Corporate Governance
The Board of directors of the Company is committed to maintaining high standards of corporate governance and to managing the affairs of the Group in accordance with the provisions of the Listing Rules and of the Combined Code on Corporate Governance, issued by the Financial Reporting Council in June 2008 (the “Combined Code”). A copy of the Combined Code is available on the Financial Reporting Council’s website at www.frc.org.uk. The Board has reviewed the Company’s corporate governance processes and policies, and has concluded that during the 52 weeks ended 26 April 2009 (the “Year”) the Company complied with the provisions of the Combined Code except as set out below.
The Combined Code (code provision A3.2) recommends that at least half of the Board of directors of a UK listed company, excluding the Chairman, should be comprised of non-executive directors determined by the Board to be independent in character and judgement and free from relationships or circumstances which may affect, or could appear to affect, the director’s judgment. During the Year the Board was made up of the Acting Chairman, three executive directors and two independent non-executive directors. Accordingly during the Year the Company did not comply with this provision of the Combined Code in this regard.
The Combined Code also provides (code provisions B2.1 and C3.1) that each of the Remuneration and Audit Committees of the Board should comprise of at least three independent non-executive directors. The Code also provides that, in respect of the Remuneration Committee, the Company Chairman may also be a member, but not chair, the Committee if he or she was considered independent on appointment as Chairman. During the Year these committees comprised two independent non executive directors and the Acting Chairman. Accordingly during the Year the Company did not comply with these provisions of the Combined Code.
The Combined Code provides (code provision A.4.1) that the majority of the members of the Nomination Committee should be independent non-executive directors. During the Year the Committee comprised the Acting Chairman, the Executive Deputy Chairman and two non-executive directors. Accordingly during the Year the Company did not comply with this provision of the Combined Code. Since the end of the Year Mike Ashley has ceased to be a member of the Nomination Committee, and the structure of this Committee is now compliant with the provisions of the Combined Code.
The Company has in the past used recruitment consultants to search for a Chairman and for additional independent non-executive directors and the Nomination Committee has approved job descriptions for those roles, which for the Chairman includes an assessment of the time commitment expected, always recognising the need for availability in the event of major activity.
The Board currently believes, however, that the Board and its committees as currently constituted are working well, and that in a period of challenging economic conditions it would be difficult to recruit an appropriate person to be either the Chairman or an independent non executive director of the Company.
Accordingly, while the Board intends when practicable to appoint a further independent non-executive director to the Board and to both of the Remuneration and Audit committees, which would bring the Company into compliance with all the provisions of the Combined Code, no steps are currently being taken to achieve that. The Nomination Committee and the Board will, however, keep the position under review.
The Board
During the Year the Board comprised a non- executive Acting Chairman, three executive directors, and two non-executive directors.
The non-executive directors are considered by the Board to be independent. The Acting Chairman, Simon Bentley was considered by the Board to be independent on appointment. The Board considers that an independent director is one who is independent in character and judgment, and where there are no circumstances that are likely to affect, or could appear to affect, his or her judgement. Relationships or circumstances that could affect judgement include having been an employee of the Company or of any Group company during the past five years, having had a material business relationship or having been a partner, shareholder, director or senior employee of a body with a material business relationship with the Company or any Group company in the past three years, receiving remuneration from the Company other than directors’ fees, participating in any share option or bonus schemes or in a Company pension scheme, having had close family ties with any of the Company’s advisors, directors or senior employees, having cross directorships or significant links with any other director, representing a significant shareholder, or serving on the Board for more than nine years.
Dave Singleton has been appointed the Senior Independent Non-Executive Director and is available to shareholders if they have concerns which have failed to be resolved through the normal channels of Acting Chairman, Executive Deputy Chairman, Chief Executive, or Group Finance director, or for which such channels are inappropriate.
Non-executive directors are appointed for an initial term of three years from the Annual General Meeting following their joining the Board, and, subject to performance, there is an expectation of reappointment for a further period of three years. Exceptionally a non-executive director may be invited to serve for a further and final three year term. Non-executive directors’ fees are determined by the Board in the absence of the non-executive directors other than the Chairman.
