“Identifying the requirements of the business and nominating suitable candidates compatible with those requirements is a key priority of the Committee. Careful succession planning for the Board and Senior Executives is crucial to the long-term success of the Company”
Committee Membership and Meetings
All Members of the Committee are Independent Non-Executive Directors with Nick Hewson, the Senior Independent Director, being Chair of the Committee. The other Members of the Committee during the period ended 30 June 2019 were Debbie Hewitt, Sir Michael Lyons and Vanda Murray.
Debbie Hewitt retired as a Member of the Board and the Committee with effect from 7 November 2018.
The biographies of the Members of the Committee can be found at pages 40 to 41.
Table of Attendance
|Name||Role||Attendance at Meetings|
|Sir Michael Lyons||Member||3/3|
* Debbie Hewitt attended both meetings which were held prior to her retirement as a Member of the Committee.
The Committee met three times during the year ended 30 June 2019. For all meetings and where necessary, papers were circulated sufficiently in advance to allow proper consideration of all matters for discussion. The Company Secretary acts as Secretary to the Committee.
Responsibilities and Terms of Reference
The key responsibilities of the Committee are:
- reviewing the structure, size and composition of the Board (including skills, knowledge and experience) and making recommendations for further recruitment to the Board or proposing changes to the existing Board;
- reviewing the leadership needs of the Company, both executive and non-executive, ensuring appropriate succession planning for Directors and other senior executives within the business;
- leading the process for Board appointments, ensuring they are conducted on merit and against objective criteria;
- making recommendations to the Board, including on appointment of Executive Directors and Non-Executive Directors to the Board, the re-appointment of Directors, the re-election of Directors at the Annual General Meeting and the membership of the Audit, Nomination, Remuneration and Placemaking and Sustainability Committees;
- ensuring that a formal, structured and tailored induction programme is undertaken by any newly appointed member of the Board;
- reviewing annually the time required from the Non-Executive Directors;
- satisfying itself with regard to succession planning for the Board and senior management, taking into account the challenges and opportunities facing the Company and future skills and expertise needed on the Board including development and training; and
- ensuring suitable candidates for the Board are identified through an appropriate recruitment process, giving due regard to the benefits of diversity, including gender and ethnicity, and recommended for appointment.
Main Activities During the Year
During the year to 30 June 2019 the Committee undertook the following activities:
- a review of the structure, size and composition of the Board;
- a review of executive succession. The Committee concluded that the present Board balance and composition remains appropriate but that it will be kept under review;
- an assessment of the Board composition and effectiveness with specific regard given to the retirement of Steve Morgan on 31 March 2019;
- an assessment of the needs of the Board, followed by the recommendation of the appointment of John Tutte as Executive Chairman and Matthew Pratt as the Chief Operating Officer;
- a review and recommendation that the Directors stand for re-election at the conclusion of the 2019 Annual General Meeting in accordance with UK Corporate Governance Code; and
- a review of the Committee’s Terms of Reference.
Where appropriate, the Directors were not present and did not vote when any individual proposals were discussed.
Executive Chairman and Chief Operating Officer
The appointment of the Executive Chairman and Chief Operating Officer is paramount to the effectiveness of the Board and the Company and the Board has spent a significant amount of time putting in place a long-term succession plan for the previous Chairman and Group Chief Executive.
Steve Morgan and John Tutte have been instrumental to the success of Redrow and careful planning of the Nomination Committee and the Board was necessary in order to ensure that the Company was positioned in the best way possible for continued growth and success.
The decision making process for both positions is detailed below.
The succession plan for the Chairman has been a priority of the Nomination Committee for some time, particularly given that the founder of the Company had occupied this position for the past 10 years, in both an executive and a non-executive capacity.
When returning to the Company as Executive Chairman in 2009, Steve Morgan led the Group to growth and success through a difficult period for the industry. Given this track record, the Board values how instrumental the Chairman can be in leading the Company to create value for stakeholders and society alike.
The Nomination Committee developed a list of characteristics which were deemed essential for the succession of the Chairman role. This list was used to aid the succession plan and included the following:
- The capability to lead the Board and engage successfully with key stakeholders;
- An understanding of the key stakeholders of the Group;
- A developed understanding of the long-term strategy of the Group and a commitment to deliver that strategy; and
- Proven experience within, and a developed understanding of, the housebuilding and construction industry.
Given the history of the Company, and the position to be filled following Steve Morgan’s departure, the Nomination Committee felt that such an adjustment to the Board necessitated continuity.
With this in mind and to remain focused on what has proved to be a successful long-term strategy of the Group, John Tutte was deemed to be the ideal successor for the position. Having worked with Steve Morgan for a number of years, the Board felt that it was essential to retain his skills and experience to lead the Company successfully through the period of change. As such, there was therefore no open advertisement, nor was an external search consultancy engaged, in respect of the chairmanship role.
John Tutte joined the Board in July 2002. In September 2009 he was promoted to Group Managing Director and in July 2014 became Group Chief Executive. He qualified in civil engineering and has amassed more than 40 years’ experience within the industry, having previously held the position of Chief Executive of Wilson Connolly plc.
The Committee recognises that ordinarily the Group Chief Executive should not go on to become Chairman (per provision A.3.1 of the Code), however for the reasons outlined, John Tutte was deemed the most suitable person for the role.
