committee, following the resignation of Nick Salmon at the AGM in July 2014. Stephen is currently group chief executive of Informa plc, where he previously held a non-executive role prior to being appointed as a group chief executive. Additionally he has held non-executive positions at Travis Perkins plc and Royal Mail Holdings plc. An induction plan will also be arranged for Stephen.
Board diversity policy: in line with our board diversity policy we have continued to achieve our objective of maintaining at least 25 per cent female board membership. In addition, as of 31 March 2014, 50 per cent of our executive team were female and 37 per cent of all our employees were female. We have continued to focus on developing our female talent, through networking and leadership skills development.
Executive pay: A key objective of our remuneration policy is to ensure that executive pay is aligned to our company’s strategy of delivering long-term shareholder value by providing the best service to customers, at the lowest sustainable cost and in a responsible manner, by strongly linking pay to performance at both an individual and a company level. Retention of our world class ranking in the Dow Jones Sustainability Index is part of the suite of measures in this remuneration arrangement. Before introducing changes to executive incentives, namely the introduction of the new Long Term Plan in 2012/13 which incorporates measures relating to customer service, we consulted widely with shareholders. At our recent 2014 AGM, 98.48 per cent of the votes cast were in favour of the resolution to approve the Directors’ Remuneration Policy.
Base salary increases for both of our executive directors were limited to 2.5 per cent, which was in line with the headline increase applied across the wider workforce.
If you would like to send us a comment about this report, please email our Head of Sustainability, Chris Matthews