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Annual Report & Accounts 2016 - Governance
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41 • Appointment of a new Chief Financial Officer. • Reports from the Chairmen of the Audit, Remuneration and Nominations Committees. • Merger and acquisition opportunities. • The disposal of non-core assets. In addition to the scheduled meetings described above, ad hoc Board meetings were also convened at short notice in 2016, to deal with the following matters: • Agreeing the Nomura bridging loan for repaying the Cerberus loan in February 2017. • Consideration of potential corporate transaction opportunities. • Adopting the Company's distribution policy and the payment of a special dividend. Board meetings are usually held in Gibraltar, where the Group's gaming business is headquartered. The Company's articles of association prohibit any Board or Board Committee meeting from being held in the United Kingdom. Meetings without Executive Directors present The UK Corporate Governance Code recommends that the Chairman meets with the Non-executive Directors without the Executive Directors present at least once a year. This meeting will happen in connection with the annual Board performance evaluation process, however, it is not unusual for the Chairman to conduct these meetings more frequently, particularly if the Company is contemplating a significant transaction. The Chairman reports back to the full Board any recommendations arising from these meetings. How does the Board decide on making changes to its membership? The Board has adopted a formal and transparent procedure for the appointment of new Directors by appointing a Nominations Committee to lead the process of appointment and make recommendations to the Board. The Nominations Committee also advises the Board on its structure, size, composition and matters of Director and senior management succession. A report from the Nominations Committee on its work appears on pages 44 to 45. How do Directors develop in the role and fulfil their duties? A full induction programme is provided to new Directors, which is specifically tailored to the needs and experience of the new Director and the committees on which they sit. The programme provides corporate governance information provided by the Company Secretary which is both general in nature (eg UK Corporate Governance Code, remuneration best practice) and specific to the Company (eg the risk register, etc.). New Directors may also meet with the Company's external auditors and advisers as part of the induction process. After the induction programme from time to time the Company Secretary notifies Directors of courses and seminars conducted by corporate governance bodies and professional advisers that Directors may find helpful. Working with the Chairman the Company Secretary ensures good information flows within the Board and its committees and between senior management and the Non-executive Directors. The Company Secretary is the guardian of all Board procedures and advises the Chairman and other Directors when required. Agendas and accompanying reports are prepared for each Board or committee meeting and circulated via a secure data-room in advance of each meeting. Between scheduled meetings, Directors are updated on business developments with email reports, management accounts and regulatory updates and, where necessary, the Chairman of the Board or the Chairman of a committee will convene a conference call to discuss and reach agreement on material urgent matters. The Company Secretary is available to all Directors to offer guidance and advice on corporate governance, company law and share plan matters. The Company Secretary presents a report at each Board meeting updating the Directors on share capital and shareholder changes, Group corporate structure changes and corporate governance developments. GVC's Head of Legal is also available to all Directors to provide advice on general legal and regulatory issues. In addition, a formal procedure has also been adopted allowing Directors to seek independent professional advice where they believe it is necessary in order for them to fulfil their duties to the Company. Board committees are also authorised by the Board under their terms of reference to retain external advice as required for each committee to carry out its duties. In accordance with best practice, the Board conducts an evaluation of the performance of the Board, its committees, individuals and the Chairman. For the 2016 evaluation process, the Directors followed the process described in the chart below. A third party advisory firm was not engaged on this occasion to facilitate the exercise, but in accordance with the Code's recommendation, the Board will retain such a firm to support the annual evaluation process at least once every three years. A list of evaluation questions is drawn up by the Chairman in consultation with the Company Secretary. Any questions relating to the performance of the Chairman of the Board are set by the SID in consultation with the Company Secretary. The questions are circulated to the Directors via a secure website and are answered online. The Secretary collates the results and reports the results to the Chairman and the feedback on the Chairman's performance to the SID. The Chairman discusses the results of the Board, individual and committee performance evaluations with the Board and with individual Directors where necessary. Possible options for addressing any issues arising from the review are considered and action agreed. The SID meets with the Non-executive Directors to review the results of the evaluation of the Chairman's performance. The SID then discusses with the Chairman these results and any further feedback from the Non-executive Directors. For the purpose of conducting the 2016 review only, because the Company did not have a SID, Stephen Morana, the Audit Committee Chairman, stepped in to fulfil the SID's role in this evaluation process. What came out of the first performance evaluation processes? Matters identified Action taken More regular access to the senior management team To begin from the next Board meeting Risk mitigation management The Board and Audit Committee to more effectively challenge management on the mitigating action taken to manage risk Increase knowledge and understanding of executive remuneration practices and developments Greater access to be given to PwC, the remuneration consultant, beginning with the design of the new 2018 remuneration policy