Justin Dowley, Non-executive Chairman
Christopher Miller, Executive Vice-Chairman
Simon Peckham, Chief Executive
Geoffrey Martin, Group Finance Director
Peter Dilnot, Chief Operating Officer
Liz Hewitt, Senior Independent Director
David Lis, Non-executive Director
Archie G. Kane, Non-executive Director
Charlotte Twyning, Non-executive Director
Funmi Adegoke, Non-executive Director
Heather Lawrence, Non-executive Director
Victoria Jarman, Non-executive Director
The Board is 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 has applied the principles and complied with the provisions of corporate governance contained in the UK Corporate Governance Code (the “UK Code”) issued by the Financial Reporting Council (the “FRC”) and available to view on the FRC’s website at: www.frc.org.uk.
In support of this commitment, the Board carried out a number of key governance activities during 2020 designed to ensure that Melrose remains compliant with the provisions of the UK Code and to enable continuous improvement in line with best practice corporate governance guidelines.
Succession planning arrangements for the Board as a whole were reviewed by the Nomination Committee and the Board. This included reviewing the skills set, tenure, diversity and independence of those already on the Board, and reviewing the Melrose senior management team including the career planning and talent management programmes in operation for them. In each case this was to allow the Nomination Committee to ensure that the right balance of skills, experience and diversity were reflected and being developed.
Further details with respect to this review and succession planning more generally are set out in the Nomination Committee Report on pages 108 to 109 of the 2020 Annual Report.
Melrose Executive Committee
The Melrose Executive Committee operates under the direction of the Chief Executive. It is chaired by a member of the Melrose senior management team on a rotating basis to encourage diversity, and comprises members of the Melrose head office team from London, Birmingham and Atlanta. The Melrose Executive Committee meets on a weekly basis and executive and Non-executive Directors attend by invitation. Its key roles are to ensure that there is full knowledge of, and coordination between, the Melrose central team on all important issues, to consider what, if any, actions are required that week in respect of acquisitions, disposals and day-to-day management, to ensure that the appropriate resource is being devoted to resolve any such issues, and to ensure that actions being taken are supportive of the Group’s aims, objectives and culture.
The 2020 Directors’ Remuneration Report is set out on pages 110 to 126 of the 2020 Annual Report.
The Company’s previous long-term incentive plan, the 2017 Incentive Plan, crystallised on 31 May 2020 and, following approval by shareholders at the January 2021 GM, was replaced by a new scheme, the 2020 Employee Share Plan. The 2020 Employee Share Plan is due to crystalise on 31 May 2023.
Melrose’s remuneration philosophy remains unchanged in order to align senior management with shareholders: executive remuneration should be simple, transparent, support the delivery of the Melrose value creation strategy and only pay for performance.
The Board is mindful of its responsibilities regarding sustainability and has carefully considered how it can deal with matters relating to sustainability in the most efficient and appropriate way, in light of Melrose’s decentralised model and the industries in which its businesses operate. The Board oversees and retains ultimate responsibility for Melrose’s initiatives, disclosure and reporting in respect of improving the sustainability performance of its businesses. The Board receives external training annually and quarterly updates on key sustainability issues that impact the sectors within which the Group’s businesses operate, and on the specific measures that are required to be implemented to drive improved sustainability performance over the longer term for the benefit of all stakeholders.
Further details with respect to Melrose’s sustainability strategy are set out here.
Risk management and compliance
The objectives of the Directors and senior management include safeguarding and increasing the value of the businesses and assets of the Group for stakeholders as a whole. Achievement of these objectives requires the development of policies and appropriate internal control frameworks to ensure the Group’s resources are managed properly, and for key risks to be identified and mitigated where possible.
The Board recognises that it is ultimately responsible for determining the nature and extent of the principal risks it is willing to take in the pursuit of its strategic objectives. It also recognises the need to define a risk appetite for the Group, to maintain sound risk management and internal control systems, and to monitor its risk exposures and mitigation measures to ensure that the nature and extent of risks taken by the Group are aligned with, and proportionate to, its strategic objectives.
The Board confirms that there is an ongoing process for identifying, evaluating and managing the principal risks faced by the Company and that these systems, which are subject to regular monitoring and review, have been in place for the year ending 31 December 2020 and up to the date of approval of the 2020 Annual Report and financial statements.
Melrose has implemented a uniform Enterprise Risk Management programme across all its business units. Our processes and procedures are now fully embedded in all Group businesses.
