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Nomination Committee Report

Introduction by Ken Hanna, Nomination Committee Chairman

I am delighted to introduce my first Report as Chairman of the Nomination Committee.

It has been a year of change for the Board. I succeeded Philip Rogerson as Chairman in April, following his retirement from Aggreko. We have appointed two new Non-executive Directors, and now women comprise 40% of our Non-executive Directors. We announced a new global management structure in September: all three Regional Directors have stepped down from the Board, and we have appointed three new ones.

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 (appointed as Chairman of the Committee on 25 April 2012)

David Hamill

   

Russell King

  

Robert MacLeod

   

Philip Rogerson 

 (retired on 25 April 2012) 
Rupert Soames
  


The majority of the members of the Committee are independent Non-executive Directors. 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 2012.

Main activities of the Committee during the year

Non-executive Director appointments

The Committee oversaw the appointment of two new Non-executive Directors in 2012. For each appointment, we prepared detailed candidate specifications, taking into account the existing skill set on the Board, which defined the criteria for the new appointees. We worked with external search consultants managing a formal, thorough and orderly search, reviewing all potential candidates that might fit our criteria. We interviewed rigorously and secured two excellent appointments to the Board. Diana Layfield was appointed on 1 May 2012 bringing with her a wealth of experience directly relevant to Aggreko and in depth knowledge of many of our most important markets. Rebecca McDonald, an experienced Non-executive Director with extensive knowledge of the international energy markets was appointed on 1 October 2012. Diana and Rebecca have each undertaken an extensive induction programme to ensure a rounded understanding of the business. Further information on these induction programmes can be found in the Corporate Governance Report.

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 enabled us to identify strong and experienced internal candidates to run the new Americas and Asia Pacific units created as part of the new global management structure announced in September 2012. Asterios Satrazemis, previously managing Aggreko's Australia Pacific business, has now returned to the US, where he was previously responsible for the Northern Business Unit, to manage the Americas business and Debajit Das, who was running Aggreko's Asia business has added the Australia Pacific business to his existing responsibilities. Each joined the Board on 1 January 2013. We conducted an external search to identify a candidate to run the Europe, Middle East and Africa region unit and were pleased to announce on 22 February 2013, that David Taylor-Smith had been selected for the post and accepted our offer. David Taylor-Smith will join the Board on 11 March 2013.

New global management structure

Before the Board agreed on the new global management structure, announced in September 2012, the Committee carefully considered the qualifications required for the roles to lead the new business areas and the implications for the composition of the Board. The Committee believes that, in line with the Board's policy of being able to hold to account the line managers who run the business on a daily basis, the three new regional Directors should be appointed to Executive Director roles. George Walker had already indicated his intention to step down from the Board and the Committee decided that it would not be appropriate to offer the newly created roles to the two other existing regional Directors. The Committee therefore oversaw the selection process for the three new roles, under which we identified internal candidates for two roles and conducted an external search for the third role, following which, the Committee made appropriate recommendations to the Board. Although replacing three Executive Directors in a short space of time would present challenges for the Board and for the management of the Group, the Committee was satisfied that the process could be successfully managed, particularly given the availability of two excellent internal candidates.

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 Board-level 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. The appointment of two female Non-executive Directors is consistent with this policy.

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 Non-executive appointments and announcement of our new global management structure, we now believe we have the right composition.

Committee appointments

We recommended three committee appointments. As noted above, I became Chairman of the Committee in April 2012. Given Diana Layfield's experience in operating in countries facing high ethical risks, similar to many of those in which we operate, we recommended her appointment to the Ethics Committee. Similarly, we decided that Rebecca McDonald's previous experience as a Non-executive Director in other companies would strengthen the Remuneration Committee.

Governance

Each year the Board reviews the Committee's effectiveness as part of the Board's evaluation process. We undertook a thorough review of our terms of reference and recommended revised terms to the Board, which were approved in July.

Ken Hanna
Chairman of the Nomination Committee
7 March 2013