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Shareholder
Executive
HM Government
1Victoria Street » London SMHOET
Robert Swannell
Via email = GRO
November 2013
NON- EXECUTIVE BOARD MEMBER: SHAREHOLDER EXECUTIVE BOARD
I am very pleased to write formally to confirm your appointment as a Non-Executive
Board member of the Shareholder Executive Board. The terms of reference for the
Shareholder Executive Board are at Appendix 1, and the terms of your appointment
are at Appendix 2. As you are aware, this role is advisory. You will receive a fee of
£6,000 for this appointment.
I would be grateful if you would reply formally to this letter accepting the terms of
reference for the appointment as set out in the appendix, and include a list of all
directorships or other offices held and a note of any shareholdings or other
beneficial interests which you have in any of the listed companies in the
Shareholder Executive portfolio. Throughout the duration of your appointment, I'd
be grateful if you could please keep me advised of new directorships, offices and
any fresh acquisition of shares in these companies. This information will, of course,
be held in confidence.
Once again, I am very pleased to offer you this appointment and look forward to
working with you in this role.
Yours sincerely,
PATRICK O’SULLIVAN
CHAIRMAN, SHAREHOLDER EXECUTIVE
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APPENDIX 1
Shareholder Executive Board
Terms of Reference
September 2013
1. Background
The Shareholder Executive was formed in 2003 with a mandate to improve the
Government's performance as a shareholder of publicly-owned businesses. It now has a
portfolio of around 20 complex businesses in which Government has a shareholding, and
works with Government departments and management teams to help these businesses
perform better.
The Shareholder Executive subsequently developed a wider role as a specialist provider of
corporate finance advice which includes advising on asset sales, launch aid and broader
forms of assistance, rescue aid and other major interventions and other significant
Government projects.
ShEx has also taken a lead role in incubating various new projects including the
Government Property Unit, the Green Investment Bank and, most recently, the Business
Bank.
ShEx is part of the Department of Business, Innovation and Skills (“BIS”) but a large part of
its work is carried out for other Government Departments.
The Chief Executive Officer (“CEO”) of ShEx is appointed by the Secretary of State of BIS.
The Shareholder Executive Board (“SEB”) was established, initially as an Advisory Group,
in late 2007. This was modified to ‘Board’ status in 2009.
Terms of Reference were agreed in October 2009. These reflected the shape and activities
of ShEx at that time, hence the references to the Operational Efficiency Programme and
the Government Property Unit.
Since then, not only has the shape of ShEx changed considerably but the SEB itself has
taken on a more significant role within the governance arrangements for ShEx;
This paper is informed by three key documents:
Chair's Appointment letter dated 4" October 2011;
Corporate Governance in Central Government Departments Code of Good Practice
2011;
Governance of the Shareholder Executive dated October 2009
2. Purpose
The designated purpose of the SEB is to act as an Advisory Board, providing assistance
and support to the CEO and helping him ensure that ShEx adopts best practice with
regards to governance. The principal activities of the SEB relate to three main areas:
Strategy, Leadership of specific projects and Whitehall relationships.
Strategy
e To monitor strategic and operational risks faced by ShEx in relation to all its
activities;
To advise on the development of a medium term 5 year Strategy;
To consider moves into new, or cessation of activity in existing, areas of business
To review financial and operational performance in the context of the Strategy
To consider major changes to ShEx’s management and control structure.
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Leadership of Specific Projects
To assess individual high priority and / or high risk transactions, projects or other
situations where ShEx is actively involved;
To consider and regularly review the ShEx Risk Register, responsibility for which
lies with the CEO.
Whitehall relationships
To monitor developments across Whitehall and the broader public sector and to
consider the threats and opportunities faced by ShEx;
To ensure that effective relationships are maintained with all major stakeholders
including BIS, HMT, Cabinet Office, Number 10 and other central Government
departments;
To consider strategy towards matters of public interest which could affect ShEx’s
reputation.
Beyond this, Cabinet Office guidance is that all Public Sector Boards should focus on
providing advice and supervision in five main areas:
(i)
(ii)
(ii)
(iv)
(v)
Strategic clarity
Commercial sense
Talented people
Results focus
Management information.
Authority
The non-executive Chair is appointed by the Secretary of State for BIS and is
responsible for leading the SEB;
The CEO is appointed by the Secretary of State for BIS and reports to him. The CEO
is responsible for the operational performance of ShEx;
Non-executive Directors are endorsed by the Minister responsible for ShEx, but
appointed by the Permanent Secretary for BIS;
The Chair and CEO will report to Ministers on a 6-monthly basis on the overall
performance of ShEx;
In the event that the CEO believes that actions recommended by the Chair or the
SEB will cause a conflict with his responsibilities he will seek to remedy this in
discussion first with the Chair and/or SEB and then through the Permanent Secretary
in BIS. If it proves impossible to resolve the conflict, the CEO will invite the Secretary
of State to issue an Accounting Officer Direction.
