The Board is responsible for the long-term success and stewardship of the Company, overseeing its conduct and affairs to create sustainable value for the benefit of its Shareholders and other stakeholders including customers, suppliers, employees and the communities in which the business operates.
The Board delegates certain roles and responsibilities to its various committees and to senior management. The committees assist the Board by fulfilling their obligations and reporting back to the Board on the outcomes from their respective activities.
PRINCIPLES OF GOOD GOVERNANCE
The adoption and maintenance of good governance is the responsibility of the Board as a whole. The Board applies the principles of good governance and best practice as set out in the ‘Code’ which can be found on the Financial Reporting Council’s website www.frc.org.uk.
The Board is pleased to report that it has complied with the requirements of the Code during the 52 weeks ended 27 March 2021, with the following exceptions:
Chairman remaining in post beyond nine years from appointment (Code Provision 19)
The Company has not complied with the requirement that the Chairman should not remain in post beyond 9 years from appointment. However, the Board was of the view that Martin Davey’s knowledge and experience of the sector remained valuable and that his continuing as Chairman remained appropriate. As indicated in the Nomination Committee Report on pages 86 and 87, Martin Davey will retire as a director of the Company with effect from the Company’s forthcoming AGM and will be succeeded as Chairman by Tim Smith who is an independent Non-Executive Director appointed in 2018 and who will therefore satisfy the requirements of the Code.
Executive Director pension contributions alignment with the Group’s workforce (Code Provision 38)
Whilst the Group is not compliant with the Code relating to the alignment of Executive Directors pension contributions, going forward existing contractual pension entitlements will be frozen at their current monetary value for two years then reduced to 10 per cent of salary (in line with other Senior Executives of the Group). It is intended that pension entitlements then will be reduced to 5 per cent of salary (in line with the wider workforce rate) over the course of the next tri-annual policy review in 2024. Further details of proposals in relation to Executive Director pension contributions are set out in the Remuneration Committee Report on page 91.
Workforce engagement relating to alignment of executive remuneration with wider Company pay policy (Code Provision 40 and 41)
The Remuneration Committee does not directly consult with employees regarding the remuneration of the Executive Directors. However, when considering remuneration levels to apply, the Committee takes into account base pay increases, bonus payments and share awards made to the Company’s employees generally. Details of how Executive Director pay is considered in the context of the broader workforce is set out on page 102 of the Remuneration Committee Report.
Post-employment shareholding requirement for Directors (Code Provision 36)
The Group has not had a formal policy regarding post-employment shareholding requirements for Directors given existing ‘good leaver’ provisions in incentive arrangements which do not result in accelerated vesting of shares on leaving employment with the Group, which it was considered provided appropriate continuing alignment with Shareholders’ interests post-employment. However, the opportunity has been taken to review the position in connection with the Company’s review of its Directors’ Remuneration Policy and appropriate provisions have been included in the new policy to satisfy the requirements of the Code. Details of the proposed policy are set out in the Remuneration Committee Report on page 92.
Annual Board evaluation (Code Provision 21)
The Board conducted a Board evaluation in relation to its activities in 2020, but did not formally consider this until early 2021 (the previous external evaluation of the Board having been undertaken in November 2019). Details of the Board evaluation and review of the recommendations from the 2019 external Board evaluation are set out on page 88 of the Nomination Committee Report. The Board has reviewed the financial statements and, taken as a whole, considers them to be fair, balanced and understandable, providing sufficient and appropriate information for Shareholders to assess the Company’s position and performance, business model and strategy. The Audit Committee provided guidance to the Board to assist it in reaching this conclusion.