All directors appointed by the Board are appointed after consideration of the recommendations of the Nomination Committee, and those so appointed must stand for reappointment at the following Annual General Meeting. Every director must retire at least once every three years, and in addition at least one third of the continuing members of the Board must retire by rotation each year. Retiring directors may seek reappointment if willing and eligible to do so and if so recommended by the Nomination Committee. The Chairman will, when proposing the reappointment of a director, confirm that following formal performance evaluation, the director’s performance continues to be effective and he or she continues to demonstrate commitment to the role.
This year Simon Bentley and
The Board provides corporate governance training for those directors appointed to the Board for whom it is their first appointment to a listed company board, and provides a tailored induction programme for all directors on appointment. In addition the Board is made aware of material changes to laws and regulations affecting the Group’s business from time to time. All directors have access to the advice and services of the Company Secretary, and each director and each board committee may take independent professional advice at the Company’s expense, subject to prior notification to the other non-executive directors and the Company Secretary. The Company maintains appropriate directors and officers insurance.
The division of responsibilities between the Chairman, the Executive Deputy Chairman and the Chief Executive is in writing and has been agreed by the Board. The Chairman is responsible for leadership of the Board, for ensuring its effectiveness, and for ensuring that all directors are able to play a full part in the activities of the Company. He ensures effective communication with shareholders, and that the Board has an understanding of the views of major investors. The Chairman is available to provide advice and support to members of the executive team. The Executive Deputy Chairman is an ambassador for the Company, and takes the lead in the strategic development of the Company, formulating the vision and strategy in conjunction with the Chief Executive. The Chief Executive is responsible for leading the management team, the running of the Group’s business, for the delivery of the strategy approved by the Board, and for implementing specific decisions made by the Board. No one individual has unfettered power of decision.
The Board is collectively responsible for the success of the Company, and has a programme to enable it to discharge its responsibility of providing effective and entrepreneurial leadership to the Company within a framework of prudent and effective controls. An agenda is established for each meeting, and appropriate documentation is provided to directors in advance of them. For regular meetings the agenda will include reports from the Chief Executive and the Group Finance Director, reports on the performance of the business and current trading, reports on meetings with investors, reports from committees of the Board and specific proposals where the approval of the Board is sought. Presentations are also given on business or strategic issues where appropriate, and the Board will consider at least annually the strategy for the Group. Minutes of the meetings of committees of the Board are circulated to all members of the Board, unless a conflict of interest arises, to enable all directors to have oversight of those matters delegated to committees, and copies of analysts’ reports and brokers’ notes are provided to directors.
The Board has a formal schedule of matters reserved for decision by it. Matters so reserved include the approval of the strategic plan and long-term objectives of the Group, the annual budget and the allocation of resources to achieve that budget, decisions relating to unbudgeted expenditure over certain limits, significant acquisitions, disposals and joint ventures, other material contracts, changes to the corporate structure of the Group, the appointment and removal of the Company Secretary, approval of accounting policies and practices and approval of the annual report. The Board delegates management of the businesses of the Group to the executive management, and delegates specific responsibilities to Board committees.
The Board believes that the appointment of executive directors to be non-executive directors of other listed companies benefits the Group, through the additional experience and knowledge gained by such an appointment, and accordingly, executive directors are permitted to accept one such appointment where no conflict of interest arises, and to retain the fees received. Currently none of the executive directors holds such an appointment.
All non-executive directors disclose to the Board prior to appointment their significant other commitments and they are required to notify and have notified any changes to or additional commitments from time to time. Simon Bentley, the Acting Chairman, is deputy Chairman of the solicitors Mishcon De Reya, a senior trustee of the Leadership Trust, Chairman of the hair product brand Umberto Giannini and the hotelier Maypole Group plc. He is also a director of Powerleague. The Board is satisfied that Simon Bentley meets his obligations to the Company. All non-executive directors are available to meet with major investors.
The Company Secretary is an employee of the Company and is the secretary of all Board committees, and fulfils the responsibilities required of him by the Combined Code.