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4. Interaction between SEB and Exco
SEB is separately constituted from, and is independent of, the Executive Committee of
ShEx (“Exco”). The composition of the two bodies is different and, while they will inevitably
cover some of the same ground, the nature of the discussions will be different. The SEB is
expected to take a higher level, more supervisory and strategic perspective while the
Exco’s perspective will be more detailed and operationally orientated.
Interaction will be both formal, with papers presented by Exco members who will be invited
to attend relevant parts of SEB meetings, and informal.
The principal conduit between the two boards is the CEO.
5. Role of Chair
The key role of the Chair is to lead the SEB and to provide high level advice and support to
the CEO and the senior ShEx team on the three key areas of strategy, project leadership
and Whitehall relations.
It is expected that the Chair will have significant board — level experience from the private
sector, together with first hand experience of leading major transactions and a familiarity
with Whitehall principles, practices and networks.
6. Membership of the Board
(i) The Chair and the CEO will determine the makeup of the SEB which will be a
combination of Non-executive directors and executives;
(ii) I Non-executive directors will be expected to have broad experience of Whitehall and a
familiarity with the nature of ShEx’s activities;
(iii) Although SEB members do not have the statutory responsibilities associated with
Company Directors, all members of the SEB are expected to act in line with the
highest standards of corporate governance to ensure that ShEx complies, wherever
possible and appropriate to its circumstances, with the Combined Code & the Nolan
principles;
(iv) There will be up to five Non-executive Directors, one of whom will be a senior
representative of HMT;
(v) Executive members will comprise the CEO and all ShEx Grade 3 Directors. The Chief
Operating Officer, if not a Grade 3 Director, will be invited to attend as an observer.
(vi) Remuneration of Non-executive Board members will be in line with current practice in
BIS;
(vii) A Senior Independent Director (“SID”) shall be nominated by the Chair, in
consultation with the CEO, who would normally take the place of the Chair when
required.
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7. Meetings
(i)
(ii)
(iii)
(iv)
(v)
(vi)
vii)
Frequency — SEB will normally meet six times per annum in central London and on
such other occasions as the Chair, in consultation with the CEO, shall deem
appropriate;
Attendance - Other individuals, particularly members of ShEx who are not
members of SEB, will be invited periodically to attend SEB meetings, to give advice
or actively participate in discussions on specific subjects, particularly those relating
to their own function or transaction. Rights of access to SEB will at all times be at
the discretion of the Chair in consultation with the CEO;
Quorum — The minimum number of members required to constitute a quorum is
four, including the Chair and at least one Executive and at least one Non-Executive
member;
Agenda — To be agreed with the Chair and finalised for distribution together with all
relevant papers a minimum of 5 working days before each meeting.;
Minutes — Full minutes, in draft form, will be circulated to all SEB members as part
of the following board pack . These will be ratified as a standing item at the following
SEB;
Papers — SEB should be provided with the right level of information and assurance
to ensure it has appropriate oversight of strategic issues. Papers brought to SEB
should be owned by one of the SEB members. Papers should be in the agreed
form, making clear the Purpose and Next Steps proposed, together with an
Executive Summary and relevant background information to provide the SEB with a
rounded view of the matter in question. As a rule, papers should not exceed ten
pages in length, although further information can be added as appendices where
relevant;
Publication - These TOR will be made available on the Intranet and the public
Internet site.
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APPENDIX 2
Terns of appoint nent of Non-Executive Board Menbers
to the Sharehol der Executi ve Board
Status
1. Youare appoi nted as a Non-Executive Board Menber of the Sharehol der
Executive Board. This role is advisory andis classedas an Office Hol der”
for tax and National Insurance purposes. This appoi nt ment does not mean that
you are an enpl oyee of the Department or the Crow.
Period of Appoi nt nent
2. Your termof appoi ntnent will beginon 1 December 2013 and will be for three
years, ending by 30 Novenber 2016.
Renewal of Appoi nt nent
3. Aninformal annual reviewof your appointment will be carried out by the
Chai rman of the Sharehol der Executive Board.
4. Subj ect toa reviewof the position before the end of your current term you
nny be eli gible for areappoi nt nent for asecondterm
Terni nation of Appoi nt nent
5. The appointment can be terni nated at any ti ne oneither side wthout notice.
Level of Connit nent required
6. The Sharehol der Executive Board neets 6 tines a year. The neetings last
approxi mtely 3 hours and will be hel dinCentral London.
7. The Board secretariat will ai mto send neeti ng papers to youat least five
worki ng days bef ore the neeti ng.
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Remuneration
8. Intotal, youwll receive a fee of £6, 000 gross a year. This will be paid
automatically, via our pay-roll, in2instal ments of £3, 000 gross payable at
the end of March and Sept enber. This appointnent is classedas an Office
Hol der” for tax and National Insurance purposes and, as such, under Section
19(1)1 Incone and Corporation Taxes Act 1988, the feeis liable totax under
Schedule Eand attracts Class 1 National Insurance liability.
9. Please notify Nigel Snith, Head of Corporate Services (contact information
bel ow of the details of your preferred bank or buil ding society account,
into which you wuldlike your remuneration paid, by conpl eting the format
Annex A.