The separation of roles at the head of the Company has been maintained, with the Executive Chairman being responsible for running the Board and the Chief Operating Officer being responsible for the operational management of the Company’s business. Further information on the division of responsibilities between the Executive Chairman and the Chief Operating Officer can be found on page 44.
Chief Operating Officer
As in the case of succession in the chairman role, criteria were drawn up by the Nomination Committee and the Board to aid the succession plan for the Group Chief Executive and the conclusions were that the following qualities would be necessary in any candidate:
- A deep understanding of the values and culture of the Group;
- A long-standing knowledge and understanding of the housebuilding and construction industry;
- The ability to manage successfully the operations of the Group; and
- The ability to form relationships with key stakeholders of the Company.
A key component of the Group’s strategy is Valuing People and the Group possesses a talented employee base in which great focus is placed on development. As such, the Board greatly supports promotion from within, provided that the needs of the role and the qualities required can be clearly met.
Following this process, Matthew Pratt was identified as the ideal person to occupy the new position of Chief Operating Officer of the Group. He joined the Company in 2003 as a Chief Quantity Surveyor and later became Managing Director of the Midlands Division. In 2013, he was appointed as a Regional Chief Executive and became a member of the Executive Management Team.
Matthew Pratt has amassed over 22 years’ experience within the industry and understands the needs of the Company. Having spent 16 years within the Group, he understands the culture and values of the Group and brings stability and continuity for our key stakeholders.
Senior Independent Director and Chair of the Nomination and Remuneration Committees
The Board considers that succession planning of the Board and its Committees is extremely important and believes that it currently has a good balance and diversity among its Non-Executive Directors, with each of them having relevant skills derived from serving in a range of executive and non-executive positions over many years.
On 7 November 2018, Nick Hewson replaced Debbie Hewitt as the Senior Independent Director and Chair of the Nomination Committee. Nick Hewson has substantial experience as a Non-Executive Director and, having been on the Board since December 2012, has a good understanding of the business of the Group.
Debbie Hewitt was also succeeded by Vanda Murray in her position as Chair of the Remuneration Committee. Vanda Murray has extensive Remuneration Committee experience, having held Chair positions of the Remuneration Committees in Bunzl plc and Fenner plc. She joined the Remuneration Committee of the Company on 1 August 2017 and spent a significant amount of time shadowing Debbie Hewitt, which put her in good stead to take on the role of Chair of the Remuneration Committee.
The principle of boardroom diversity is strongly supported and recognised by the Board. It is the Board’s policy that appointments to the Board will always be based on merit, so that the Board has the right individuals in place, and the Board recognises that diversity is an important consideration forming part of the selection criteria used to assess candidates so as to achieve a balance on the Board. With this in mind, the Board currently has not imposed a diversity quota.
The Group Human Resources Director attends the monthly Executive Management Team meetings and provides a monthly HR report which provides key statistics on Group employees as well as providing updates on employee engagement and recruitment. She reports to the Nomination Committee at least twice a year to provide an update on progress.
The Committee continues to note the target of 33% female representation on boards outlined in the 2015 Hampton-Alexander review. Following the retirement of Debbie Hewitt from the Board in November 2018, the current female representation on the Board is 33%, remaining in line with this target.
The Board believes in the benefits of cognitive diversity, from a wide range of complementary skills. The Committee will continue to aspire to maintain a diverse Board with recruitment and selection of talented individuals and with a broad range of appropriate skills, irrespective of gender or otherwise.
The Committee continues to monitor and review reports and recommendations relating to the composition of boards and diversity, including the Parker Review and the McGregor-Smith Review on ethnic diversity.
The Committee believes that all levels of the business should reflect a diverse workforce and that appointments to the Board will always be based on merit. The Board strictly prohibits any bias towards any particular ethnicity, creed, religious belief or otherwise.
As a national housebuilder, the Company is present in many different communities and the Board believes that the Group’s workforce should be reflective of the communities we work in and the customers we create homes for, including in respect of ethnicity.
Further details of the steps taken by the Company to increase diversity and raise awareness of the importance of an inclusive workforce can be found on page 83.
As part of the external Board evaluation, Independent Audit also carried out an evaluation of the Nomination Committee.
Having discussed the objectives of the evaluation with the Executive Chairman and Company Secretary, Independent Audit produced a questionnaire bespoke to the Nomination Committee. The Members of the Committee, as well as those people who regularly attend the Committee meetings by invitation, were invited to participate in the evaluation.
A report was presented to the Members of the Nomination Committee at the Board meeting in June 2019. The findings of the evaluation were discussed and the Committee was found to be effective, concluding that it had fulfilled its remit and had in place appropriate Terms of Reference.
The evaluation highlighted that the Committee was particularly strong in ensuring that the Board is of the right size, with a good mix of personalities and core skills. It also found that the Committee could have a deeper involvement in the oversight of talent management within the Company so as to grant exposure to the boardroom and Non-Executive Directors to potential successors. Key actions were agreed by the Committee to maintain progress on this. Throughout the year, good progress has been made on the longer-term succession planning of the Executive Management Team and this will remain a priority for the coming year.
Chairman of the Nomination Committee
4 September 2019