Committee Membership and Attendance

The membership of the Committee, together with appointment dates and attendance at meetings during the year, is set out above. Other attendees at the meetings include the Chief Executive Officer, the Group HR Director and the Company Secretary (who acts as secretary to the Committee).

The Chairman does not chair the Committee meeting if it is dealing with the appointment of his successor. The Senior Independent Director, Ishbel Macpherson, takes the chair when required.

Role and Responsibilities

The role and responsibilities of the Committee are set out in the written terms of reference, which are available on the Company's website at www.dechra.com. The Committee's terms of reference are reviewed on an annual basis. During the 2019 financial year this took place at the February meeting and they were amended to reflect the 2018 UK Corporate Governance Code requirements. An overview of the terms of reference is detailed in the Corporate Governance Report.

Principal activities of the Committee during the year included:

• Diversity

  The Board reviews its policy on diversity and its implementation every year and during 2019 this review took place in February. The Group recognises that the diversity of teams and an inclusive culture is beneficial for the Dechra business, its processes, and its performance. Our objective is to continue to be a high performing business driven by highly skilled and committed teams. In the context of the market in which we compete, we believe that the diversity of our workforce contributes significantly to developing strong relationships with veterinarians, a significant and growing proportion of which are women, in the many markets and cultures in which we trade.

  The Board believes that everyone should be recruited and promoted on the basis of their personal ability, contribution and potential. The Board is committed to promoting and supporting a culture of fairness, respect and equal opportunity across the Group.

  The Board is generally opposed to the idea of stated gender quotas; however, it acknowledged in the 2018 Annual Report that there was a low representation of female Directors (14.3%) on the Board, and it committed to restoring the balance. Following the appointment of Lisa Bright in February 2019, the female representation at Board level increased to 25%. Following Richard Cotton's resignation this has increased to 28.6%. Female representation below Board level is 27.3% of the Senior Executive Team and 52% of the overall workforce.

 

Board Skills, Knowledge and Experience

Industry knowledge/experience
Industry experience	5
Knowledge of sector	6
Understanding of regulatory process	5
Skills/experience of the Board
Strategic thinking	7
Governance	7
Risk management	7
Financial	6

• Board Appointments

  During the 2018 financial year, the Committee commenced the recruitment for an additional Non-Executive Director which resulted in the appointment of Lisa Bright in February 2019.

We are currently assessing our options in relation to a replacement for Richard Cotton, who resigned as Executive Director and Chief Financial Officer on 3 April 2019, which may include the appointment of an external recruitment consultant as well as the consideration of internal candidates.

• Board Succession Planning

  The Committee has reviewed the Board succession plans during the year, which have, in particular, taken into account the key dates of the Non-Executive Directors' terms of appointment. This has highlighted that over the next two years at least one Non-Executive Director will need to be recruited in order to have orderly succession.

• SET Succession Planning and Leadership Needs of the Group Two of our key risks are people focused and they are:
  • the failure to retain high calibre, talented senior managers and other key roles in the business; and
  • failure to recruit or develop good quality people to achieve our strategic aims.

To assist with this, the Group HR Director regularly presents to the Committee on the Group's succession planning. The Committee discusses the succession plan for the SET, which includes the Executive Directors, at least annually. Plans are in place for sudden, unforeseen absences, for medium term orderly succession and for longer term succession as well as supporting significant acquisitions that require full time Dechra leadership during the integration phase. For each SET member, we have either identified an internal candidate or have identified roles that would benefit from bringing new experience into the team. In addition, the Committee has reviewed the emergency succession planning, which clearly identified individuals capable of covering key management roles on an interim basis whether this be due to an unanticipated absence, secondment of a key resource into a different role for a defined period or assume a key role until a successor can be identified and appointed. All these individuals will receive, or have received, the necessary coaching to assist them in obtaining the required skills to provide any critical support when needed. This planning has facilitated the DVP EU Finance Director, Paul Sandland, being appointed as the Acting Chief Financial Officer, with his post being backfilled by the DVP International Finance Director.

In addition to this, a forward looking review of the future anticipated shape of the organisation has been undertaken to identify any potential gaps that may emerge and plans have been outlined to enable the organisation's structure to remain fit for purpose.

One of the elements of our People Plan has focused on the continual development of the SET to provide world class leadership to the Group. In order to support this plan, it has been agreed that the SET will undertake a development programme, which will focus on each individual SET member, their behavioural traits and preferences, leadership styles and contribution to the team.

We encourage regular contact between members of the SET and the Board, with all SET members presenting to the Board at least once a year, leading site visits of their respective businesses and attending one-to-one sessions with Non-Executive Directors to discuss specific issues when applicable.

During the year Simon Francis was appointed as Group Manufacturing and Supply Director to continue the evolution of the team.

• Effectiveness of Committee and Directors

The Committee's performance was evaluated as part of the 2019 Board and Committee Internal Evaluation (further details of which are provided in the Corporate Governance Report). The Committee considered the results of the evaluation and it was agreed that the Committee remained effective and was covering all areas within its remit. The findings of the internal evaluation were presented to the Committee for its discussion at the June 2019 meeting and it was agreed that more work on succession planning was required as well as implementing employee engagement initiatives.

Following the internal evaluation, which concluded that the Board is dynamic, robust and challenging (further details of which, including the outcomes and actions, are provided in the Corporate Governance Report), the Committee has concluded that each of the Directors continue to perform effectively and demonstrate commitment, not only in respect of their roles and responsibilities, but also in relation to the Group and its shareholders. At the forthcoming Annual General Meeting, Lisa Bright, who was appointed to the Board on 1 February 2019, will offer herself for election, and all of the remaining Directors will retire and offer themselves for re-election.