10. Your fee earnings wll not attract any eligibility for or benefits fromthe
Principal Civil Service Pension Schene.
Conflicts of Interest
11.The Nolan Principles of Public Life, attached at Annex B, whichare the
foundations of the public appoint ments process and provi de gui dance onthe
standards expected of public appointees, appl y to these appoi nt nents.
12.You must decl are any busi ness interests which nny, or my be perceivedto,
influence your j udgenent in perf orni ng your functions. Accordingly, when
replyingtothisletter, pleaseinclude alist of all directorships or other
offices held anda note of any sharehol dings or other beneficial interests
whi ch you have in any of the listed companies inthe Sharehol der Executive
portfolio, or wthinthe Operational Efficiency Programm asset mnagenent
strand. You shoul dal so keep t he Chai rman advi sed of any newdi rect orshi ps,
of fices or fresh acqui sitionof shares insuchconpanies. This information
wll, of course, be hel dinconfidence.
13.1f at any time youfeel that you my have aconflict of interest inany of the
issues to be consi dered by the Board, youshoul dI et the Chai rman know. If
this should occur during a neetingitself youshoul d bring the mtter tothe
attention of the Chairman, who wll deci de whether or not it woul d be
appropriate for youto wthdrawfromthe neeting.
Decl aration of Political Interests
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14. You are expected not to occupy paid party political posts or hold
particularly sensitive or highrolesina political party. Subj ect tothe
above, youmny engage inpolitical activity but should, at all times, remin
consci ous of your responsi bilities as a board menber and exercise proper
discretion, particularly Wwthregardtothe work of the Sharehol der
Executive Board.
15.All members are expectedtoinformthe Chairmmnif theyintendtoaccept a
paidor proni nent positioninany political party and understand that the
appoi nt ment my beterninatedearlyif itis felt that the positions are
inconpatible. Inadditionif, at any time during your termof office, you
accept a noni nati onfor electiontothe House of Conmnns or European
Assenbl y, youwll needtoresign your appoi nt ments.
Conf identi
ty
16.Al though not a civil servant of the Crow, the provisions of the Official
Secrets Acts 1911 and 1989 will apply to you, and will conti nue to apply after
the expiry of your appoi nt nents, Unauthorised di scl osure of any information
gainedinthe course of this appointnent, or its use by you or others for
personal gain or advancenent, coul dresult inthe appoi nt nent bei ng
terni natedearly, or evencrininal prosecution, Youare not requiredtosign
a declarationrel ating tothese Acts.Inaddition, the appointnent carries
wthit aduty of confidentialityinrel ationtothe information youwll
receive.
Personal liability
17.Inaccordance wthcentral policy, the Sharehol der Executive will provide
that where i ndi vi dual nenbers have acted honestly, reasonably, in good
faith and wthout negligence they will not have to neet out of their own
personal resources any personal civil liability whichis incurredin
execution or purported executi onof their Board functions,
Furt her I nf ormati on
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If you have any questi ons about the above terns of reference or any other issues
concerning your appointnent, please contact Peter Batten, Board Secretariat.
Sharehol der Executive contacts
Board Secretariat: Peter Batten,
He
porate Services: Nigel Smith,
1Victoria Street, London SWHOET
Details of part tine appointees for BIS to process fees
PLEASE COMPLETE I N BLOCK CAPI TALS (ot her t han e-nail address)
Menbers Full Nane
Nane of Board / Comittee
SHAREHOLDER EXECUTI VE BOARD
Residential Address
E-mi Address
Date of Birth
National Insurance Nunber
Bank Nane
Bank Address
Bank Sort Code
Bank Account Nane
Bank Account Nunber
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Annex A
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Annex B
THE SEVEN PRI NCI PLES OF PUBLI C LI FE (Nol an Pri nci pl es)
Selflessness
Hol ders of public office shouldact solelyinterns of the public interest. They
shoul d not dosoinorder to gainfinancial or other benefits for thensel ves,
their family or their friends.
Integrity
Hol ders of public office should not place thensel ves under any financial or
other obli gati onto outsi de indi viduals or organisations that ni ght seekto
influence theminthe performmnce of their official duties.
Obj ectivity
Incarrying out public business, incl udi ng mki ng public appoi nt nents,
awarding contracts, or reconmendi ng i ndi vi duals f or rewards and benefits,
hol ders of public office should make choices onnerit.
Accountability
Hol ders of public office are accountable for their decisions andactions tothe
public and must subnit thensel ves to whatever scrutinyis appropriate totheir
of fice.
Openness
Hol ders of public of fice should be as openas possi bl e about all the deci si ons
and actions that they take. They shoul d gi ve reasons for their decisions and
restrict information onl y whenthe wider public interest clearly demnds.
Honesty
Hol ders of public of fice have a duty to declare any private interests rel ating
totheir public duties andtotake steps to resol ve any conflicts arisingina
way that protects the publicinterest.
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Leadership
Hol ders of public office should pronvte and support these princi ples by
leadershi p and exanple.