Corporate governance

The GKN Board remains committed to high standards of corporate governance which are key to the Group’s objective of delivering long term shareholder value.
GKN’s governance framework, led by the Chairman of the Board, is designed to facilitate a combination of effective, entrepreneurial and prudent management required both to safeguard shareholders’ interests and to sustain the success of GKN over the longer term.

The Board recognises that to achieve good governance requires considerable and continuing effort. Governance is therefore an integral part of the way in which the Board and its Committees operate.

The governance framework extends across the Group to ensure that all relevant laws and regulations are complied with wherever GKN operates and that an appropriate internal control environment exists. In pursuit of GKN’s Values, Directors and employees are expected to act with integrity at all times, combining high standards of business performance with equivalent standards of corporate governance and risk management.

Directors also have a statutory duty to take into account the long term consequences of their decisions, the interests of employees, relationships with suppliers, customers and others, the impact of the Group’s operations on local communities and the environment, and the need to maintain a reputation for high standards of business conduct.


The role of the Board

The GKN Board is collectively responsible for the long term success of the Group. Key aspects of the Board’s role include setting the Group’s strategic aims, ensuring that the necessary capabilities to deliver the strategy are in place, reviewing operational performance and ensuring that an appropriate and effective framework of control and risk management exists. A full description of the role of the Board, which includes a number of specific responsibilities reserved for its decision, is available on our website at

Roy Brown has been Chairman since 2004; he is responsible for leading the Board and for its effectiveness. Sir Kevin Smith leads the business as Chief Executive, a position he has held since 2003. With the support of the Executive Committee he is responsible for the execution of the Group’s strategy and the day-to-day running of the business.

Board agendas are set by the Chairman in consultation with the Chief Executive and with the assistance of the Company Secretary, who maintains a 12 month rolling programme of items for discussion by the Board to ensure that all matters reserved to the Board and other key issues are considered at the appropriate time. Agendas are closely aligned to the key aspects of the Board’s role; below are examples of areas of the Board’s focus in 2010.

Strategy   Capabilities   Performance   Control
  • Approved strategic plans and considered the risks inherent in them.
  • Approved the Group’s annual budget to support the strategic plans.
  • Approved a 20 year asset-backed cash payment arrangement for the UK pension scheme.
  • Succession planning for the Board and senior executives.
  • Reviewed the Group’s technology plan and the activities of the Group Technology Strategy Board.
  • Considered progress on the deployment of Lean Enterprise across the Group.
  • Discussed divisional operating performance.
  • Considered Group financial performance, with particular focus on cash generation and working capital.
  • Reviewed performance against the Group’s non-financial KPIs (covering health, safety and environmental matters).
  • Assessed, with the support of the Audit Committee, the effectiveness of internal control and audit processes.
  • Considered a post acquisition review in respect of Stellex Aerostructures.
  • Assessed the effectiveness of the Board and its Committees.

The Board meets formally at least eight times a year. At least one meeting is combined with a Board visit to one of the Group’s business locations. In 2010, to coincide with the Shanghai Expo (GKN was one of the founder sponsors of the UK Pavilion), the Board visited China and toured a number of the Group’s businesses and joint venture operations. A number of informal meetings are also held during the year which help to strengthen relations between Directors. There are sufficient opportunities for the Chairman to meet with the non-executive Directors, without the executive Directors being present, should this be deemed appropriate.

Board Committees

The Board has appointed a number of Committees which play an important governance role through the detailed work they carry out to fulfil the responsibilities delegated to them. All Board Committees are supported by the Company Secretariat. Their terms of reference are available on our website.

Corporate Governance Committees

Audit Committee
(chaired by John Sheldrick)
monitors the integrity of financial reporting and audit processes and reviews the effectiveness of the Group’s systems of internal control and risk management. A report on its activities in 2010 is given in Audit Committee report.
Remuneration Committee
(chaired by Richard Parry-Jones)
determines and makes recommendations on the Group’s remuneration policy and framework to recruit, retain and reward Directors and senior executives. Click here for the remuneration report.
Nominations Committee
(chaired by Roy Brown)
recommends Board and Board Committee appointments and reviews succession planning against the leadership needs of the Group.

All independent non-executive Directors are members of these Committees. This gives them detailed insight into matters critical to the success of the Group and helps to inform Board discussions. The Chairman and the Chief Executive are also members of the Nominations Committee.

Briefing papers are prepared and circulated to Committee members in advance of each meeting and, in respect of the Audit Committee, made available to other Directors. In order that the Board remains fully appraised of their work, the Committee Chairmen report formally on Committee activities at the subsequent Board meeting.

These Committees can obtain external professional advice at the cost of the Company if deemed necessary.

Operational Governance Committees

Executive Committee
(chaired by Sir Kevin Smith)
is responsible for executing strategy by leading, overseeing and directing the activities of the Group. Its work is supported by a number of sub-committees:
Lean Enterprise Sub-Committee is responsible for driving operational best practice globally through the application of Lean business processes.
Group Technology Strategy Board is responsible for development of the Group’s technology plan, driving the development of appropriate technologies across the Group and the strengthening of external relationships including access to sources of funding.
Governance and
Risk Sub-Committee
has responsibility for developing strategy for and providing oversight and direction on all matters relating to governance and compliance, risk management and corporate social responsibility.

Board and Committee attendance

The attendance of Directors at relevant meetings of the Board and of the Audit, Remuneration and Nominations Committees held during 2010 was as follows:

Director Board
(10 meetings)
(4 meetings)
(8 meetings)
(8 meetings)
Roy Brown 10 8
Executive Directors
Sir Kevin Smith 10 8
Marcus Bryson 10
Andrew Reynolds Smith 10
William Seeger 10
Nigel Stein(a) 9
Non-executive Directors
Shonaid Jemmett-Page 6/6* 2/2* 4/4* 4/4*
Richard Parry-Jones(b) 10 3 8 8
John Sheldrick(c) 9 4 7 8
Michael Turner(d) 9 3 7 7
* Actual attendance/maximum number of meetings Director could attend based on date of appointment.
(a) Nigel Stein was unable to attend the Board meeting in January due to illness.
(b) Richard Parry-Jones was unable to attend the Audit Committee meeting in February due to personal commitments.
(c) John Sheldrick was unable to attend the Remuneration Committee meeting in January due to a prior business commitment and the Board meeting in September due to personal commitments.
(d) Michael Turner was unable to attend the Board, Remuneration and Nominations Committee meetings in February and the Audit Committee meeting in July due to prior business commitments with Lazard Ltd, of which he is a non-executive director.