Corporate Governance Practices

This extract from the Halma plc 2017 Annual Report & Accounts has not been updated since publication in June 2017.

Compliance with the UK Corporate Governance Code 2014 (the Code)

Throughout the year ended 1 April 2017, the Company has complied with the provisions as set out in the UK Corporate Governance Code 2014 (a copy of which is available on the Financial Reporting Council's website at www.frc.org.uk). The Group's approach to risk management and internal control is set out on the Managing Risk page.

The Directors confirm that they consider the Annual Report and Accounts, taken as a whole, to be fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance. Halma's business model is set out on the Our Strategy page and an explanation of the strategy and longer-term objectives of the Company is contained within the Strategic Report on pages 1 to 67 of the Annual Report.

Board meetings

The Board has six regular meetings scheduled each year but will meet, as required, to consider urgent or non-routine matters. In March 2017, an additional meeting was held to consider the recommendation from the Audit Committee to propose to shareholders, at the 2017 Annual General Meeting, the appointment of PricewaterhouseCoopers LLP as Auditor for the accounting year ending 31 March 2018.

All Directors are issued with an agenda and meeting papers via an electronic board portal in the week preceding each Board meeting. The Board and each Director has access to the advice and services of the Company Secretary, as well as the option of obtaining independent professional advice at the Company's expense.

Board meeting attendance

During the year attendance by Directors at Board and Committee meetings was as follows:

Committees
Board attendance Board Audit Remuneration Nomination Overall
attendance
%
Paul Walker 6/6 - 5/5 3/3 100
Andrew Williams 6/6 - - 3/3 100
Kevin Thompson 6/6 - - - 100
Adam Meyers 6/6 - - - 100
Jennifer Ward1 2/2 - - - 100
Jane Aikman2 3/3 1/1 2/2 1/1 100
Daniela Barone Soares 6/6 3/3 5/5 3/3 100
Jo Harlow3 2/2 2/2 2/2 1/1 100
Roy Twite4 5/6 3/3 4/5 2/3 82
Tony Rice 6/6 3/3 5/5 3/3 100
Carole Cran 6/6 3/3 5/5 3/3 100
  1. Jennifer Ward was appointed as executive Director on 27 September 2016
  2. Jane Aikman retired following the conclusion of the AGM on 21 July 2016.
  3. Jo Harlow was appointed as non-executive Director on 3 October 2016.
  4. Roy Twite was unable to attend the Board, Remuneration Committee and Nomination Committee meetings held on 23 September 2016 as he was attending the Advanced Management Program at Harvard Business School.
Independence

The Board has reviewed the independence of the Chairman and each non-executive Director and considers the Chairman and all of
the non-executive Directors to be independent of management and free from business or other relationships that could interfere with the exercise of independent judgement. The Board believes that any shares in the Company held by the Chairman and non-executive Directors serve to align their interests with those of the shareholders.
Tony Rice was appointed as Senior Independent Director in July 2015. 

Time allocation

The Board benefits from the wide variety of skills, experience and knowledge that each Director has. However, being available and committing sufficient time to the Company is essential and therefore the number of external directorships that a non-executive Director holds is an important consideration when recruiting and when performing the annual evaluation of non-executive Directors effectiveness.

Executive Directors are permitted to accept one external appointment, subject to the prior approval of the Chairman. Approval will only be given where the appointment does not present a conflict of interest with the Group’s activities and where the role is considered to be beneficial to the development of the individual, which will also benefit the Company.

In addition to the scheduled Board meetings (six per year), non-executive Directors are expected to attend the AGM, the annual strategy meeting and certain other Company events and site visits throughout the year. A time commitment of around 20 days per annum is the anticipated requirement for each non-executive Director. Confirmation is obtained on appointment from each non-executive Director that they can allocate sufficient time to the role. Details of Board attendance during the year are set out above and biographical details of each Director are on our Management page.

Induction of new Directors

Newly appointed non-executive Directors follow a tailored induction programme, which includes dedicated time with Group executives and visits to companies within each of the four sectors.

Jo Harlow met with the Company Secretary to review the tailored induction materials, which provide a comprehensive overview of: the Group and the legal and organisational structure; the governance framework; the role of non-executive Director; key business contacts at Group, sector and operating company level; and details of the external advisers. In addition to the latest Annual Report and Company announcements, further materials such as recent broker coverage, the last Board evaluation and CEO conference presentations were also provided. Jo met the Chairman, Chief Executive and Finance Director on a one-to-one basis on her appointment and has subsequently met the other members of the Board and Executive Board along with senior managers from Head Office functions and the sectors. A varied programme of site visits to operating companies across the sectors was arranged.

The Chairman reviews training and development needs of the Board, and each individual Director, at least annually. Briefings and presentations from subject specialists form part of the ongoing training needs for the Directors.

Performance evaluation

The Board undertakes a formal evaluation of its performance, and of each Director, on an annual basis. The principal Committees of the Board undertake an annual evaluation of their effectiveness, in accordance with their terms of reference.

As in prior years, the Board met in January 2017 before its scheduled meeting to provide a forum for discussion of the Board evaluation outside the formal meeting. This forum has proven useful for a number of years. The Chairman and non-executive Directors also meet after each Board meeting without executive Directors present to ensure there is an opportunity to discuss potentially sensitive matters. The Chief Executive will join for part of these meetings at least once per annum.

The Senior Independent Director meets with the non-executive Directors without the Chairman present, at least annually, to evaluate the Chairman’s performance. The Executives are also given the opportunity to meet with the Chairman and/or the Senior Independent Director separately. The outcome of these meetings is fed back to individuals by the Chairman, Senior Independent Director or Chief Executive, as appropriate.

Liability insurance

Each Director is covered by appropriate directors’ and officers’ liability insurance, at the Company’s expense. In addition, there are Deeds of Indemnity in place, which provide an indemnity from the Company to the Director in respect of any proceedings brought by third parties against Directors personally in their capacity as Directors of the Company. The indemnity does not extend to certain areas, including: any liability to pay a fine levied in criminal proceedings; defending criminal proceedings where the Director is convicted and such conviction is final; defending any civil proceedings brought by the Company or an associated company; or in any proceedings for disqualification of the Director.