Further details on the Terms of Reference of the Committees can be accessed here.

Corporate governance

The Board met in person or by video conference ten times during 2021 and held a number of meetings by telephone/video
conference to consider specific matters. The Board receives a full pack of reports in advance of each scheduled meeting
detailing Group and entity trading performance, and containing individual reports from each of the executive directors and local
management. 

During 2021, the Board also received presentations from operational management on topics including business
unit strategy, talent and succession planning, ESG, tax strategy, IT systems and security, and acquisition proposals. Alongside
monitoring operational performance, it is the Board’s responsibility to formulate, review and approve the Group’s strategy,
investments (including acquisitions), budgets and major items of expenditure.

The Board believes in a strong governance culture and recognises the need to adopt and comply with a recognised corporate governance code. The Board has adopted the updated Quoted Companies Alliance (QCA) corporate governance code for Midwich plc. The most recent statement of QCA code compliance is available here.

Board Committees

The Board has established three committees, (Audit, Nominations and Remuneration), each having written terms of reference which are available below.

Attendance at board and committee meetings

Board meetings are scheduled in advance for each calendar year. The scheduled Board meetings and attendance during the twelve months ended 31 December 2021 were as follows:

  Board Meetings Audit Remuneration Nomination
Andrew Herbert (Chairman) 10 3 5 3
Mike Ashley 10 3 5 3
Hilary Wright 10 3 5 3
Stephen Fenby 10     3
Stephen Lamb 10      

Attendance was 100%

 

Audit Committee

The Audit Committee consists of the three Non-executive Directors and is scheduled to meet at least three times a year. Andrew Herbert is the Chairman of the Audit Committee having a relevant background. The current terms of reference of the Audit Committee are reviewed annually.

The main roles of the Audit Committee are:

  • To monitor the integrity of the financial statements of the Company, including its annual and half-yearly reports and trading updates;
  • To review and challenge where necessary the consistency of, and any changes to, accounting policies both on a year-on-year basis and across the Company/Group;
  • To keep under review the effectiveness of the Company’s internal controls and risk management systems; and
  • To consider and make recommendations to the Board, to be put to shareholders for approval at the Annual General Meeting, in relation to the appointment, re-appointment and removal of the Company’s external auditor

Nominations Committee

The Nominations Committee consists of the three Non-executive Directors and the Managing Director and is scheduled to meet at least once a year. Andrew Herbert is the Chairman of the Nominations Committee. The current terms of reference of the Nominations Committee are reviewed annually.

The main roles of the Nominations Committee are:

  • To lead the process for Board appointments and make recommendations to the Board;
  • Evaluate the structure, size and composition (including the balance of skills, knowledge and experience);
  • Keep under review the leadership needs of the organisation, both Executive and Non-executive; and
  • Be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise.

Remuneration Committee

The Remuneration Committee consists of the three Non-executive Directors and is scheduled to meet at least twice a year. Mike Ashley is the Chairman. The current terms of reference of the Remuneration Committee are reviewed annually.

The main roles of the Remuneration Committee are:

  • To determine the framework and broad policy for setting remuneration for the Chief Executive and all Executive Directors;
  • To recommend and monitor the level and structure of remuneration for senior management;
  • To review the establishment of all share incentive plans for approval by the Board and shareholders and determine each year whether awards will be made, and if so, the overall amount of such awards and the individual awards per person to Executive Directors and other senior management; and
  • To produce an Annual Report on the Company’s remuneration policy.

Update on the May 2021 AGM vote on resolution 8 (approval of the Directors’ remuneration report)

Resolution 8 (approval of the Director’s remuneration report) was passed with the necessary majority but with less than 80% in favour. In response to this the Board engaged with the Company’s major shareholders to understand and discuss their concerns with respect to the resolution.

Following discussions, shareholder feedback identified (1) the scale of the one-off LTIP award and (2) that the targets for this award were not disclosed, for commercial reasons, and therefore it was difficult to assess the alignment between the one-off LTIP and stakeholder interests.

The Remuneration Committee welcomes all shareholder feedback and notes that this was a one-off award intended to accelerate the Group’s post-pandemic recovery. The base award represented a full recovery in profitability to pre-pandemic levels and would result in 22% of the award vesting. Full vesting requires a level of profit before tax materially ahead of expectations at the time the award was made. The Committee believes that the stretching performance criteria for the award to vest in full are fully aligned to shareholder interests.

This was a one-off award and the Company’s LTIP awards returned to normal levels in 2021. The Remuneration Committee has taken independent advice on the Company’s LTIP scheme and is comfortable that the normal awards are aligned with stakeholder interests and consistent with awards made by similar sized companies. The Board takes corporate governance and transparency seriously and notes that the Company’s remuneration disclosures and the advisory vote on Directors’ remuneration at the AGM exceed the requirements of the QCA governance code.

Noting the shareholders’ feedback the Remuneration Committee has decided that the Company will disclose the one-off LTIP performance targets and level of achievement in the annual report following the performance period.

Tax Strategy

The Board has approved a tax strategy for the Group which sets out its approach to conducting its tax affairs and dealing with tax risk. The tax strategy is also applicable to Midwich Limited. A copy of this can be found here.