The Board’s primary responsibility is to promote the long-term success of the Company and deliver sustainable shareholder value. The Board has ultimate responsibility for the management, direction and performance of the Group, and leads and controls the Group’s business. The Board is also responsible for ensuring appropriate resources are in place to achieve its strategy and deliver sustainable performance. Through authorities delegated to its committees, the Board directs and reviews the Group’s operations within an agreed framework of controls, allowing risk to be assessed and managed within agreed parameters. The Board is collectively accountable to the Company’s shareholders for the proper conduct and success of the business.
The Board’s powers are set out in the Company’s Articles of Association, which are available to view on its website, and may be amended by a special resolution of its members. The Board may exercise all powers conferred on it by the Articles, in accordance with the Companies Act 2006 and other applicable legislation.
The Board has established a formal schedule of matters reserved for its approval, and has delegated other specific responsibilities to its principal committees: the Audit, Remuneration and Nomination Committees. These are clearly defined within
the written terms of reference of the respective committees, which are available on the Company’s website. Information on the responsibilities and work of each of the Board’s committees is set out on pages 41 to 66.
During the year, as part of its annual review process, the matters reserved for the Board were reviewed and where necessary amended to reflect best practice. The schedule of matters reserved for the Board includes the consideration and approval of:
- the Group’s overall strategy, medium-term plans and annual budgets;
- financial statements and Group dividend policy, including recommendation of the final dividend;
- major acquisitions, disposals and capital expenditure;
- major changes to the capital structure including tax and treasury management;
- major changes to accounting policies or practices;
- the Group’s corporate governance and compliance arrangements;
- the system of internal control and risk management policy;
- the Group’s risk appetite statements; and
- review of management development strategy.
Composition of the Board
During the year, the Board was made up of the non-executive Chairman, four executive directors and six non-executive directors. The number of executive directors reduced to three following the departure of Philippe Tible at the end of July. The current balance of the Board’s skills, experience and knowledge, together with regular briefings by executives below Board level, ensures that views, perceptions and discussions are not dominated by any one specific view. The structure, size and composition of the Board is continually reviewed to ensure it remains suitable for the needs of the business.
There is an established, formal, rigorous and transparent procedure for the selection and appointment of new directors
to the Board, and this is described in the Nomination Committee Report on page 45. At the Annual General Meeting to be held on 9 June 2015, shareholders will be asked, in accordance
with Principle B.7.1 of the Code, to re-appoint the directors.
In accordance with provision B.6 of the Code, the Board is required to conduct a review of its performance each year. During the year under review, to ensure that they continue to be effective and each director remained committed to their role and had sufficient time to manage their commitments, the Board and its committees evaluated their effectiveness using an externally facilitated questionnaire and a series of one-to-one interviews between each director and the Chairman. The questionnaire was developed by reference to the topics discussed and recommendations made during the previous year’s evaluation, and drafted following discussions between the Chairman, the Company Secretary and the external facilitator, Linstock. Responses to the questionnaire were collated and the output was used by the Chairman in his individual meetings with directors as part of the evaluation process. The evaluation was conducted in December 2014 and the areas considered during the evaluation were:
- Board composition and expertise;
- time management oversight;
- Board support;
- strategic oversight;
- risk management and internal control;
- succession planning and human resource management; and
- priorities for change.
The results of the evaluation were considered by the Board at its meeting in January 2015. No significant issues were
highlighted and the review indicated that the Board continued to work efficiently and effectively, and that the contribution and commitment of each director, and their interaction with each other, remained good, and the challenge offered by the non- executive directors was robust and appropriate. As a result of the evaluation, the Board agreed to undertake the following activities during the 2015/16 financial year:
- support the new Chief Executive Officer with her review of the organisation, strategy phasing, articulating the customer proposition and omnichannel development;
- conduct a third-party review of Board papers to increase clarity and brevity, to enhance Board discussion;
- conduct in-depth reviews of two of the Group’s new markets, in Romania and Germany;
- review the forward business agenda to ensure that there is sufficient time to focus on key Group programmes and initiatives such as the development of a more common and unique offer and the omnichannel proposition;
- maintain its oversight of the Group’s performance relative to its competitors and customer trends; and
- increase its exposure to the Group’s senior management below the Board.
As part of the evaluation process, the Chief Executive Officer carried out a performance review of the executive directors. The non-executive directors, led by the SID, conducted a performance review of the Chairman in respect of the financial year.
The Board has confirmed that the contribution of each of the directors continues to be effective and that shareholders should be supportive of their re-appointment to the Board.
The Board will continue to review its procedures, effectiveness and development in the year ahead, and the Chairman will use the output of the most recent Board evaluation in his individual meetings with the directors during the year.
Induction, information and professional development
All new directors appointed to the Board receive an induction pack as part of their comprehensive induction programme tailored to their experience, background and particular areas of focus. The induction programme is designed to develop directors’ knowledge and understanding of the Group’s operations and culture.
The induction programme includes:
- individual one-to-one meetings with the Chairman, the Chief Executive Officer, the Chief Financial Officer and other directors;
- site visits to the Group’s stores and those of its competitors;
- meetings with management of the Group’s operating companies and other senior management; and
- if required, external training courses at the Group’s expense.
In accordance with best practice, the Chairman considers and addresses the development needs of the Board as a whole, if any, and ensures that each director updates their individual skills, knowledge and expertise.
As part of her induction as new Chief Executive Officer, Véronique Laury conducted visits to most of the Group’s operating companies to meet with management and understand the particular nature of the businesses. The Company Secretary arranged for the Group’s corporate lawyers to provide a training session on her duties and responsibilities as a director of a UK listed company. Amongst other topics, the training covered Listing Rules compliance and the control and release of inside information, and provided case studies and practical situations for consideration. Ms Laury also attended shareholder roadshows in London and the United States and met with the Company’s major institutional investors.
The Board also receives regular reports and feedback from discussions with the Company’s institutional shareholders and is informed of any issues or concerns raised by them. This process allows directors to develop necessary understanding of the views
of these shareholders and also enables the Board to judge whether investors have a sufficient understanding of the Group’s objectives. In addition to planned development and briefings, each director is expected to take responsibility for identifying their own individual needs and to take necessary steps to ensure that they are adequately informed about the Group and their responsibilities as a director. The Board is confident that all its members have the requisite knowledge, ability and experience to perform the functions required of the directors of a listed company. There is also an agreed procedure whereby directors may take independent professional advice at the Group’s expense in the furtherance of their duties.
Subsequent training in specific aspects of the Group’s businesses is provided to directors, when requested, or regularly as part of site visits. Directors are briefed on issues at Board and committee meetings and have full and timely access to relevant information ahead of each meeting.
Conflicts of interest
Each director has a duty under the Companies Act 2006 to avoid a situation where he or she may have a direct or indirect interest that conflicts with the interests of the Company. The Company has robust procedures in place to identify, authorise and manage such conflicts of interest, and these procedures have operated effectively during the year.
A register of directors’ situational and transactional conflicts
is maintained by the Company Secretary and reviewed by the Board on a regular basis and directors have a continuing duty to update the Board with any changes to their conflicts of interest. Following review, the Board confirmed that there were no situations of which they were aware which would, or potentially could, give rise to conflicts with the interests of the Company, other than those that might arise from directors’ other appointments, which are set out in the directors’ biographies.