Christopher Miller, Executive Chairman
David Roper, Executive Vice-Chairman (from 9 May 2012, previously Chief Executive)
Simon Peckham, Chief Executive (from 9 May 2012, previously Chief Operating Officer)
Geoffrey Martin, Group Finance Director
Justin Dowley, Senior Non-executive Director
Liz Hewitt, Non-executive Director
David Lis, Non-executive Director
Archie Kane, Non-executive Director
The Board remains committed to maintaining the high standards of corporate governance required to ensure that the Company can continue to deliver on its strategic goals and to achieve long-term success for the benefit of its shareholders.
As part of this approach, the Board supports, applies and complies with the main principles, the supporting principles and the respective related provisions of corporate governance contained in the UK Corporate Governance Code (the “UK Code”) issued and as updated by the Financial Reporting Council (the “FRC”) and available to view on the FRC’s website at: https://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance.aspx.
In support of this commitment, the Board carried out a number of key governance activities during 2016 designed to ensure that Melrose remains compliant with the provisions of the UK Code and also to enable continuous improvement in line with best practice corporate governance guidelines.
Succession planning was an area of focus for Melrose in 2016 and a dedicated Board session was held to review the leadership needs of the Group, present and future, together with the skills and experiences needed from its Directors going forward. We recognise that succession planning is an ongoing process and is critical to maintaining an effective and high-quality board. With this in mind, a number of changes to the Board are planned during 2017. John Grant will be retiring from the Board at the conclusion of this year’s Annual General Meeting (AGM), to be held on 11 May 2017. John has held a non-executive position on the Melrose Board since 2006 and his advice and extensive financial experience have been invaluable to Melrose; we wish him every success in the future. John will be replaced as senior non-executive Director by Justin Dowley, who will also continue to hold the position of Chairman of the Remuneration Committee. John's position as Chairman of the Audit Committee will be taken up by Liz Hewitt, who will step down as Chairman of the Nomination Committee, to be replaced by David Lis.
The Nomination Committee has determined that in seeking a replacement for John, the number of non-executive Directors serving on the Board will be increased to five so that there are a majority of independents serving on the Board, and a search and selection specialist has been engaged to support the recruitment process. Appointments are expected to be made in 2017.
The Directors’ Remuneration Report is set out on pages 72 to 84 of the 2016 Annual Report. Following the introduction of a new holding company for the Group in November 2015, we were required to seek shareholder approval for the Directors’ Remuneration Policy at last year’s AGM which remains unchanged and is set out on pages 72 to 84 of the 2015 Annual Report.
The Company’s existing long-term incentive plan, the 2012 Incentive Plan, will crystallise on 31 May 2017 and, subject to shareholder approval at a general meeting to be held immediately following the 2017 AGM on 11 May 2017 (the General Meeting), be replaced by a new scheme, the 2017 Incentive Plan, on equivalent economic terms. Accordingly, at the General Meeting shareholder approval will be sought for a new Directors’ Remuneration Policy to be adopted in order to incorporate, and allow for awards to be made under, the 2017 Incentive Plan. The 2017 Incentive Plan will be on equivalent economic principles as the 2012 Incentive Plan with additional, shareholder focussed features, and its terms are set out in the circular posted to shareholders with or prior to this Report (the “Circular”). The proposed new Directors’ Remuneration Policy for which shareholder approval will be sought at the General Meeting is set out in the annex to the Circular. The only change to that Policy as compared to the Policy approved at the 2016 AGM is to reflect the inclusion of the 2017 Incentive Plan. All other elements remain the same as approved at the 2016 AGM. In addition, our remuneration philosophy remains unchanged; executive remuneration should be simple, transparent, support the delivery of the Melrose value creation strategy and only pay for performance.
Risk management and compliance
During 2016, the Melrose risk management framework was implemented across the newly acquired Nortek business divisions, and the Group’s compliance policies were comprehensively reviewed and updated to ensure their effectiveness for the enlarged Group. Taken together, these initiatives have ensured the former Nortek businesses’ effectiveness at identifying and managing risks and have promoted and embedded a more risk-aware culture. Further details on the Group’s management of risk can be found on pages 40 to 45 of th2 2016 Annual Report.
Melrose’s reputation for acting responsibly plays a critical role in its success as a business and its ability to generate shareholder value. We maintain high standards of ethical conduct and take a zero tolerance approach to bribery, corruption and other unethical or illegal practices. Supporting our updated compliance policies are a comprehensive online training platform and an industry-leading whistleblowing reporting facility. The integrity of the compliance framework is further reinforced by the use of independent assurance and compliance audits.
Engagement with shareholders
During 2016, the Company continued its programme of engagement with major investors and the governance bodies in respect of our remuneration policy and incentive arrangements. The Board is pleased with the support and constructive feedback throughout these discussions and it is our intention to continue this programme for the foreseeable future.
Main responsibilities of the Board
- effectively manage and control the Company via a formal schedule of matters reserved for its decision;
- determine and review Company strategy and policy;
- consider acquisitions, disposals and requests for major capital expenditure;
- review trading performance;
- ensure that adequate funding and personnel are in place;
- maintain sound internal control systems;
- report to shareholders and give consideration to all other significant financial matters;
- agree Board succession plans and consider the evaluation of the Board’s performance over the preceding year;
- determine the nature and extent of the risks the Group is willing to take; and review the Group’s risk management and internal control systems;
- agree the Group’s governance framework and approve the Group governance policies.
Committees of the Board
In accordance with the provisions of the UK Code, the Board has three standing Committees: the Audit, Remuneration and Nomination Committees. Each of these includes the four independent non-executive Directors. The duties of the Committees are set out in formal terms of reference. These are available from the Company Secretary and on this website. The Company Secretary acts as Secretary to each of the Committees.
Inspection of service agreements and letters of appointment
Copies of the executive Directors' service agreements with the Company or any of its subsidiaries and copies of the letters of appointment of the non-executive Directors of the Company are available for inspection at the Company’s registered office. Please contact the Company Secretary to arrange inspection.
Visits can be arranged during normal business hours 09.00 to 17.00 (UK) (Saturdays, Sundays and public holidays excepted). The documents are also available for inspection at our Annual General Meeting each year for 15 minutes prior to and during the meeting.