Chair’s introduction to governance continued
Effectiveness As Chair, I am responsible for providing leadership to ensure that the Board operates effectively. I have been supported in this by all the Directors, in particular Chris Batterham, our Senior Independent Director. The annual reviews of Board effectiveness help the Board to consider how it operates and how its operations can be improved. This year, the review was undertaken internally and the findings of this review have provided us with ideas to further improve the manner in which the Board operates, and build on previous evaluations. The results were very useful and insightful and have been incorporated into our plans for the coming year. In particular, Board succession planning remains a priority, particularly as we look to ensure the Board and Executive Committee have the right set of skills and experience to support the Group as the business evolves. I have been very impressed by how effectively the business as a whole, and indeed the Board, has transitioned to remote working during the Covid-19 pandemic. Although I feel that longer meetings are best done face to face, we have continued to hold all of our scheduled Board and Committee meetings as planned and also our strategy day in March, which all attendees agreed was our best strategy session to date. While being mindful of the impact of Covid-19 on the wider world and us as a business, our approach as a Board has been one of “business as usual” and we continue to focus on important longer-term strategic and governance issues facing the Group, while supporting management on more short-term tactical decisions. As lockdowns around the world continue to ease, the Board is very much looking forward to holding more in-person meetings and reconnecting with our colleagues around the world as part of office and site visits. Our investors We are in regular contact with our large investors through a regular scheduled programme of meetings attended by our CEO, CFO and Chair. Chris Batterham, our Audit Committee Chair and Senior Independent Director, and Jennifer Duvalier, Remuneration Committee Chair, are also available to meet with investors should the need arise. I met with our larger investors in February and March 2022 and fed back my findings to Board colleagues at the next Board meeting. In addition, our brokers undertook an investor survey on the back of our half-year results in January 2022 and the results of this were presented and discussed at a Board meeting. Our aim is to engage with our shareholders in an open and meaningful way. Ensuring that the Directors’ remuneration packages align the Directors’ and senior managers’ interests with the long-term interests of NCC Group and its shareholders is always a key area of interest for investors. Our Directors’ Remuneration Policy was approved by shareholders at the 2021 AGM and will last until 2024. The 2021 Directors’ Remuneration Policy received 87.43% of votes in favour at the 2021 AGM. Following the significant vote against our Directors’ Remuneration Report in 2020 (following on from two years of strong support) it was pleasing to see that our 2021 Directors’ Remuneration Report received 93% of votes in favour, recognising the continued support of our shareholders for our approach to executive remuneration. The UK Corporate Governance Code 2018 has increased the role and remit of the Remuneration Committee and this is reported on within the Remuneration Report. As part of our new Remuneration Policy, we have now aligned our Executive Directors’ pensions with our wider colleague population, and introduced post-employment shareholding rules.
Statement of compliance with the UK Corporate Governance Code The Company measures itself against the requirements of the UK Corporate Governance Code 2018 (the ‘Code’), which is available on the Financial Reporting Council website (www.frc.org.uk). The following areas of non-compliance are noted below: • Pensions (before 1 December 2021) – we did not comply with Provision 38 of the Code. This was because the recruitment of the former CEO and current CFO happened before the 2018 Code came into effect and their pension arrangements were negotiated at the time as part of their recruitment at a higher level than the general colleague population. Our non-compliance was caused by the fact that our Remuneration Policy from 2017–2020 did not contain these provisions and in 2020 we effectively rolled forward our existing Remuneration Policy due to the Covid-19 pandemic. There was a risk that continued non-compliance could potentially be perceived by stakeholders and particularly colleagues as unfair and have a demotivating impact on the workforce. We aligned the pension arrangements of our CEO and CFO with effect from 1 December 2021. This is no longer an area of non-compliance. • Post-employment shareholding guidelines (before 1 December 2021) – we did not comply with Provision 36 of the Code as we did not have post-employment shareholding guidelines. Our non-compliance was caused by the fact that our Remuneration Policy from 2017–2020 did not contain these provisions and in 2020 we effectively rolled forward our existing Remuneration Policy due to the Covid-19 pandemic. There was a risk that continued non-compliance with this would be perceived as not aligned to best practice and we would be a market outlier. This was corrected during the year and we now have post- employment shareholding guidelines. This is no longer an area of non-compliance. • Combined Chair and CEO (17 June to 7 July 2022) – we did not comply with Provision 10 of the Code. There was a three week window between Adam Palser leaving us as CEO and Mike Maddison joining us as it was very difficult to ensure that Mike was on-board before Adam left. One option considered was for a senior colleague to take on the CEO role but it was felt that Chris Stone was best placed given his length of time at NCC and his career experience as a CEO elsewhere, plus the fact that Chris was Executive Chair for a number of months back in 2017. There is a always a risk that having both roles exercised by the same individual results in poor quality decisions being made and power concentrated in the hands of one individual. This was mitigated by the fact the non-compliance was of an extremely short timeframe with limited material decisions to be made within an existing governance framework. This is no longer an area of non-compliance. During the prior year the Company had not engaged with the workforce to explain how executive remuneration aligns with the wider Company pay policy as required by the Code. This was rectified during the year ended 31 May 2022 (see pages 106 and 107). Thank you We are immensely proud of our colleagues for their extraordinary efforts during the pandemic, recognising that many were still working from home in far from ideal circumstances, acting in the best interests of our customers and our stakeholders. I would like to thank all our colleagues for their incredible contribution in stepping up and meeting the unprecedented challenges of the Covid-19 pandemic.
Chris Stone Non-Executive Chair 6 September 2022
76
NCC Group plc — Annual report and accounts for the year ended 31 May 2022
Made with FlippingBook Online newsletter maker