Table of Attendance

^{* Nicky Dulieu was appointed as a Member of the Committee on 6 November 2019 and attended all meetings that were held from 6 November 2019 to the end of the 2020 financial year.}

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;
• 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; and
• reviewing the policy on diversity and inclusion and ensuring there is sufficient linkage to the Company’s strategy.

The Committee’s Terms of Reference are published on the Group’s website (redrowplc.co.uk).

Main Activities During the Year

During the 2020 financial year, the Committee undertook the following activities:

• a review of the structure, size and composition of the Board;
• a review of executive and non-executive succession;
• a review of the succession plans of the Executive Management Team;
• an assessment of the Board composition and diversity;
• a recruitment process for an additional Independent Non-Executive Director, resulting in the appointment of Nicky Dulieu;
• consultation with major shareholders in respect of the intended Board changes following discussions with those shareholders at the end of 2019, including Matthew Pratt being promoted to Group Chief Executive and John Tutte stepping back to Non-Executive Chairman at the end of the 2020 AGM and being replaced by an Independent Non-Executive Chairman ahead of the 2021 AGM;
• a discussion following Vanda Murray informing the Board of her intention to retire from the Board on 6 November 2020 after the AGM as a result of other work commitments and the appointment of Nicky Dulieu to the role of Chair of the Remuneration Committee;
• an evaluation of the Board, its Committees and the Executive and Non-Executive Directors;
• a review and recommendation that the Directors stand for re-election at the conclusion of the 2020 Annual General Meeting in accordance with UK Corporate Governance Code;
• a review of the Committee’s Terms of Reference; and
• engagement of an external recruitment agency, following a tender process for the provision of such services, to commence the search for an Independent Non-Executive Chairman to succeed John Tutte as the current Chairman ahead of the 2021 AGM.

Where appropriate, the Directors were not present and did not vote when any individual proposals were discussed.

Succession

Executive directors

Chairman

John Tutte was appointed as Executive Chairman, replacing Steve Morgan, on 1 April 2019.

The Committee determined that the appointment of John Tutte, having a wealth of experience and knowledge of the Group, was in the best interests of the Company, as the circumstances necessitated continuity following the departure of Steve Morgan. Moreover, following Steve Morgan's retirement, the appointment of John Tutte allowed for an eventual transition to a more conventional board structure, which would be in line with the Code.

The Board consulted with major shareholders in respect of the rationale behind this appointment and set out its reasons to all shareholders via RNS announcement and additionally by way of publication on the Company website at http://investors.redrowplc.co.uk/corporate-governance.

The Committee recognised that ordinarily the Group Chief Executive should not go on to become Chairman and that should this happen, major shareholders should be consulted (per Provision 9 of the Code). For the reasons outlined, John Tutte was deemed the most suitable person for the role and the Board held consultations with major shareholders in this regard. Following these consultations, it is intended that John Tutte will step back to Non-Executive Chairman at the AGM in November 2020 and retire from the Board ahead of the AGM in 2021. An Independent Non-Executive Chairman is to be appointed following John’s retirement ahead of the AGM in 2021, in line with Provision 9 of the Code.

The Committee also recognised that the Chairman should not remain in post beyond nine years from their first appointment to the Board and that, if this is to be extended, a clear explanation is to be provided (per Provision 19 of the Code). John Tutte joined the Board in July 2002 however, as explained above, the re-appointment of John Tutte to be proposed at the 2020 AGM is intended to allow for a thorough search process for a succeeding Independent Non-Executive Chairman. 

In July 2020, the Committee commenced a tender process for external recruitment services to be provided to the Company to commence the search for the succeeding Non-Executive Chairman. Following the tender process, the Inzito Partnership was engaged to assist with the recruitment process for this position. Other than its engagement for this appointment, the Inzito Partnership has no connection to the Company or the individual directors of the Company. The process is still in the early stages, however further details of this process shall be outlined in next year’s Annual Report. As soon as the appointment has been approved, the Company shall release an RNS announcement containing details of the appointment.

Group Chief Executive

Matthew Pratt, previously Chief Operating Officer, was promoted to Group Chief Executive on 1 July 2020.

Having joined the Board on 1 April 2019 as Chief Operating Officer, the Committee recommended the promotion of Matthew Pratt to Group Chief Executive, having been satisfied that his capabilities, experience and strategic focus would allow him to effectively lead the operational management of the Group and implement strategic plans with the assistance of the Executive Management Team.

During his tenure, the Committee was satisfied that Matthew Pratt had demonstrated the following, which were deemed essential for the appointment of Group Chief Executive:

• 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. The appointment of Matthew Pratt as Group Chief Executive, having joined the company in 2003 as a Chief Quantity Surveyor and becoming a Regional Chief Executive in 2013, is a great example of how the Company develops and nurtures talent resulting in the ability for employees to make their way up to the Board.

Division of Responsibilities

The Committee is satisfied that the separation of roles at the head of the Company has been maintained, with the Executive Chairman being responsible for leading the Board and the Group Chief Executive being responsible for the executive leadership of the business. Further information on the division of responsibilities between the Executive Chairman and the Group Chief Executive can be found on page 58.

