Nomination Committee Report
INTRODUCTION BY KEN HANNA, NOMINATION COMMITTEE CHAIRMAN
I am pleased to introduce the report from the Nomination Committee for 2013.
In our previous report, the Committee described a number of major changes to Aggreko's Board taking effect during 2012 and in the earlier part of 2013. Since then we have made a further appointment of Ian Marchant as a Non-executive Director.
We have also announced some changes to the Board for 2014. After 11 successful years as Chief Executive, Rupert Soames will step down from the Board and leave the Company after the AGM on 24 April 2014. Rupert has been an excellent Chief Executive for Aggreko and the Group has achieved an enormous amount during his tenure. We have made strong interim appointments whilst we assess both internal and external candidates for the Chief Executive role. David Hamill, Senior Independent Director will also be retiring after seven years on the Board. David has helped guide Aggreko through an outstanding period of growth and we wish him well for the future. I am pleased to be able to report that Russell King has agreed to succeed him as Senior Independent Director.
RESPONSIBILITIES AND ROLE OF THE NOMINATION COMMITTEE
The main responsibilities of the Committee are:
- to review the structure, size and composition (including skills, knowledge, experience, diversity and balance of Executive and Non-executive) of the Board and its Committees and make recommendations to the Board with regard to any changes;
- to consider succession planning for Directors and other senior executives;
- to identify and nominate for the approval of the Board, candidates to fill Board vacancies; and
- keep under review the time commitment expected from the Chairman and the Non-executive Directors. The full Terms of Reference of the Committee are available on our website at http://ir.aggreko.com/committee-terms-of-reference.
MEMBERSHIP OF THE COMMITTEE
The members of the Committee throughout the year were as follows:
| Ken Hanna | Chairman |
| David Hamill | |
| Russell King | |
| Robert MacLeod | |
| Rupert Soames |
The majority of the members of the Committee are independent Non-executive Directors. Rupert Soames and David Hamill will be stepping down form the Board following the 2014 Annual General Meeting and Diana Layfield will be joining the Committee at that point. Peter Kennerley is Secretary to the Committee and Siegfried Putzer, Group Human Resources Director, also attends meetings of the Committee by invitation.
The Committee met six times during 2013.
MAIN ACTIVITIES OF THE COMMITTEE DURING THE YEAR
Non-executive Director appointment
The Committee oversaw the appointment of one new Non-executive Director in 2013. For this appointment, we prepared a detailed candidate specification, taking into account the existing skill set on the Board, which defined the criteria for the new appointees. We worked with an external search consultant, The Lygon Group, managing a formal, thorough and orderly search, reviewing all potential candidates that might fit our criteria. We regard The Lygon Group as independent, and except for Board searches, they provide no other services to Aggreko. We interviewed rigorously and secured an excellent appointment to the Board. Ian Marchant was appointed on 1 November 2013 bringing further strength to our Board through his extensive knowledge of the domestic and international energy markets and a substantial finance background. Ian has undertaken a full induction programme to ensure a rounded understanding of the business. Further information on this induction programme can be found in the Corporate Governance Report.
Executive Director appointment
The Committee also oversaw the appointment of a new Executive Director in 2013. We used an external search consultant, Inzito, and appointed David Taylor-Smith on 11 March 2013 to run the Europe, Middle East and Africa region. We regard Inzito as independent, and except for senior executive searches, they provide no other services to Aggreko. We also appointed Asterios Satrazemis and Debajit Das as Executive Directors on 1 January 2013,the appointment process for Asterios and Debajit was undertaken in 2012 and disclosed in our report last year.
Succession planning
The Committee continued to focus our attention to ensure that we had a robust management succession planning process in place for senior positions within the Group. We review the composition of the Board twice each year – in June and December – focusing in particular on Executive Director posts. In conjunction with the June meeting, the full Board then looks at people and posts at one or two levels below the Board, to identify possible candidates for succession to bigger roles, individual potential and development needs and areas where we might have to recruit from outside the Group to fill a future vacancy. We also look for opportunities for senior executives to move to other parts of the Group to gain experience in managing different businesses in different markets. This process has enabled us to identify strong and experienced internal candidates to fill interim posts following the announcement of Rupert Soames' resignation from the Board. We are pleased to report that Angus Cockburn has agreed to become Interim Chief Executive whilst we identify a permanent Chief Executive and Carole Cran, Director of Finance, has been appointed Interim Chief Financial Officer.
Board composition
The Board's policy is to have a broad range of skills, background and experience. Operationally Aggreko is organised into three regions, and the Board has concluded that the ability to hold to account the line managers who run the business on a daily basis, to get their input into decision making, and to get the additional Boardlevel visibility which comes from having these executives as part of the Board adds real value, and is the appropriate choice. While we will continue to ensure that we appoint the best people for the relevant roles, we recognise the benefits of greater gender diversity and will continue to take account of this when considering any particular appointment, although we do not set any particular targets.
As in previous years, as part of the Company's annual evaluation of Board performance, all Directors were consulted on the composition of the Board, as to size, the appropriate range of skills and balance between Executive and Non-executive Directors. Following the appointments made in 2012, 2013 and implementation of our new global management structure, we believe we have the right composition.
Committee appointments
We recommended two committee appointments during 2013. Diana Layfield was appointed as a member of the Audit Committee on 29 July 2013 and Ian Marchant was appointed as a member of the Audit Committee on 1 November 2013. Both were recommended as Audit Committee Members based on their strong financial experience; Diana has worked for a multinational banking and financial services company for ten years; and prior to his appointment as Chief Executive, Ian spent six years as Finance Director for SSE. Following David Hamill's retirement from the Board in April 2014, Diana Layfield will join the Committee, Ian Marchant will join the Ethics Committee and Russell King will be the Senior Independent Director.
Reappointment of Directors
Two of our Non-executive Directors had their appointments extended during 2013. Each having served terms beyond six years, their reappointments were subject to particularly rigorous review by the Committee. Both David Hamill and Robert MacLeod make important contributions to the Board, specifically David as Senior Independent Director and Robert as Chairman of the Audit Committee, when combined with the reorganisation of Aggreko and the number of Board changes made in 2013, the Committee concluded that the experience and continuity brought by David and Robert was extremely valuable and both should remain on the Board during 2013 by having their terms extended for a further year.
With the exception of Rupert Soames and David Hamill, who have indicated their intention to step down following the 2014 AGM, the Committee unanimously recommends the reappointment of each of the Directors at our 2014 Annual General Meeting.
Governance
Each year the Board reviews the Committee's effectiveness as part of the Board's evaluation process. The results of this year's evaluation found that the Committee works well and succeeds in recommending appointments that result in a good mixture of skills on the Board across industry, finance and geographic areas. It was also noted that the experience of the Non-executive Directors complements the experience of the Executive Directors well, although we recognise that we need to keep the areas of expertise under review as the business develops. A detailed explanation of the Board evaluation process, findings and areas identified for improvement can be found in the Corporate Governance Report.
Ken Hanna
Chairman of the Nomination Committee
6 March 2014