the people, the processes and the challenges of the Group. It has been a very good process to date”
Independent non-executive director Feedback received as part of a committee effectiveness review
Hong Kong 3 Vietnam 2 Myanmar 1
Bangladesh 1 Dubai 1
France 1
USA 3
Tanzania 1
Kenya 1 Singapore 10 Malaysia 13 Singapore 14
Independent and onward visits Board meetings
Cambodia 1
China 2
Japan 1
Korea 2
Total visits 57
Number of visits to our markets in 2014, undertaken by the independent non-executive directors and the Chairman
Directors’report
●
● Completed a full formal and tailored induction programme including: overview of strategy;
risk; finance, capital and liquidity;
geographies; corporate;
introduction to legal and compliance; and governance Mandatory
●
● Independent non-executive director refresher training Additional
●
● Hosted Audit Committee lunch with Group Internal Audit Management Group
●
● Attended May Audit and Board Risk Committee’s half-day session
●
● Board Regulatory Compliance Oversight Committee induction
●
● Board Financial Crime Risk Committee induction
●
● Client dinner with other Board members
●
● Met with Standard Chartered Bank Singapore Country Management Group, with other Board members
●
● Meeting with Monetary Authority of Singapore, with other Board members
As part of overseas board (Kuala Lumpur)
●
● Client dinner with other Board members
●
● Talent and leadership lunch with other Board members
Community as part of overseas board
●
● Kuala Lumpur: HappySmile Project2
●
● Kuala Lumpur: deep-dive session on Living with HIV
Dubai
●
● Meetings with Regional Head of Audit; Regional Chief Executive Officer; Chief Executive Officer of the UAE and Head of Governance, Europe, Middle East, Africa and Americas
●
● Received briefing on key clients in the region and met members of senior management
New York
●
● Meetings with the Chief Executive Officer Americas; Head of Client Coverage Americas; Head of Financial Markets, Americas and Chief Finance Officer Americas
●
● Tour of Newark offices including overview of dollar clearing business Singapore
●
● Meetings with the Global Head, Small and Medium-Sized Enterprise Banking; Head of Regions, Subsidiary Governance; Chief Executive Officer Singapore; Group Head, Financial Markets; Group Head, Wealth Management; Group Head, Corporate Finance; Group Head, Strategy and Group Technology & Operations Top Team Members
●
● Branch visit Hong Kong
●
● Meetings with Chief Executive Officer Greater China and Hong Kong;
Head, Corporate & Institutional Clients; Head of Retail Clients; Head of Private Banking and Vice Chair Wholesale Banking Asia
●
● Branch visit
●
● Dealing room visit Korea
●
● Meetings with local board independent non-executive directors and chairman
●
● Meetings with Chief Finance Officer; Chief Information Officer; Head of Corporate, Institutional & Commercial Risk; Head of Risk Management and Head of Legal and Compliance
●
● Attended Standard Chartered Bank Korea Executive Committee dinner
●
● Branch visit Committee Chair
engagement/development Meetings with Regulators
●
● Hosted Committee lunch with the Prudential Regulation Authority
●
● Met with the Dubai Financial Services Authority
●
● Met with the Deputy Chief Executive, Hong Kong Monetary Authority
●
● Met with the Senior Deputy Governor, Korean Financial Supervisory Service Meetings with local KPMG Audit Partners
●
● Meetings with KPMG Audit Partners in Dubai, Hong Kong, New York, Singapore, Malaysia and Korea
Other
●
● Attended Bank of England chairs of Audit Committees discussion
●
● Met with the US Monitor1
1. Pursuant to the 21 September 2012 Consent Order agreed to by the New York Department of Financial Services (the NYDFS) and Standard Chartered Bank (SCB), a compliance monitor was appointed to conduct a comprehensive review of the Bank Secrecy Act/Anti-Money Laundering and Office of Foreign Assets Control compliance programmes, policies and procedures at SCB’s New York branch. Pursuant to the 19 August 2014 Consent Order agreed to by the NYDFS and SCB, the compliance monitor’s term has been extended for two additional years, through January 2017
2. Developed under the Youth, Health & Education pillar. Focus on the development of children with special needs: Cerebral Palsy, Autism, ADHD, Down’s Syndrome, Dyslexia, slow learners
During the year, directors received training on a range of topics, including: control of inside information obligations in the context of Ian Hannam v FCA; UK Financial Services (Banking Reform) Act 2014, including Senior Managers Regime; and the changing regulatory and macroeconomic landscape.
