The Group has two standing Board Committees: an Audit Committee and a Remuneration Committee, the membership of which is made up solely of the Independent Non-Executive Directors.
The functions of a Nominations Committee are undertaken by the Board as a whole. Where necessary and appropriate, a nominations sub-committee is appointed temporarily to fulfil specific tasks. Given the size of the Group, and the size and composition of its Board, the Directors believe it is both practical and beneficial for matters of Board composition and recruitment, Board performance evaluation, Executive and Non-Executive succession planning, and training and development to be undertaken by the Board as a whole. All such matters are regularly scheduled on the Board’s agenda and are discussed thoroughly and robustly, incorporating the detailed perspectives and experience of all Directors.
The Audit Committee comprises:
- Steve Coggins, Chair of the Committee, Non-Executive Director
- Dr Alison Vincent, Independent Non-Executive Director
- Andrew Lockwood, Independent Non-Executive Director
All of the Committee members have no personal or financial interests, other than as shareholders, in the matters considered by the Committee.
The Committee is responsible for ensuring that the Company maintains a strong control environment. It provides effective governance over the Group’s financial reporting, including oversight and review of the systems of internal control and risk management and the performance of internal and external audit functions.
The Committee’s formal terms of reference, which are reviewed and approved annually, set out its duties delegated by the Board. These can be accessed here: Audit Committee Terms of Reference.
During the year, the Committee met three times. Neither the Executive Directors nor the Board attends meetings of the Committee other than by invitation. The Committee invites the external auditor to attend certain meetings.
The Committee is authorised by the Board to obtain external professional advice at the Group’s expense in order to perform its duties. The Committee’s principal duties are to:
- make recommendations to the Board on the appointment, re-appointment or removal of the external auditor and the amount of its remuneration;
- discuss and agree the scope of the audit and review the auditor’s management letter and the Group’s response;
- review and agree the scope and work of the Group’s internal audit activities;
- review half-year and annual financial statements and formal announcements relating to financial performance;
- review the adequacy and effectiveness of the Group’s internal financial controls, and internal control and risk management systems;
- consider compliance with relevant laws and regulations;
- consider findings of internal investigations and management’s response; and
- review the Committee’s terms of reference and recommend any proposed changes to the Board for approval.
During the financial year the Audit Committee considered the following matters:
- the suitability of the Group’s accounting policies and practices;
- the half-year and full-year financial results, including the assessment of going concern and recommendation to the Board that it is appropriate to adopt the going concern assumption;
- the full-year report and audit findings of RSM UK Audit LLP (‘RSM’) for 2021;
- the evaluation of the performance and independence of RSM;
- the internal control environment across the Group, including approving updates to the Group’s Delegation of Authority document;
- the actions arising from the audit findings of RSM and progress made against each;
- the re-appointment of RSM as the Group’s external auditor;
- the arrangements in respect of internal audit, including its resourcing and the scope of the annual internal audit plan, as well as reports on the activity carried out during the year;
- the assessment of the internal finance organisation;
- the annual review of the Group’s policies on whistleblowing and provision of non-audit services;
- the review of the Committee’s terms of reference and recommendation of the updated terms of reference to the Board for approval;
- the review and approval of RSM’s plan for 2022, which detailed the proposed audit scope and risk and governance assessment;
- the review and approval of RSM’s fees for 2022;
- the results of the internally conducted assessment of the Committee’s performance and effectiveness in 2022;
- a review of the Group’s internal controls, detailed reviews of strategic and operational risks facing the Group, the risk registers and the mitigating actions to minimise risk;
- the approval of the Committee plan for 2022;
- the review of the finance priorities and finance teams following the change of Group Finance Director.
The Group’s Remuneration Committee comprises:
- Andrew Lockwood (Chair of the Committee), Independent Non-Executive Director
- Steve Coggins, Non-Executive Director
- Dr Alison Vincent, Independent Non-Executive Director
The Committee members have no personal or financial interests, other than as shareholders, in the matters considered by the Committee.
The Committee operates within the remit delegated by the Board, which is set out in formal terms of reference. The remuneration of Non-Executive Directors is a matter for the Chair and the Executive Directors. No Director or manager is involved in any decision regarding their own remuneration. A copy of the terms of reference can be accessed here: Remuneration Committee Terms of Reference.
Neither the Executive Directors nor the Board attend other than by invitation of the Remuneration Committee and are not present at any discussion of their own remuneration.
The principal duties of the Remuneration Committee are to:
- recommend to the Board for approval overall Group remuneration policies, and the specific remuneration each year for all Directors and senior management, including bonuses, incentive payments and share options and awards;
- ensure Executive Directors and the senior management team are provided with appropriate incentives to encourage enhanced performance in a fair and reasonable manner; approve the design of, and determine targets for, any performance-related pay schemes; review the design of all share incentive plans for approval by the Board and, where appropriate, shareholders; determine whether awards will be made under any share incentive plans, including the size of the award and the performance targets to be used;
- determine the policy for pension arrangements for Executive Directors and certain senior managers; ensure that contractual terms on termination and any payments made are fair, that failure is not rewarded and that the duty to mitigate loss is fully recognised;
- consider applicable legislation, regulation, best practice guidance and recommendations, and developments on remuneration policy and remuneration reporting;
- review remuneration trends at individual subsidiaries and the Group as a whole, and oversee any major changes in employee benefit structures across the Group;
- select and appoint any remuneration consultants to advise the Committee, if required; and
- review the Committee’s performance, constitution and terms of reference to ensure it operates effectively and to recommend any changes to the Board for approval.
The Committee Chair reports formally to the Board on the Committee’s proceedings after each meeting; ensure that an annual report of the Group’s remuneration policy and practices is published in the Group’s Annual Report and Accounts; and ensure each year that the Remuneration Committee Report, which contains the Directors’ remuneration, is put to shareholders for approval at the AGM.
The Committee is authorised by the Board to seek any information it requires from any employee of the Group in order to perform its duties and to obtain external professional advice at the Group’s expense.
During the year, the Committee met six times. Matters dealt with by the Committee included the:
- approval of global pay review for 2021;
- approval of discretionary bonus payments 2021;
- approval of formal bonus targets and discretionary bonus payments for 2022;
- approval of no Executive bonus for the year ended 30 November 2021;
- review of 2020 and 2021 Synectics Performance Share Plan (‘PSP’) awards due to the impact of Covid-19;
- approval of discretionary Executive bonus for 2022 H1 profitable performance;
- review of the outturn of the 2019 PSP awards and the determination that those awards had not met the performance criteria and lapsed in full;
- approval of the Group’s updated Share Dealing Policy and Code;
- approval of amendment of 2020 and 2021 PSP awards;
- review of the Committee’s terms of reference and recommendation of the updated terms of reference to the Board for approval;
- approval of an award of options under the PSP on 2 August 2022 for the Senior Leadership Team and to the Group Finance Director;
- approval of global pay review for 2022.