Board & Committees
Board members
Justin Dowley, Non-executive Chairman
Peter Dilnot, Chief Executive Officer
Matthew Gregory, Chief Financial Officer
David Lis, Senior Independent Director
Heather Lawrence, Non-executive Director
Charlotte Twyning, Non-executive Director
Gillian Elcock, Non-executive Director
Chris Grigg, Non-executive Director
Ian Barkshire, 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 “Code”) issued by the Financial Reporting Council (the “FRC”) and available to view on the FRC’s website.
In support of this commitment, the Board carried out a number of key governance activities during 2023 designed to ensure that Melrose remains compliant with the provisions of the Code and to enable continuous improvement in line with best practice corporate governance guidelines.
Succession planning
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 and considered in 2023. This included a review and discussion of the skill set of the Directors in light of the change in business strategy of the Company, as well as a review of the tenure, diversity and independence of those already on the Board. This review allowed the Nomination Committee to satisfy itself that the right balance of skills, experience and diversity are reflected and being developed, and that the composition of the Board is consistent with the Board's Diversity policy.
Further details with respect to this review and succession planning more generally are set out in the Nomination Committee Report on pages 124 to 127 of the 2023 Annual Report.
Remuneration
The 2023 Directors’ Remuneration Report is set out on pages 128 to 152 of the 2023 Annual Report.
Melrose's long-standing executive remuneration structure was traditionally characterised by setting salary, benefits and annual bonuses within the lower quartile of its FTSE 100 peers, with the opportunity for significant reward being weighted towards long-term incentivisation. This approach was entirely appropriate in complementing Melrose's 'Buy, Improve, Sell' strategy. With Melrose's strategy now having shifted, the 2024 Directors' Remuneration Policy rebalances the Company's remuneration structure to align with its FTSE 100 peers across fixed and variable aspects. This reflects the new long-term aerospace business model, using a structure and mechanics in line with the majority of FTSE 100 companies (including through the introduction of a performance share plan as the Group's ongoing long-term incentive plan).
Melrose’s remuneration philosophy remains unchanged in order to align senior management with shareholders: executive remuneration should be simple, transparent, support value creation and pay only for performance.
Sustainability
The Board is mindful of its responsibilities regarding climate change and sustainability more broadly, which are central to implementing the Company’s purpose and strategy. In particular, the Board assesses the basis on which the Company generates and preserves value over the long-term, including reviewing opportunities and risks, and the sustainability of the Company’s business model.
The Company has carefully considered how it can strategically address matters relating to sustainability in the most efficient and appropriate way. The Board oversees and retains ultimate responsibility for the Group's strategy, initiatives and disclosure in respect of improving the Group's sustainability performance. The Board receives regular training at least annually on key sustainability and climate-related issues, 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. Sustainability and climate change are also a standing topic on the Board's quarterly agenda.
As part of the renewal of the Directors' Remuneration Policy in 2023, the Remuneration Committee further integrated ESG metrics into executive remuneration as a standalone element of the annual bonus.
Risk management and internal control
Melrose has implemented a Group Enterprise Risk Management programme, with complementary processes and procedures. During 2023, 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.
Management, with support from external advisors, continued to utilise a third-party hosted interactive dashboard which has been tailored to the requirements of the Group in order to consolidate the Group's risk reporting. The dashboard includes data from GKN Aerospace's risk register, which was reviewed and approved by GKN Aerospace's senior management key risk owners. The dashboard has supported the continued enhancement of the Group's risk management processes, with in-depth reporting and data collection. The outputs have informed management's reporting to the Audit Committee and has bolstered the Audit Committee's oversight of risk areas, mitigations, controls and trends. Furthermore, it has helped to guide the Audit Committee on relevant updates to the Group's principal risks (including assessing, for discussion with the Board, any new and/or emerging principal Group risks).
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. The principles outlined in our Code of Ethics are embedded within the Group, and mechanisms and policies are in place for anyone to whom the Code of Ethics applies to seek guidance on interpreting its principles, where required.
The Code of Ethics is supported by Group compliance 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, human rights, supply chain, biodiversity and water.
Engagement with stakeholders
In 2023, 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 37 to 42 of the 2023 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.
- 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 operation of the Workforce Advisory Panel in ensuring the views of the workforce are considered in its discussions and decision-making.
- Report to shareholders and give consideration to all 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 compliance policies.
- Monitor, assess and review cyber security and fraud risk for the Group.
- Consider acquisitions, disposals and requests for major capital expenditure.
- 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 within the Group.
- Promote the long-term success of the Company 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 the business.
Chairman and Chief Executive Officer
The roles of the Chairman and the Chief Executive Officer of the Company are, and will remain, separate in accordance with the Code and Board policy.
The 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 and the Executive Directors.
The Chief Executive Officer 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 Code, the Board has three standing Committees: the Audit, Remuneration and Nomination Committees. Each of the Committees consists 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) on any weekday (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.