Board Structure, Size and Composition
The Board seeks to ensure that the Board and the Committees have an appropriate composition to manage their duties effectively and to manage succession issues. It supports diversity in its broadest sense and considers it an essential driver of Board effectiveness. The Board recognises it is important that its composition is sufficiently diverse and reflects a wide range of knowledge, skills and experience. The Letter from the Nomination Committee Chairman provides further information on the diversity of the Board in terms of gender and skills.
Board Composition as at 30 June 2019
Non-Executive Chairman 14%
Executive Directors 29%
Non-Executive Directors 57%
Board Balance and Independence
The Board understands the importance of balance and refreshment in terms of its composition and keeps these matters under review. There have been the following changes at Board level over the past 12 months:
- Lisa Bright (Non-Executive Director) joined the Board on 1 February 2019; and
- Richard Cotton (Executive Director) resigned on 3 April 2019. Until a successor is appointed, Paul Sandland is Acting Chief Financial Officer during this interim period.
As disclosed in the 2018 Annual Report, the Nomination Committee retained an independent recruitment consultancy, Dzaleta Consulting, to assist in the appointment of Lisa Bright. Further details relating to the recruitment process and appointment can be found in the Nomination Committee Report.
The Nomination Committee Report provides further information on succession planning measures taken by the Company, together with how we are developing the talent pool internally.
Conflicts of Interest and External Board Appointments
Under the Companies Act 2006 (the Act), all Directors have a duty to avoid a situation in which they have, or could have, a direct or indirect conflict of interest with the Company. As permitted under the Act, the Articles of Association of the Company enable the Directors to consider and, if appropriate, authorise any actual or potential conflict of interest which could arise.
The Board has established procedures for the disclosure by Directors of any such conflicts, and also for the consideration and authorisation of these conflicts. Directors are required to submit any actual or potential conflicts of interest they may have with the Company to the Board. The non-conflicted Directors are able to impose limits or conditions when giving or reviewing authorisation. The Board reviews the Conflicts of Interest register annually and on an ad hoc basis when necessary. Any potential conflicts of interest are considered by the Board prior to the appointment of new Directors. During the financial year under review no actual conflicts have arisen.
None of the Executive Directors have external Board appointments.
Induction and Training
In order to assist the Board to maintain its knowledge and familiarity with the Group's operations, at least one Board meeting per year is held at one of the Group's operational sites. This year, Board meetings were held at Sansaw and Skipton, UK and Uldum, Denmark (see case study in the Corporate Governance for further details).
Any newly appointed Directors are provided with comprehensive documentation in relation to the remit and obligations of the role, current areas under consideration for the Board and the latest equity research reports. New Directors visit the various business units in order to allow them to meet with the management teams and to be shown around the operations. An introduction to Remuneration Committee responsibilities was provided to Lisa Bright by our remuneration advisers, Deloitte LLP. Lisa Bright has visited Uldum, and plans have been made for her to attend a field visit and one manufacturing site, as well as meet key Head Office employees during the forthcoming year.
Regular briefings are provided to the Directors, which cover a number of legal and regulatory changes and developments relevant to each Director's areas of responsibility. In addition, the Company Secretary informs the Directors of any external training courses which may be of relevance, and all Directors are encouraged to raise any training needs with the Company Secretary.
Each Director is entitled, upon request, to receive information to enable him or her to make informed judgements in order to discharge their duties adequately. In addition, all Directors have access to the advice and services of the Company Secretary and senior managers, and may take independent professional advice at the Company's expense in connection with their duties.
Understanding the Business
Key documentation is provided such as a schedule of Board and Committee dates, Schedule of Matters and Delegation of Authority, Programmes of Business, Articles of Association, and Group Policies and Procedures
One to one with the CEO
Meeting the Management Team
Meet the SET informally and formally
Meet key management at Head Office and leadership teams at the main sites
Director and Committee Responsibilities
Receive induction/training on Director and Committee responsibilities (if applicable)
Market Abuse Regulations online training course
Visit the Business
Visit a key site for each function (PDRA, Manufacturing, Sales and Marketing, and Head Office)
The Chairman manages the Board and oversees the operation of its Committees with the aim of ensuring that they operate effectively by utilising the diverse range of skills and experience of the various Board members. The effectiveness of the Board is important to the success of the Group and the Board undertakes an annual evaluation of its performance and that of its Committees to ensure that they remain fit for purpose.
The 2018 External Board Evaluation
An external evaluation of the Board and its Committees was completed during 2018 by Independent Audit Limited. The findings of the external evaluation were discussed at the June 2018 Board meeting. Overall, the review indicated that the Board operates effectively and is robust and challenging, but noted some areas for improvement. The actions which were taken are shown in the table below:
|Increase the diversity of the Board||Female representation at Board level increased to 25% following the appointment of Lisa Bright on 1 February 2019|
|Continue to develop the organisational design to meet future growth requirements||Ongoing|
|Concise Operational and Functional Board reports||A standard operational and functional Board paper format has been adopted|
|Bi-annual update on product pipeline and product development||An update on the product pipeline and product development was presented to the meetings in November 2018 and May 2019|
The 2019 Internal Board Evaluation
Following the external evaluation last year, it was agreed to undertake an internal evaluation for the 2019 financial year, focusing on the following areas: (i) Board composition; (ii) strategy review and delivery process; (iii) the format of Board meetings and the decision process; (iv) training and development; (v) the performance of the Board and the individual Directors; (vi) Corporate Governance; (vii) leadership and culture; and (viii) risk assessment.
The internal evaluation process is detailed below and took the format of a questionnaire which was distributed to all of the Board, with the survey results presented on an anonymous basis. The responses were received in April, and were discussed with the individual directors. In addition, the Senior Independent Director discussed the performance of the Chairman with the Directors in April and the Chairman in May.
Internal Board Evaluation Process
The process of the Internal Evaluation of the Board and its Committees were as follows:
Outcomes of the 2019 Internal Board Evaluation
Following an initial review of the responses, the Chairman discussed with the Executive and Non-Executive Directors at the June 2019 Board meeting the general themes raised by the survey, and any other survey-related points they wished to discuss.
Overall, the review once again indicated that the Board operates effectively but noted the following focus areas:
- Succession Planning; and
- Employee Engagement.
The Board will perform a further external evaluation in two years' time. Internal evaluations will be completed during the intervening period.