The role of the Board
The Board is collectively responsible for the long-term success of the Company by creating value for shareholders and always acting in their interests. It assesses whether the necessary financial and human resources are in place to enable the Company to meet its objectives as well as ensuring that it takes into account safety, environmental and social factors when reviewing operations and taking decisions.
Specifically the Board must:
- provide entrepreneurial leadership
- understand and monitor risk
- develop the business model, consider and approve strategy, approve annual operating plans and major transactions
- ensure the adequacy of management resources and make executive appointments including that of Chief Executive
- challenge and support executive management, oversee the governance process and the control framework
- report to shareholders and be accountable to them.
A schedule of the matters reserved for the Board's attention is reviewed annually and was most recently reviewed in December 2016. The schedule sets out the Board's ultimate responsibility for the group's strategy, operations and risks and reserves to the Board power to approve a range of decisions of a significant nature.
The schedule can be downloaded here.
Key Board roles
The division of responsibilities between the Chairman and Chief Executive is set out in writing and is summarised in the Annual Report for 2015 together with the primary responsibilities of the Senior Independent Director and those of the Company Secretary. Non-executive Directors have regular opportunities to meet with members of Executive management and also hold discussions under the leadership of the Chairman without Executive members present. At least once a year Non-executive Directors meet under the leadership of the Senior Independent Director without the Chairman being present.
Composition of the Board
Click here for details of our Board of directors.
Appointments to the Board and composition
A Nomination Committee comprising independent
Non-executive Directors and chaired by the Company Chairman has responsibility
for managing the appointment process to ensure a formal, rigorous and
transparent procedure for appointing Directors.
In order for the Board to discharge its duties and
responsibilities effectively, it must comprise a diverse group of individuals
whose skills and experience are gained in a variety of backgrounds. Successful candidates must demonstrate
independence of mind and integrity, and must enhance the overall effectiveness
of the Board. Appointments are
considered objectively, regardless of gender, ethnicity or other personal
characteristics, and are made on merit. Pro-forma letters of appointment and
employment contracts are available for public inspection in the sections below.
At the date of this report the Board has eight members: the Chairman,
five Non-executive Directors, and two Executive Directors. The names of the
Directors serving throughout and at the end of 2015 and their biographical
details are set out above.
Balance and independence of Board members
The Board considers that it and its Committees have an appropriate composition to discharge their duties effectively and to manage succession issues. The Board keeps its membership and that of its Committees under review to ensure that an appropriate balance is maintained.
All Directors may serve on a number of other Boards, provided that they can demonstrate that any such appointment will not interfere with their time commitment to the Company and that they obtain the agreement of the Chairman before proceeding. This also ensures that any potential conflicts of interest are considered and addressed. The major commitments of the Directors are shown in their biographical information on pages 44 and 45 of the 2015 Annual Report. Currently Non-executive Directors are obliged to commit at least 20 days a year and the Chairman is obliged to commit at least two days a week to the Company.
The independence of Directors is reviewed as part of the individual Director performance evaluation process, to ensure that all Non-executive Board members retain the necessary independence of judgement. This continues to be reflected in constructive challenge to the Executive team and senior management at Board and Committee meetings, and during informal interaction outside those meetings.
The Board considers that an individual’s independence cannot be determined arbitrarily on the basis of a particular period of service. In the case of Alan Giles, who has served as a director for ten years (eight years following the change in executive management in 2008, and less than two years as Senior Independent Director) the Board benefits from his considerable experience and knowledge resulting from the length of his service as well as from his wider business experience.
All Non-executive Directors (other than the Chairman) have been determined by the Board to be independent, having retained their independence of character and judgement. In making this determination the Board has taken into account indicators of potential non-independence as set out in the Code. No Director took part in the Board’s consideration of their own independence.
Board performance evaluation, training and succession
The Board ensures that the Directors continue to provide suitable leadership for the Company through a regular performance evaluation process, training processes, Board succession planning and annual re-election by shareholders.
This involved an external independent facilitator, Lintstock, engaging with the Chairman and Company Secretary to set the context for the evaluation. Lintstock is a specialist corporate governance consultancy and has no commercial dealings with the group, other than for the provision of corporate governance services to the Board. The performance evaluation was positive with all responses indicating continued high or increased performance. Actions taken following the 2014 evaluation and the 2015 evaluation can be found in the Corporate Governance section of the Annual Report and Accounts 2015.
The Board is ultimately responsible for succession planning for Executive and Non-executive Directors. The Nomination Committee has conducted a performance evaluation of each Non-executive Director seeking re-election and concluded that their performance (individually and in aggregate) continues to be effective and that each demonstrates commitment to the role.
Where appropriate, Directors participate in peer group discussion forums and seminars related to the commercial environment and targeted at specific needs, for example relating to executive remuneration, financial reporting or risk management. Training also covers the group, its business sectors and governance matters more generally, including individual experiences with frontline staff. Further information on the induction process for new Directors is included in the Nomination Committee Report.
In accordance with the Code, the Directors are subject to annual re-election by shareholders. To enable shareholders to make an informed decision, the 2016 AGM notice includes biographical information and a statement as to why the Company believes the Directors should be re-elected. The Board recommends to shareholders the re-appointment of all Directors retiring at the meeting on the basis that they are all effective Directors of the Company and demonstrate the appropriate level of commitment to the role. Peter Bamford, who joined the Board in July 2006, will be stepping down from the Board at the 2016 AGM and so will not be put forward for re-election. The terms of the Directors’ service and a pro-forma of the letters of appointment of the Non-executive Directors can be found in the sections below.