The Melrose Code of Ethics reinforces our values and provides guidance for all employees, contractors and business associates so that they are fully aware of what is expected of them, their responsibilities and the consequences of non-compliance. All business units are required to ensure that the Code of Ethics is communicated and embedded into their business operations. Each business unit is also required to ensure there is a mechanism in place for anyone to whom the Code of Ethics applies to seek guidance on interpreting its principles, where required. This is supported by a compliance framework comprising policies covering best practice with respect to anti-bribery and anti-corruption, anti-money laundering, anti-facilitation of tax evasion, competition, conflict minerals, trade compliance, data privacy, whistleblowing, treasury and financial controls, anti-slavery and human trafficking, document retention and joint ventures.
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, modern slavery and human trafficking and other unethical or illegal practices. We are committed to acting professionally, fairly and with integrity in all business dealings and relationships, within all jurisdictions in which we operate. Further details of the Group’s stance and focus on ensuring effective stewardship in respect of key environmental, social and governance matters are set out in the Sustainability Report on pages 58 to 87 of the 2020 Annual Report. Supporting our compliance policies are a comprehensive online training platform, an industry-leading whistleblowing reporting facility and a data-driven risk reporting dashboard providing increased risk management visibility and trend analysis to senior management and the Audit Committee. The integrity of the compliance framework is further reinforced by the use of independent assurance and compliance audits.
Engagement with stakeholders
Engagement with key shareholders and governance bodies continued throughout 2020 on a number of important topics including diversity, sustainability and remuneration. Further details on the Company’s engagement with stakeholders is contained in the Section 172 Statement on pages 54 to 57 of the 2020 Annual Report and in the Sustainability Report on pages 58 to 87 of the 2020 Annual Report.
Main responsibilities of the Board
The main responsibilities of the Board are to:
- Effectively manage and control the Company via a formal schedule of matters reserved for its decision.
- Define the Group’s purpose, determine and review Group strategy and policy to deliver that purpose, and provide strategic leadership to the Group.
- Set the Group’s values and behaviours that shape its culture and the way it conducts business.
- Consider acquisitions, disposals and requests for major capital expenditure.
- Review financial and trading performance in line with the Group’s strategic objectives.
- Ensure that adequate funding and personnel are in place.
- Engage with stakeholders and key shareholders on issues that are most important to the long-term success of the Company.
- Oversee the effective operations of the workforce advisory panel in ensuring the views of the Group’s business unit workforces are considered in its discussions and decision-making.
- 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.
- Oversee the Group’s risk management and internal control systems.
- Determine the nature and extent of the risks the Group is willing to take.
- Agree the Group’s governance framework and approve Group governance policies.
- Monitor, assess and review cyber security and fraud risk for the Group.
- Delegate and oversee responsibility for entrepreneurial leadership and strategic management of the Group to the Group senior executives.
- Challenge, review and exercise robust managerial oversight across key decisions, actions and processes performed by the Group’s business units.
- Promote the success of the Company over the long-term for the benefit of shareholders as a whole, having regard to a range of other key stakeholders and interests.
- Oversee and retain ultimate responsibility for Melrose’s enhanced sustainability initiatives, disclosure and reporting in respect of improving the sustainability performance of its businesses.
Chairman, Vice-Chairmen and Chief Executive
The roles of each of the Chairman, the Vice-Chairmen and the Chief Executive of the Company are, and will remain, separate in accordance with the UK Code and Board policy. The Chairman, with the assistance of the Vice-Chairmen, is responsible for leadership of the Board. The Chairman sets the Board agenda and ensures that adequate time is given to the discussion of issues in order to facilitate constructive discussions with effective contributions from the Non-executive Directors, particularly on those issues of a strategic nature.
The Chairman with the support of the Company Secretary, also facilitates constructive board relations by providing accurate and clear information in a timely manner. Responsibility for ensuring effective communications are made to shareholders rests with the Chairman, Vice-Chairmen and the two other executive Directors.
The Chief Executive is responsible for strategic direction and decisions involving the day-to-day management of the Company.
Senior Independent Director
The Senior Independent Director’s role is to provide a sounding board for the Chairman, to act as an intermediary for the other non-executive Directors where required, and to ensure that any key issues that are not being addressed by the Chairman or the executive management are addressed.
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 the Committees consist of a mix of 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.