Dr John McAdam

Chair of nomination committee

The refreshing of the board is being maintained for the third consecutive year.

Current committee members

  • John McAdam (chair)
  • Catherine Bell
  • Mark Clare
  • Brian May
  • Nick Salmon
  • Sara Weller

Biographies of the directors are in the Board of Directors

Dear Shareholder

We currently have a relatively small sized board with eight directors in total, two of whom are executive directors and the remaining six are non-executive directors. We feel the size of our board is appropriate to our business and that the skills and experience of our board members match its needs. In line with our succession plans, Mark Clare was appointed during the year and Nick Salmon will be stepping down at the forthcoming AGM in July after over nine years' service. As a result, the refreshing of the board is being maintained for the third consecutive year arising as a result of natural turnover, due to the directors having reached around their ninth year of service on the board.

We are aware that the European Parliament voted in favour of draft rules aimed at increasing female representation on the boards of listed companies to ensure that there is a quota of at least 40 per cent of female non-executive directors. We will keep this matter under review.

For the moment, we have maintained the 25 per cent gender diversity ratio recommended by Lord Davies. Our gender diversity policy is taken into account during every candidate selection process – ultimately we will strive to appoint the person we believe is best matched to the role.

We have a talent management programme which aims to identify and develop leaders for our future resourcing needs who may, in the fullness of time, develop into non-executive directors of the future.

Over the coming year, we will be looking at the resourcing needs of our company in the new regulatory period (2015-2020) and ensuring that our succession plans at board and executive and senior manager level complement the needs of our business.

Dr John McAdam
Chair of the nomination committee

Quick facts

  • The Code requires that 'a majority of members of the nomination committee should be independent non-executive directors'
  • The role of the committee is to make recommendations to the board on its composition, balance and membership and on refreshing the membership of the board committees
  • The company secretary attends all meetings of the committee
  • The business services director, who has responsibility for human resources, regularly attends meetings and is responsible for engaging with executive search recruitment advisors
  • Terms of reference – corporate.unitedutilities.com/corporate-governance.aspx

What has been on the committee's agenda during the year

Board succession

Board succession planning has been a key topic of discussion. To support the committee in the search process, which resulted in the appointment of Mark Clare, we engaged Russell Reynolds Associates, an executive search consultant. The committee prepared a brief of the skills and experience that were needed by a candidate, which identified the fact that the successful candidate would, when Nick Salmon stepped down, be his successor as senior independent director. The process thereafter was for the committee to consider a number of suitable candidates, which were narrowed down after discussion by the committee. A number were then invited to attend initial meetings with the Chairman and the CEO and business services director. Thereafter, a small number of candidates were invited to meet the other non-executive directors and the CFO. The committee met again and after discussion agreed that the role should be offered to Mark Clare. Russell Reynolds Associates is a signatory to the voluntary code of conduct on gender diversity for executive search firms; it has no other relationship with the group other than being used on previous occasions for executive search purposes.

Question & Answer:
MARK CLARE

Mark Clare
Independent non-executive director

There is a real pride in what has been achieved over the last few years.

What, so far, have you done as part of your induction process?

"So far, I spent an intensive two days at the group's head office in Warrington, meeting on a one-to-one basis with members of the executive team and other senior managers, covering a number of areas of the business including the wholesale activities, domestic retail/customer services and regulation. I also spent the afternoon at Davyhulme wastewater treatment works in Manchester. It was great to get an understanding from the team at Davyhulme about what goes on, and what the opportunities for energy generation are at one of the country's largest wastewater treatment works." (Davyhulme is the group's largest wastewater treatment plant serving a population equivalent of 1.2 million in and around Manchester; it is set to become a centre of excellence for sludge treatment and energy generation. Such is the scale of recovery of energy from wastewater at Davyhulme, the site generated over 50GWhs of energy during the year - see Our performance.)

What are your initial impressions of United Utilities?

"As a customer, in the UK we take our water services pretty much for granted. There has been considerable progress in improving customer service over the last few years and the challenge for United Utilities is to continue to move faster than its peers to get to a leadership position.

"While United Utilities is a big business delivering critical services to its customers, it's also one that has had to embrace considerable change whilst continuing to invest in major infrastructure."

From your induction process so far, what has left you with a lasting impression?

"It's the people that make great businesses and the enthusiasm, experience and willingness to deliver the change programmes came through very strongly for me. There is real pride in what has been achieved over the last few years and quite rightly so."