Board Committees and Board support
In addition to a clear statement of the matters reserved to the Board, each Board Committee has written terms of reference, approved by the Board, summarising its objectives, remit and powers and membership of the principal Board Committees is shown in the section below. Agendas, papers and minutes of Committee meetings are provided to all Board members, save for the private sessions of Committee members. Chairmen of Committees update the Board following each Committee meeting. Chairman, supported by the Company Secretary, ensures that the Board receives appropriate information to allow full preparation for meetings and to carry out its responsibilities effectively. All Directors are able to make further enquiries of the Executive Directors, Company Secretary or management whenever necessary. The Company Secretary is responsible for advising the Board through the Chairman on corporate governance matters, and there is also a procedure in place for Directors to take independent legal advice, if they judge this to be necessary, at the Company’s expense.
Managing conflicts of interest
The Directors have a statutory duty to avoid a situation where they have, or could have, a direct or indirect interest that conflicts or might possibly conflict with the interests of the Company. The Board is permitted (under powers from shareholders contained in the articles of association) to authorise actual or potential conflicts of interest. The Company has a procedure in place to deal with the situation where a Director has a conflict of interest and as part of the process the Board considers each potential conflict situation on its merits. The Board maintains a register of authorisations granted and the scope of any approvals given. These potential conflicts are not material either to the Company or, the Directors believe, to the other companies that are the subject of the potential conflict. The register of authorised conflicts is reviewed by the Board regularly. All of the approvals given have been
situational and no transactional conflicts have occurred. No Director has had a material interest in any contract of significance in relation to the Company’s business at any time during the year ended 31 December 2015.
Activities of the Board during 2015.
- Safety, Health & Environment (SHE) performance and governance
- Operational and financial performance, including review of the annual operating plan and deep dive review of all five regional businesses and key functions
- Visits to the Global Science Centre to review the innovation pipeline, to France to review the French and European business and Workwear business, and to the UK Sales Academy to review the training and career development arrangements for frontline staff
- Preparation of the Annual Report and Accounts, and quarterly and half year financial results, and associated investor relations activity
- M&A activity including the acquisitions of Eradico, Anderson Pest, Steritech and Oliver Exterminating
- Reviews of key risks to the business, including material disputes
- Governance arrangements and processes including conflicts of interest, Board evaluation, and Board governance
- Strategy for the group and its businesses
- Succession planning
- Corporate responsibility
Accountability to shareholders
The Board fulfils its obligations of accountability to shareholders by clear and open reporting on current performance and plans for the future, engagement with shareholders and investor representative bodies and taking into account the views expressed by shareholders. The Company has a premium listing on the London Stock Exchange and an ADR programme that trades on the over-the-counter market in the United States. All ordinary shares carry the same rights and no shareholder enjoys any preferential rights, regardless of the size of their holding. Further information on the rights attaching to shares can be found in the 2015 Annual Report.
The Company publishes a half yearly unaudited interim statement at the end of July/early August as well as audited financial statements which are announced in February and circulated to shareholders in early April. In accordance with the changes implemented by the Financial Conduct Authority with effect from 7 November 2014, we now only provide simplified quarterly trading updates in May and November. We will continue to keep under review our quarterly reporting practice, and seek shareholders’ views on the benefits of doing so.
The Board considers that the Annual Report and Accounts for 2015 meets the Code requirement to provide a fair, balanced and understandable assessment of the Company’s position and prospects in its external reporting.
Over 88% of shareholders obtained their primary information on the Company through electronic communications via this website. The Company strongly encourages shareholders to use electronic means for accessing shareholder communications, saving resources and cost that would be involved in distributing printed material (each printed copy of the Annual Report costs approximately £22 to produce). Shareholders who elect to receive electronic communications can revert to paper communications at a future time, if they so wish. The Company continue to canvass shareholders on how they wish to receive their shareholder communications and did so in February 2015 and January 2016.
The Board places great importance on communications with shareholders and also recognises the contribution made by other providers of capital and is open to hearing the views of such providers in so far as they are relevant to the Company’s overall approach to governance.
The following summarises the activities carried out by the Company to ensure that investors and other interested parties have a transparent and effective dialogue with the Company.
- The Chairman, Chief Executive and Chief Financial Officer make themselves available to shareholders at all appropriate times
- Regular dialogue with institutional shareholders through one-to-one and group meetings, formal investor and analyst conference calls as well as ad-hoc communications, where appropriate, and through exchanges with shareholder representative organisations
- Formal presentations are held after full-year and half-year results, to which investors and sell and buy-side analysts are invited. These presentations are web-cast and any investor is able to hear the presentation and related questions and answers via the Company’s website. Slide presentations of results are hosted as are recordings of meetings
- Investor road shows are conducted after full-year and interim results, involving extensive investor meetings on each occasion, as well as opportunities for private client investor presentations across the UK. In May 2015 a highly successful Pest Control Investor Seminar was held to provide investors with additional information on the Pest category and our leading position within it globally
- The Chief Financial Officer, supported by the Group Financial Controller and Treasurer, regularly meets with and hears the views of representatives of the debt capital markets
- The Chairman, the Senior Independent Director and Committee chairmen are available to attend meetings with investors, as required, and will typically do so on a number of occasions annually
- Dialogue with both private and institutional shareholders at the AGM; the Board and executive welcome this opportunity to engage with all our shareholders on the performance of the business they own
- The Board is briefed on the Company’s investor relations programme through a regular report from the Head of Investor Relations as well as by periodic updates from the Chief Executive and the Chief Financial Officer