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Corporate governance
Control processes The Board reviews its strategic plans and objectives on an annual basis and approves Group company budgets and strategies in light of these. Control is exercised at Group, continental, cluster and subsidiary board level through monthly monitoring of performance by comparison to budgets, forecasts and cash targets and by regular visits to Group companies by the Group Chief Executive, Chief Financial Officer and continental CEOs.
The Board has formal procedures in place for the approval of investment and acquisition projects, with designated levels of authority, supported by post investment review processes for major acquisitions and capital expenditure. The Board takes account of social, environmental and ethical matters in relation to the Group’s businesses when reviewing the risks faced by the Group. The Board is conscious of the effect such matters may have on the short and long-term value of the Company.
As noted in Report of the Directors, the Company has entered into a Level II American Depository Receipt programme with the Bank of New York Mellon and has securities registered with the Securities and Exchange Commission in the USA. As a result, the Company is required to comply with applicable US regulations including the Sarbanes-Oxley Act, insofar as it applies to foreign private issuers. In accordance with the Securities and Exchange Commission’s recommendations, the Company has established a disclosure committee comprising the Group Chief Executive, Chief Financial Officer, the Group Company Secretary and General Counsel and the Director of Financial Reporting and Strategic Planning.
The Group Chief Executive and Chief Financial Officer will also provide the certificates required by the Sarbanes-Oxley Act when the Form 20-F for 2007 is filed. There were no changes to the Company’s internal control over financial reporting occurring during the year ended 31 July 2007 which have materially affected, or are reasonably likely to materially affect, that internal control. Procedures relating to the internal controls, as required by Section 404 of the Sarbanes-Oxley Act, were in place throughout the year ended 31 July 2007 and continue to the date of this report.
Compliance statement The Company applied all of the principles set out in section 1 of the Code and the Revised Code for the period under review and has, throughout the year, complied with the detailed provisions set out therein, save that, until 31 July 2007, the pensionable salary of one Executive Director included his bonus capped at a fixed amount (as detailed in Remuneration report). From 1 August 2007, all Executive Director service contracts comply with the Code and the Revised Code.
The Company’s auditors, PricewaterhouseCoopers LLP, are required to review whether the above statement reflects the Company’s compliance with the nine provisions of the Code specified for its review by the Listing Rules of the UK Listing Authority and to report if it does not reflect such compliance. No such report has been made.
New York Stock Exchange corporate governance requirements Although not required to do so as a foreign private issuer, the Company complies in all material respects with the corporate governance measures set out by the board of the New York Stock Exchange, Inc for US issuers. Those standards state that companies should have a nominating/corporate governance committee composed entirely of independent directors with written terms of reference, which develops and recommends to the board a set of corporate governance principles for the company. The Company has a Nominations Committee, details of which are set out in Corporate governance and a majority of the members of the Nominations Committee are independent Non Executive Directors and all such Directors sit on the Board. The Board itself, rather than the Nominations Committee, develops the corporate governance principles for the Company and approves the Group’s overall system of internal controls, governance and authority limits. The Company’s practice, in accordance with the UK Companies Act and the Code in relation to the appointment and termination of the external auditors, is that a recommendation is made by the Audit Committee to the Board, which will then make a recommendation to shareholders in general meeting. This differs from the procedure in the USA, where the external auditors are accountable to the audit committee, which has the authority to appoint or dismiss the external auditors without reference to shareholders.
In July 2005, rules were introduced by the US Sarbanes-Oxley Act, the Securities and Exchange Commission and the New York Stock Exchange which require the Company to comply with certain provisions relating to audit committees. These include a requirement related to the independence of audit committee members and procedures for the treatment of complaints regarding accounting or auditing matters. The Company is fully compliant with these requirements.
Communications with shareholders The Company places considerable importance on communication with its shareholders, including its employee shareholders. The Group Chief Executive and Chief Financial Officer are closely involved in investor relations and a senior executive has day-to-day responsibility for such matters. The views of our major shareholders are reported to the Board by the Chief Financial Officer and by the Chairman and discussed at its meetings. The Annual Report and Accounts are available to all shareholders either in paper form or electronically and can be accessed via the Company’s website www.wolseley.com or via Shareview, an internet service offered by the Company’s Registrars, as detailed in Shareholder information.
The Company has regular dialogue with institutional shareholders and meetings with shareholder representatives, as required, and promotes communications with private shareholders through attendance at the Annual General Meeting. Contact with institutional shareholders and with financial analysts, brokers and the media is controlled by written guidelines to ensure the protection of sensitive information which could affect the Company’s share price and which has not already been made generally available to the Company’s shareholders. Contact is also maintained, when appropriate, with shareholders to discuss overall remuneration plans and policies. The Group’s preliminary and interim results, as well as all announcements issued to the London and New York Stock Exchanges, are published on the Company’s website, www.wolseley.com. The Company issues regular trading updates to the market and these, together with copies of presentations to analysts and interviews with the Group Chief Executive and Chief Financial Officer, are also posted on the Company’s website. The Notice of the Annual General Meeting is circulated to all shareholders at least 20 working days before such meeting and it is Company policy not to combine resolutions to be proposed at general meetings. All shareholders are invited to the Company’s Annual General Meeting at which they have the opportunity to put questions to the Board and it is standard practice to have the chairmen of the Audit, Nominations and Remuneration Committees available to answer questions. The proxy votes for and against each resolution, as well as abstentions which may be recorded on the proxy form accompanying the Notice of Meeting, are counted before the Annual General Meeting and the results are made available at the meeting after shareholders have voted on each resolution on a show of hands. The results are also announced to the London and New York Stock Exchanges and are published on the Company’s website shortly after the meeting.