LLOYDS BANKING GROUP PLC
The following sets out the schedule of matters reserved to the Board of Lloyds Banking Group plc. To the extent that matters require approval by each of the Principal Subsidiaries, and except where powers are conferred by statute or regulation, matters reserved to, or approved by the Board of Lloyds Banking Group plc are also reserved to the Boards of the Principal Subsidiaries. All directors of Lloyds Banking Group plc also serve on the boards of the Principal Subsidiaries. The boards generally meet simultaneously.
The Principal Subsidiaries are defined as Lloyds TSB Bank plc, HBOS plc and Bank of Scotland plc.
1 Statutory Requirements
1.1 Approval of interim and final financial statements.
1.2 Approval of any interim and recommendation of final dividends.
The declaration of dividends, release of interim and preliminary results announcements may be approved by a Board Committee (comprising the Chairman, Group Chief Executive and Group Finance Director).
1.3 Approval of the Annual Report & Accounts and Form 20-F.
1.4 Approval of any significant change in accounting policies or practices.
1.5 Appointment (or removal) of the Company Secretary.
1.6 Authorisation for Directors’ conflicts or potential conflicts of interest.
1.7 The Board recommends the appointment, reappointment or removal of external auditors to shareholders following the recommendation of the Audit Committee.
1.8 Approval of resolutions and associated documentation for shareholders at a general meeting.
2. Regulatory Requirements
2.1 Approval of all shareholder circulars, prospectuses and listing particulars.
2.2 Approval of announcements or press releases concerning matters reserved to the Board. Routine regulatory announcements that do not concern matters reserved to the Board may be approved by the Group Finance Director.
Approval of routine regulatory announcements concerning matters reserved to the Board, circulars, prospectuses, listing particulars or press releases may be delegated to the Disclosure Committee or, if appropriate, a suitably authorised Transaction Committee.
2.3 Approval of the appointment or dismissal of the Chief Risk Officer ("CRO"), and acceptance of the resignation of the CRO . The appointment, resignation or dismissal of the CRO will be reviewed by the Risk Committee and a recommendation made to the Board for approval or acceptance.
3. Board Membership and Board Committees
3.1 Determining board structure, size and composition, including appointments and removals on the recommendation of the Nomination and Governance Committee.
3.2 Assurance that succession planning for the board members, including the Chairman and Group Chief Executive, and for senior management is in place. The Nomination and Governance Committee reviews succession planning in respect of Executive Directors.
3.3 Ratification of the membership of the Audit, Risk and Remuneration Committees, as agreed by the Nomination and Governance Committee, and submitted to the Board at the next scheduled meeting and reviewed at least annually.
3.4 Approval of the continuation in office of Directors seeking re-election at the AGM following the recommendations of the Nomination and Governance Committee.
3.5 Determining the role, including capabilities and time commitment, of the Chairman, Deputy Chairman, Senior Independent Director, Non-Executive Directors, the Group Chief Executive and Executive Directors following the recommendations of the Nomination and Governance Committee.
4. Structure and Capital
4.1 Approval of material changes to the Group’s corporate and organisational structure ensuring that the structures are clear and transparent and appropriate to the structure, business and risks of the Group and its component entities.
4.2 Approval of material changes to the Company’s capital structure.
4.3 Approval of the basis for allocation of capital through the annual Capital Plan.
4.4 Approval of investments, acquisitions, mergers or disposals of companies or the assets within those companies, including any related guarantees, indemnities or securities, exceeding £200m. In the case of companies (or where relevant businesses), the financial limit refers to the consideration involved. In the case of assets, the financial limit refers to the premium over (in the case of an acquisition) or discount from (in the case of a disposal) book value, in both cases subject to the proviso that any asset sales/disposals in excess of £1 billion (book value) will be subject to Board approval in any event.
4.5 Approval of acquisitions and disposals of Special Purpose Vehicles used in structured transactions, and related guarantees and indemnities, exceeding £2bn.
4.6 Approval of issues of new ordinary shares under prevailing shareholder authority.
4.7 Approval of intra group guarantees and indemnities either on a stand alone basis or as part of a larger transaction in excess of £100 million.