Directors’ induction and ongoing development in 2014
Induction training1
Directors’
duties and corporate governance
Visits to our markets and with local management
Regulatory environment macroeconomicand landscape
Sir John Peace n/a ¢ ✔ ¢
P A Sands n/a ¢ ✔ ¢
O P Bhatt n/a ¢ ✔ ¢
J S Bindra n/a ¢ ✔ ¢
Dr K M Campbell n/a ¢ ✔ ¢
Dr L Cheung n/a ¢ ✔ ¢
Dr B E Grote ¢ ¢ ✔ ¢
A N Halford ¢ ¢ ✔ ¢
C M Hodgson n/a ¢ ✔ ¢
N Kheraj ¢ ¢ ✔ ¢
S J Lowth n/a ¢ ✔ ¢
R Markland n/a ¢ ✔ ¢
A M G Rees n/a ¢ ✔ ¢
Dr Han Seung-soo, KBE n/a ¢ ✔ ¢
V Shankar n/a ¢ ✔ ¢
P D Skinner, CBE n/a ¢ ✔ ¢
O H J Stocken, CBE n/a ¢ ✔ ¢
Dr L H Thunell n/a ¢ ✔ ¢
1. Applicable to new directors appointed during 2014
¢ These briefings took the form of a combination of presentations, discussions and the circulation of papers
Directors’report year, with the exception of Peter Sands, who, as previously
announced, will step down from the Board in June 2015.
Independence of directors
The Board conducted a rigorous assessment of the
independence of the non-executive directors. Ruth Markland and Paul Skinner, who have both served on the Board for over 11 years, did not participate in this assessment.
Ruth Markland and Paul Skinner’s in-depth knowledge of the Group, combined with the consistency they provide through their continued service, remains invaluable as we continue to ensure a smooth transition of the Board and its committees.
In addition, both Ruth and Paul demonstrate superb stewardship as Chairs of their respective committees and Ruth continues to provide the Chairman with excellent support as Senior Independent Director. Given that Ruth and Paul have served on the Board for over 11 years, their appointments were the subject of particular scrutiny.
However, the Board agreed that each of them continued to demonstrate the attributes of an independent non-executive director and there was no evidence that their extended tenure has impacted on their independence. With the significant change in the Board composition since 2011, there has been real value in maintaining some stability through Ruth and Paul remaining on the Board during this transition. The Board is satisfied that all of its non-executive directors bring robust independent oversight and continue to remain independent.
As previously announced Ruth and Paul will retire from the Board by the end of 2015 as it continues to progress the multi-year Board succession plan.
External directorships and other business interests Details of the directors’ external directorships can be found in their biographies on pages 128 to 131. We closely monitor the outside business interests of our directors and are satisfied that all of our directors are compliant with the Prudential Regulation Authority (PRA) requirements, which came into effect on 1 July 2014, limiting the number of directorships both executive and non-executive directors are permitted to hold. Before committing to an additional role, directors confirm that no conflicts will arise, that the role will not breach their limit as set out in the PRA rules, and provide the necessary assurance that the appointment will not adversely impact their ability to continue to fulfil their role as a director of the Group. Committee Chairs are particularly mindful of their obligations. This year, as in previous years, directors have consistently demonstrated their ability to provide any additional time commitment as needed.
The Group continues to have an integrated approach to governance across all countries, irrespective of whether the main activities of the Group are operated through a branch or subsidiary. Governance is managed across the Group’s eight geographic regions. In addition, Corporate Secretariat is run as a global function with consistent policies and standards.
Management of geographic governance is structured to cover economic and political developments, financial performance, governance and risks, franchise development and people.
As at 31 December 2014, the Group had 28 banking subsidiaries and 65 independent non-executive directors (excluding our PLC Board independent non-executive directors).
As the independent non-executive directors on our Board travel throughout the Group’s footprint, they play a critical role in actively engaging with the banking subsidiary independent non-executive directors. An annual African Chairman’s Conference is held, with Sir John Peace in attendance, where the chairmen of our African subsidiaries meet. In 2014, it was held in June in Washington DC. The ASEAN boards met in Shanghai and the Greater China boards had their annual joint strategy sessions in Hong Kong.