In addition to this, the Committee has determined that there remains an appropriate combination of Executive Directors and Independent Non-Executive Directors such that no one individual, or small group of individuals, dominates the Board’s decision-making.

Non-Executive Directors

The Board considers that succession planning of the Board and its Committees is extremely important and believes that it now 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.

In late 2019, the Committee identified that the Board may benefit from the appointment of an additional Non-Executive Director and, following a tender process, Russell Reynolds Associates were engaged as the external search agency to assist with this appointment. Other than its engagement for this appointment, Russell Reynolds Associates has no connection to the Company or the individual directors of the Company.

A list of possible candidates was drawn up and interviews for the position were held. Following the interviews, a shortlist of potential candidates was presented to the Committee for consideration. The merits, strengths and weaknesses of the shortlisted candidates were discussed and considered extensively by the Committee. Following deliberations, the Committee unanimously agreed that Nicky Dulieu should be nominated to the Board for approval.

Nicky Dulieu has extensive Non-Executive Director experience and is currently a Non-Executive Director of Adnams plc, Marshall Motor Holdings plc and WH Smith plc. She trained as an accountant with Marks & Spencer Group plc and held various strategic and financial roles within the company over a 23-year period. Following this, Nicky Dulieu was appointed to the Board of Hobbs Limited and became Chief Executive from 2008 until 2014.

The Board accepted the Committee’s recommendation, and the Company appointed Nicky Dulieu as an Independent Non-Executive Director with effect from the close of the AGM on 6 November 2019. Following her appointment, she undertook a tailored induction programme, which introduced her to the Company and senior management and allowed her understand the business in order for her to be able to properly discharge her duties.   

Nicky Dulieu has brought to the Board strong financial and commercial experience as well as extensive knowledge of retailing and customer service, which shall be of great benefit to the Board.

Vanda Murray has informed the Board of her intention to retire from the Board as a result of other work commitments. Vanda Murray’s appointment term was extended on 1 August 2020 to 6 November 2020, being the date of the 2020 Annual General Meeting. Vanda Murray will not be seeking re-election at the 2020 Annual General Meeting and will retire from the Board following that meeting.

Annual Re-Election of the Directors

The Committee believes that presently the balance of Non-Executive and Executive Directors is effective and contains the appropriate mix of skills and experience for the Board to continue successfully. The current composition is compliant with Provision 11 of the Code as the ratio of Independent Non-Executive Directors to Executive Directors, excluding the Chairman, is 4:2 (66.67%). Following the retirement of Vanda Murray after the 2020 AGM, the Board composition will remain compliant with this provision, with the ratio of Independent Non-Executive Directors to Executive Directors, excluding the Chairman, being 3:2 (60%).

The Committee has also assessed the time commitment of all Directors to ensure that any other commitments do not compromise their ability to commit sufficient time to the Company to properly discharge their responsibilities. The Committee does not consider that any of its Directors are over boarded and is satisfied that sufficient time and energy is devoted to the Company by each Director.

Following an assessment comprising the following factors, the Committee has satisfied itself that all Directors continue to perform satisfactorily and are important to the Company’s long-term sustainable success:

• the effectiveness of the Directors as part of the annual evaluation;
• the skills, knowledge and experience of the Directors, taking into consideration the requirements of the Company;
• the time dedicated by the Directors to the Company in order to properly discharge their responsibilities; and
• the fulfilment of the independence criteria, as outlined in Provision 10 of the Code, for the Independent Non-Executive Directors.

As such, the Committee has recommended that the Board propose the re-election of all Directors at the 2020 AGM, save for Vanda Murray who has informed the Board of her intention to retire from the Board as a result of other work commitments. Vanda Murray’s appointment term was extended on 1 August 2020 to 6 November 2020, being the date of the 2020 Annual General Meeting, following which she shall retire from the Board.

Diversity

The principle of boardroom diversity is strongly supported and recognised by the Board and has clear linkages to the Company’s strategy, with Valuing People being one of the Company’s three strategic themes. 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 to achieve a balance on the Board. 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.

Gender Diversity

The Committee continues to note the target of 33% female representation on boards outlined in the 2015 Hampton-Alexander review. Following the appointment of Nicky Dulieu to the Board on 6 November 2019, the current female representation on the Board is 42.86%. Once Vanda Murray retires from the Board following the 2020 AGM, the female representation on the Board will be 33.33%, thereby remaining in line within the aforementioned 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.

In line with Provision 23 of the Code, the table below sets out the current position of the Company on a gender basis:

Ethnic Diversity

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 107.

Performance Evaluation

During the year, a formal internal evaluation of the Committee was carried out to build upon the progress made by the 2019 evaluation which was externally facilitated by Independent Audit.

After reviewing the evaluation report prepared by Independent Audit last year, a questionnaire was created and tailored, taking into consideration comments made in the previous years’ assessment as well as the current market. 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.

Following completion of the questionnaire, an anonymised effectiveness report was compiled and presented to the Members of the Committee. 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 establishing the right size and mix of members of the Board with a good balance of personalities for generating lively discussion and that the Committee had found the right people for the Board ensuring good coverage of the core skills required, for the business to remain effective. Succession planning for the Executive Management Team and management of potential successors for senior executive roles will remain a priority for the coming year.

NICK HEWSON

Chairman of the Nomination Committee

15 September 2020