5. Remuneration
5.1 Approval of the framework for determining the policy and specific remuneration packages of Executive Directors.
Approval of the framework for determining remuneration policy and approval of the specific remuneration packages of Executive Directors, members of the Group Executive Committee and Code staff (as defined in the FSA Code on Remuneration, i.e. a person who performs a significant influence function for a firm, or an employee whose activities have, or could have, a material impact on the firm’s risk profile) is delegated to the Remuneration Committee.
5.2 Approval of the Chairman’s and Deputy Chairman’s remuneration. Subject to the Fees payable to the Chairman and Deputy Chairman being agreed by the Remuneration Committee and recommended to the Board for approval.
5.3 Approval of non-executive directors’ remuneration. Subject to Fees payable to non-executive directors being considered by the Chairman and the Executive Directors, and recommended to the Board for approval.
5.4 Approval of material changes in employee share schemes subject to the recommendation of such changes by the Remuneration Committee.
5.5 Approval of policy relating to Group pensions and significant pension scheme issues, including closure and implementation of material schemes subject to the recommendation of such changes by the Remuneration Committee.
6. Corporate Governance
6.1 Approval of the process for the performance evaluation of the Board and Board Committees and review of findings.
6.2 Determination of the independence of Non-Executive Directors following the recommendations of the Nomination and Governance Committee
6.3 Approval of the governance principles and corporate values of the Group and corporate governance framework as set out in the Board Governance Framework.
6.4 To assist it in carrying out its responsibilities, the Board has implemented the following policies:
LLOYDS BANKING GROUP - STRATEGY AND MANAGEMENT
7. Strategy
7.1 Approval of the Group’s strategy and long term objectives, and review of delivery of the strategy within the applicable legal and regulatory framework taking into account inter alia the Group's long term financial interests and solvency.
7.2 Approval of the Medium Term Plan and the annual budget, and review of performance against plan.
8. Delegation of Authority
8.1 Approval of the high level framework of board delegations, including the matters reserved to the Board and authority of the Group Chief Executive.
8.2 Approval of Board Committee terms of reference following the recommendations of the Nomination and Governance Committee.
9. Risk Management
9.1 Ensuring the Group manages risk effectively by:-
9.1.1 approving the Group’s risk appetite (the extent and categories of risk which the Board regards as acceptable for the Group to bear);
9.1.2 approving the Group’s risk management framework; and
9.1.3 monitoring the Group’s aggregate risk exposures and risk/return.
9.2 Ensuring that the executive management of the Group:
9.2.1 establishes and maintains appropriate systems to plan and control group operations and risks and to comply with relevant legislation and regulations; &
9.2.1 provides regular and sufficient information to the Board to enable it to discharge its monitoring duties in relation to these matters.
9.3 Approval of the commencement or settlement of material litigation (in general those involving sums in excess of £100 million)
9.4 Approval of the settlement of material regulatory proceedings (in general those involving sums in excess of £100 million)
10. Policies
10.1 Approval of the Share Dealing Code for Directors and PDMRs.
10.2 Approval of Group Principles and the high level Governance Policy.
11. Contracts & Agreements
11.1 Approval of new contracts where the cost impact of the lifetime value exceeds £100m and existing contracts where the cost impact exceeds £200m. The higher level of delegation in respect of existing contracts recognises the previous authorisation of the contractual relationship, and acknowledges that the majority of increased costs are included in approved budgets and the Medium Term Plan.
11.2 Approval of any contract outside the normal course of business, which exposes the Group or a company within the Group to unlimited legal liability. Contracts which expose the Group to unlimited legal liability, but within the normal course of business, may be approved by the relevant GEC member or Business Unit Head, acting jointly with either the Chief Risk Officer or the Company Secretary. In the event of doubt, the contract should be submitted to the Group Chief Executive for approval
12. Other Matters
12.1 Approval of policy governing charitable and political donations.
12.2 Reviewing and monitoring perceptions of Lloyds Banking Group by the investing community and the media.
12.3 Approval of the appointment of the Group’s main professional advisers and their fees, where significant.