Before stepping down as Audit Committee Chair, Rudy Markham hosted an annual call with those independent non-executive directors who are members of banking subsidiary audit committees. Naguib Kheraj, as the new Audit Committee Chair, will continue to host similar annual calls. We have also set up an online forum for the subsidiary independent non-executive directors so that we can share Group information and key messages on a timely basis. We continually look at ways to improve our model for engaging the subsidiary independent non-executive directors, in order that they remain well-informed and well-equipped to make decisions that are aligned to the Group’s interests.
Board effectiveness review
This year we held an externally facilitated workshop during the Board’s strategy session in June, designed to discuss the Board’s effectiveness. Following a full and transparent tender process, Boardroom Review Limited was selected to facilitate the discussion, which was conducted by Dr Tracy Long.
Boardroom Review do not provide any other services to the Group. Ahead of the workshop directors each completed a pre-workshop questionnaire. The workshop was preceded and informed by conversations between Dr Tracy Long and individual directors, which helped identify current strengths, future challenges, and provide valuable insights to enhance the Board’s overall effectiveness.
Board effectiveness review process
– Board environment – Work of the Board
– Use of time Pre-workshop questionnaire
Externally facilitated workshop Relevant case
studies
Best practice, common themes
and priorities
Action plan 2015
Summary of strengths and challenges Key observations and themes
Board discussion Individual conversations
Following the facilitated workshop session, two separate documents were prepared. One of these summarised the strengths and challenges for the Board and the other
highlighted the key themes that arose during the workshop. All of these findings were discussed by the Board, following which an action plan was developed and agreed for the year ahead.
Directors’ effectiveness
The process to assess individual directors’ performance and effectiveness ahead of their proposal for re-election was completed by a one-on-one discussion with the Chairman.
These discussions took place between October and December 2014 and, for each of the independent non-executive directors, included consideration of:
●
● Their time commitment, including (where relevant) the potential impact of any outside interests
●
● The current and future committee membership and structure
●
● The Board’s composition, taking into account when each independent non-executive director envisaged stepping down from the Board
Chairman’s effectiveness
The independent non-executive directors, led by the Senior Independent Director, met without the Chairman present to appraise his performance.
Directors’report (including informal sessions) during the course of the year
(including some unstructured strategic thinking time)
Nomination Committee’s discussions.
He has also continued the practice of meeting with the independent non-executive directors informally to provide updates on evolving thinking on executive and independent non-executive succession During 2014, there have been a number of changes to the Board’s composition, details of which can be found on page 137
Continued focus on the linkages between the Board and its committees
While recognising the good progress that has already been made, there is appetite for continued focus on clarifying the role of each committee and simplifying the linkages between the committees and the Board as a whole
Continued focus on the linkages between the Board and its committees
The terms of reference of all the Board committees were reviewed in 2014, with a particular focus on linkages between the Audit, Board Risk and the new Board Financial Crime Risk Committees. Further details on the outcome of this review can be found on pages 147 and 148 The membership of the committees was reviewed and a number of changes made to maintain sufficient overlap of members and ensure that appropriate skills, capabilities and fresh perspectives are maintained Continued focus on executive
succession planning
Identify further opportunities for Board members to engage with the pipeline of successors to senior management positions
Review the Board’s strategic rolling agenda in light of the refreshed strategy and organisational changes
The Board’s rolling agenda was further refreshed following the Board’s strategy discussions in June 2014, and a number of new topics were included for debate in advance of the next strategy board in June 2015
Continued focus on sharpening the information provided to the Board, while balancing this with ensuring that directors receive the information necessary to fulfil their duties effectively
In addition to the existing one-page summary for Board papers, we are reviewing Board paper guidelines and maximising the use of our online Board portal to provide additional information to directors outside formal Board meetings
Continued focus on sharpening the information provided to the Board, while balancing this with the need to ensure that directors receive the information necessary to fulfil their duties effectively
The appointment of a new Group Finance Director in 2014 provided an opportunity for us to review the format and content of the Group Finance Director’s regular report to the Board
In addition to the regular risk information provided to the Board, the Group Chief Risk Officer now periodically attends Board meetings to provide updates on current and emerging risks, including macroeconomic and geo-political events
Ensure there is the right balance of input from external stakeholders into the Board’s discussions
Obtain external input from a range of stakeholders into the Board’s discussion, including regulators, customers, investors and employees
Investor engagement
The Board understands the importance of regular, honest and open engagement with shareholders, not just ahead of the AGM, but throughout the year. The Board receives regular updates on the views of our key shareholders and stakeholders, and Board members openly seek the views of our shareholders, both directly and through the Group’s Investor Relations function.
