Corporate governance

Corporate governance policy

To achieve high standards of corporate governance by complying with the Combined Code on Corporate Governance ('Combined Code'), published by the Financial Services Authority.

Corporate governance action plan

• The Board will continue to set and implement the Company’s strategy and ensure compliance with agreed policies and legal and regulatory obligations.

• The Group will act in accordance with its code of conduct.  This addresses the Group’s responsibilities to a range of stakeholders and the environment.

• The Board will maintain an appropriate balance of executive and non-executive directors, with the Chairman and the Managing Director having clearly defined roles and responsibilities which have been agreed by the Board.

• The Chairman and Company Secretary will ensure that the directors, the Board and its committees receive appropriate and timely information to carry out their duties.

• The executive directors’ remuneration must include significant performance related elements.

• The Board will regularly report to shareholders on the Company’s position and prospects.

• The Board will review the effectiveness of the Group’s system of internal control, and will maintain formal and transparent arrangements to enable it to apply the financial reporting and internal control principles.

• The Board will maintain appropriate dialogue with institutional shareholders and use the AGM constructively to communicate with all its shareholders.

Corporate governance KPIs

• Monitor compliance with the Combined Code and to report to shareholders on how we have complied.

• Minimal notified non-compliances with Listing Rules or other corporate governance requirements.

• Neutral or favourable reaction from shareholder bodies in relation to corporate governance non-compliances.

Corporate governance case study

Annual report

Northumbrian Water Group plc’s annual report for 2005/06 was reviewed by Governance Metrics International (GMI), Institutional Voting Information Service (IVIS), Pensions Investments Research Consultants Ltd (PIRC) and Research Recommendations Electronic Voting (RREV), institutional investor voting bodies.  As a result of their review of our corporate governance compliance IVIS and RREV recommended voting in favour of all the resolutions proposed at the AGM held on 27 July 2006.  PIRC recommended voting in favour of six of the eight resolutions.