Justin Dowley, Non-executive Chairman
Christopher Miller, Executive Vice-Chairman
Simon Peckham, Chief Executive
Geoffrey Martin, Group Finance Director
Peter Dilnot, Chief Operating Officer
David Lis, Senior Independent 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 stakeholders.
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 2021 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 is coordinated via the Nomination Committee in conjunction with the Board and includes all Directors and senior management.
Succession planning arrangements for the Board as a whole were reviewed by the Nomination Committee and the Board during 2021. This included a review and discussion of the skills set, tenure, diversity and independence of those already on the Board, to allow the Nomination Committee to satisfy itself that the right balance of skills, experience and diversity are reflected and being developed, that the composition of the Board is consistent with the Board of Directors’ Diversity policy, and to ensure that the Company continues to meet the expectations of the Hampton-Alexander Review and the Parker Review. The Nomination Committee also took an active interest in discussing and reviewing succession planning arrangements for the Melrose senior management team, including the career planning and talent management programmes currently in operation for them. Given the strength of Melrose’s decentralised operating structure in achieving the Group’s strategic objectives, the Nomination Committee does not have direct involvement in the succession planning arrangements of the divisions. However, the Nomination Committee has access to the divisional executive teams through the business review cycle.
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 2021 Directors’ Remuneration Report is set out on pages 102 to 116 of the 2021 Annual Report.
Following a successful consultation with shareholders during 2020 and 2021, the Company’s long-term incentive plan arrangements were successfully renewed with strong shareholder support in January 2021. The performance period of the 2020 Employee Share Plan will continue to run until 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 pay only for performance.
The Board is mindful of its responsibilities regarding climate change and sustainability more broadly, which are central to the Company’s purpose and strategy. It 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 regular training at least annually, and quarterly updates are provided for the Board, on sustainability and climate issues that impact the Group’s businesses. The Board also receives quarterly updates on key sustainability and climate-related issues that impact the sectors in 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 internal control
Melrose has implemented a uniform Enterprise Risk Management programme across all of its business units. These processes and procedures are now fully embedded in all Group businesses. During 2021, the Audit Committee continued to keep under review the Company’s internal financial controls systems that identify, assess, manage and monitor financial risks and other internal control and risk management systems, and the effectiveness of the Group’s risk management system, through regular updates from management. This included a review of the key findings presented by the external and internal auditors having agreed the scope, mandate and review schedule in advance.
During the year, Melrose senior management, with support from Ernst & Young, continued to enhance the online interactive dashboard that had been developed to consolidate the businesses’ risk reporting to the Company. Since the rollout of the dashboard, the Group’s risk management processes, together with reporting and data collection from the businesses, have continued to be enhanced. The dashboard includes data from the risk registers prepared by the risk and legal leads from each business, as well as objective trend analysis based on that data and independent insight from Ernst & Young. This helped to guide the Audit Committee on relevant updates to the Group risks (including the identification of new and emerging Group risks), and set out a consolidated risk profile report for each business within the Group.
Ethics and compliance
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 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, joint ventures, diversity and inclusion, environmental, and human rights.
Engagement with stakeholders
In 2021, the Company continued to run engagement initiatives with key shareholders and governance bodies on key topics including diversity, sustainability and remuneration. Full details of how the Board engages with all of its stakeholders and considers them in its decision-making is set out in our Section 172 Statement on pages 50 to 53 of the 2021 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 and climate-related initiatives, disclosure and reporting in respect of improving the sustainability performance of its businesses.
Chairman, Executive Vice-Chairman and Chief Executive
The roles of each of the Chairman, the Executive Vice-Chairman 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 Executive Vice-Chairman, 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, Executive Vice-Chairman and the three 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.