During 2014, the Group has focused on enhancing our engagement with both our shareholders and stakeholders, including investor voting bodies and credit rating agencies, explaining our performance and setting out our plan to refocus the Group and execute the refreshed strategy. In 2014, we have undertaken almost 850 investor meetings and have met with in excess of 400 separate institutions.
We have also spent time reflecting on the disappointing vote received on the directors’ remuneration policy at the 2014 AGM.
We have been listening to our shareholders. During the year we consulted with shareholders representing over half of our share register, supported by senior management, the Chairman and Chair of the Remuneration Committee, who played active roles in this process. The consultation was very useful and the constructive feedback has helped to shape a number of enhancements to the way in which the policy will be implemented in 2015.
Institutional shareholders programme
Investor Relations has primary responsibility for managing day-to-day communications with institutional investors. The function supports the Group Chairman, Group Chief Executive and Group Finance Director, other Board members and senior management in conducting a comprehensive shareholder programme spread over the year. An insight into the level of engagement undertaken during 2014 is set out below:
Formal presentation of full year and half year results to our institutional shareholders and analysts, followed by post-results investor roadshows in major investor centres across Europe, the US and Asia.
See http://investors.sc.com/en/financials.cfm for further information
Interim management statement issued for the three months ending 31 March 2014 and nine months ending 30 September 2014, followed by a call with investors and analysts. We discontinued the issue of our pre-close statement in the second half of 2014.
See http://investors.sc.com/en/showresults.
cfm?CategoryID=51
Industry conferences attended by executive directors and senior regional and business management. Conference attendance provided an opportunity to meet a large number of investors in London, New York, Toronto, Amsterdam, the Nordic region, Hong Kong, Singapore, and Beijing.
The presentations given at those conferences were made available on our website at http://investors.sc.com/en/
conference.cfm
Significant engagement by the Chairman with shareholders and investor bodies, including roadshows in London and Edinburgh, to obtain shareholder feedback and consider corporate governance issues. In April 2014, the Chairman hosted a governance dinner in London attended by 18 key investors.
The dinner was well received and has been a regular feature of our market communication in recent years, providing an avenue for debate on relevant AGM and topical governance issues, and, more broadly, deepening relationships with our top shareholders.
A three-day investor trip held in Hong Kong in November 2014, attended by shareholders representing around 50 per cent of the register, followed by an event for all London-based equity analysts. This was an opportunity to demonstrate how we are responding to the challenges the Group is facing, highlight the enormous opportunities that exist across our markets and demonstrate the actions being taken to execute the refreshed strategy. During the event, investors were able to interact with four Group executive directors and 25 members of senior management.
The detailed slide packs from the event can be viewed at http://investors.sc.com/en/trip.cfm
Various investor lunches and meetings hosted by a combination of our Chairman, directors and other senior management, including the Group Treasurer, regional and business management.
Retail shareholders’ programme
The Group Corporate Secretariat oversees communication with retail shareholders. The AGM, held on 8 May 2014, provided an opportunity for the Board to meet with our retail shareholders, to listen to their views and respond to their questions.
The results of voting at general meetings can be viewed at http://investors.sc.com/en/agm.cfm
In addition, during the year, we hosted a meeting with the United Kingdom Shareholders’ Association and we engaged with specialist fund managers focusing on UK retail investors.
Debt investor programme
Group Treasury manage the Group’s relationships with debt investors and the three major rating agencies. Country chief executives and chief financial officers lead on management of subsidiary ratings. In 2014, we met with debt investors and rating agencies across Europe, the US and Asia. The Group is an active issuer of senior unsecured and non-equity capital so it is important to maintain regular dialogue with debt investors to ensure continued appetite for the Group’s credit. The Group’s credit ratings are important to the external perception of the Group’s financial strength and creditworthiness.
Further information can be found at: http://investors.sc.com/
en/group.cfm
Directors’report review of brand positioning, share plans and other incentives Remuneration Committee
Oversight and review of Board and executive the US authorities1 in relation to US sanctions Oversight and review of fundamental risks including credit, Oversight and review of Board and
Oversight and review of financial, audit and internal control issues
Board Financial Crime Risk Committee
Oversight and review of all financial crime compliance matters Remuneration
Oversight and review of all financial crime compliance matters Remuneration