 

In February 2014, Steve Mogford stepped down from the committee. It is common practice across many FTSE companies for the CEO not to serve as a member of the nomination committee. Neither the Chairman nor the CEO will participate in the reappointment of their own successor when the time comes. It is envisaged that Steve will be consulted by the committee from time to time and attend meetings at their request in relation to other board and senior management appointments as they arise.

Board diversity

The ratio of male:female employees at United Utilities can be found on Our approach to doing business.

We have retained the 25 per cent female representation on our board, in line with the recommendations of Lord Davies of Abersoch and in accordance with our board diversity policy. We are mindful in our board succession planning of the wish by Lord Davies and the Secretary of State for Business Innovation and Skills (BIS) for further female appointments to our board. We are keen to develop our female senior managers so that, over time, they can be considered for board appointments at United Utilities or as potential candidates for non-executive directorships in other companies. In March 2014, the Chairman and two female members of the executive team attended the BIS 'Women on Boards Conference'; the aim of the conference was to increase the number of female candidates in the pipeline for non-executive posts. At United Utilities we are keen to support this ambition, believing that non-executive positions for its executive team provide excellent opportunities for both personal and career development.

As is the case in many UK companies, certain activities remain more widely populated by males (e.g. in operational and engineering activities) or females (e.g. customer contact centre roles and support services). United Utilities is no exception, but we are continuing our activities to try and address gender imbalances at all levels and in all areas of our business. During the year, we appointed Helen Samuels to a new role as our director of engineering (see Case study).

PHOTOGRAPH: Lorne Large, principal project manager, pictured at Liverpool Wastewater Treatment Works.

Summary of board diversity policy

  • Ensure the selection process for board candidates provides access to a range of candidates, although any appointments will be made on the basis of equal merit, but with due regard for the benefits of diversity on the board, including gender diversity
  • Ensure that the policies adopted by the group will, over time, promote gender diversity among senior managers who will in turn aspire to a board position
  • In selecting candidates for board positions, only use the services of executive search firms who have signed up to the voluntary code of conduct for executive search firms as recommended by Lord Davies
  • Adopt measurable objectives from time to time for achieving gender diversity at board level – which shall currently be to maintain at least 25 per cent female representation

Board composition

Executive

25%

Non-executive

75%

Male

75%

Female

25%

Board tenure

0-2 years

25%

2-4 years

37.5%

4-6 years

0%

6-9 years

37.5%

Age profile

50-55

37.5%

55-60

25%

60-65

25%

65-70

12.5%

Case Study

Helen Samuels
Director of
Engineering

 

Helen joined United Utilities in February 2014, from CH2MHill where she was managing director of its European water business.

Helen says: "This is an exciting time for the UK water industry. There's still a lot of work to complete in the current asset management programme and companies are eagerly awaiting the outcome of the ongoing price review to see what their investment plans will look like for the rest of the decade. We're going to be busy."

As well as bringing a wealth of engineering experience to United Utilities, Helen is a keen coach and mentor, encouraging young people to choose a career in engineering and she is taking an active interest in United Utilities' apprenticeship and graduate programmes.

Wider succession and talent management

In 2013/14 we have continued to focus on developing our female talent. We celebrated International Women's day throughout March with our female talent shadowing executive and senior leaders. Cate Cartledge, street works strategy and compliance manager, commented on her experience:

"I had the opportunity to work shadow with Sue Amies-King, our Retail Director. I found my experience very insightful and interesting, and I got a lot from the session. In particular, I now have much clearer and more focused ideas for my personal development which will help me reach my future goals within United Utilities."

We have also been delivering bespoke sessions for female employees around personal impact and networking, and later in 2014, we are partnering with the Army who will be working with us to develop leadership skills for our future female leaders.

Broader talent development also remains a focus for us. We have continued to recruit graduates and apprentices to feed our future resourcing needs. Analysis of our attraction rate for female graduates and apprentices has enabled us to proactively target key schools and universities in our advertising campaign. This year we have seen an increase in the number of female graduates being offered a role at United Utilities to 35 per cent, an increase from last year when 24 per cent of roles were offered to females. We are at the beginning of our apprentice recruitment programme, from the applications received by March 2014, 16 per cent were from females, an increase from last year's figure of ten per cent.

Outcome of the nomination committee evaluation

No issues of concern were raised. It was felt that the recent non-executive recruitment process had been well organised and effective resulting in the successful appointment of Mark Clare.