Summary of significant corporate governance differences from NYSE listing standards
InterContinental Hotels Group PLC, as a UK company listed on the London Stock Exchange, is committed to compliance with the principles of corporate governance and aims to follow the corporate governance practices specified in the UK Corporate Governance Code (the "Code") issued by the Financial Reporting Council in the United Kingdom. A report on our compliance with the Code as it applied for the year ended 31 December 2012 is given in our UK Annual Report and Financial Statements which is available on this website.
The Company’s shares are also listed on the New York Stock Exchange (“NYSE”) in the form of American Depositary Shares. The Company has also adopted the corporate governance requirements of the US Sarbanes-Oxley Act and related rules, to the extent that they are applicable to it as a foreign registrant. Although as a foreign registrant the Company is exempt from most of the corporate governance rules of the NYSE, the Company is required to disclose any significant ways in which its corporate governance practices differ from those followed by US companies. These are as follows:
Basis of regulation
The Code contains a series of principles and provisions. It is not, however, mandatory for companies to follow these principles. Instead, companies must disclose how they have applied them and disclose, if applicable, any areas of non-compliance along with an explanation for the non-compliance. In contrast, US companies listed on the NYSE are required to adopt and disclose corporate governance guidelines adopted by the NYSE. InterContinental Hotels Group's statement of compliance with the Code's requirements for 2012 is contained in our UK Annual Report for the year ended 31 December 2012, which is available on this website.
The Code's principles recommend that at least half the Board, excluding the Chairman, should consist of independent Non-Executive Directors. As at 31 December 2012 the Board consisted of the Chairman, independent at the time of his appointment, four Executive Directors and six independent Non-Executive Directors. NYSE listing rules applicable to US companies state that companies must have a majority of independent directors. The NYSE set out five bright line tests for director independence. The Board's judgement is that all of its Non-Executive Directors are independent. However it did not explicitly take into consideration the NYSE's tests in reaching this determination.
Chairman and Chief Executive Officer
The Code recommends that the Chairman and Chief Executive Officer should not be the same individual to ensure that there is a clear division of responsibility for the running of the Company's business. There is no corresponding requirement for US companies. The roles of Chairman and Chief Executive Officer were, throughout 2012, fulfilled by separate individuals.
InterContinental Hotels Group has a number of Board Committees which are similar in purpose and constitution to those required for domestic companies under NYSE rules. The Remuneration, Audit and Nomination Committees consist only of Non-Executive Directors. The NYSE requires US companies to have a nominating/corporate governance committee composed entirely of independent directors. The committee is responsible for identifying individuals qualified to become Board members and to recommend to the Board a set of corporate governance principles. As the Company is subject to the Code, the Company’s Nomination Committee is only responsible for nominating, for approval of the Board, candidates for appointment to the Board, though it also assists in developing the role of the Senior Independent Director. The Company’s Nomination Committee consists of the Company Chairman and all the independent Non-Executive Directors. The Chairman of the Company is not a member of either of the Remuneration or the Audit Committees. The Audit Committee is chaired by an independent Non-Executive Director who, in the Board’s view, has the experience and qualifications to satisfy the criteria under US rules for an “audit committee financial expert”.
Non-Executive Director Meetings
Non-management directors of US companies must meet on a regular basis without management present, and independent directors must meet separately at least once per year. The Company’s Non-Executive Directors have met without Executive Directors being present, and intend to continue this practice, before every Board meeting if possible.
Shareholder approval of Equity Compensation Plans
The NYSE rules require that shareholders must be given the opportunity to vote on all equity compensation plans and material revisions to those plans. The Company complies with UK requirements which are similar to the NYSE rules. The Board does not, however, explicitly take into consideration the NYSE’s detailed definition of “material revisions”.
Code of Ethics and Business Conduct
The NYSE requires companies to adopt a code of business conduct and ethics, applicable to directors, officers and employees. Any waivers granted to directors or officers under such a code must be promptly disclosed. The Company's Code of Ethics and Business Conduct, applicable to all Directors, officers and employees, is available on the Company's website. No waivers have been granted under this such Code.
Each Chief Executive Officer of a US company must certify to the NYSE each year that he or she is not aware of any violation by the Company of any NYSE corporate governance listing standard. As the Company is a foreign registrant, the Company’s Chief Executive Officer is not required to make this certification. However he is required to notify the NYSE promptly in writing after any of the Company’s Executive Officers become aware of any non-compliance with those NYSE corporate governance rules applicable to the Company.
Further information on IHG's corporate governance practices can be found in the corporate governance section of the Annual Report and Financial Statements for the year ended 31 December 2012.