Composition, succession and evaluation

Composition

As at the date of this report, the Board comprises nine Directors: the Chairman, the Group Chief Executive, the Group Chief Financial Officer and six independent Non Executive Directors. Forty four per cent of the Directors are female. The biographies of the Directors (set out on pages 62 and 63) demonstrate that the Board possesses strong and diverse experience that is relevant to the sector in which the Company operates and aligned with its strategy.

Independence of Non Executive Directors

Each of the Non Executive Directors and the Chairman are considered by the Board to be independent and free of any relationship which could materially interfere with the exercise of their independent judgment and that each Non Executive Director continues to demonstrate independence of thought and expertise in meetings, and to support the senior management in an objective manner and offer appropriate levels of challenge. The Code indicates several factors that should be considered when determining their independence, including length of tenure. Each Non Executive Director has served for six years or less with the exception of Tessa Bamford, Alan Murray and Jacky Simmonds. As required by the Code, Tessa and Jacky’s reappointments for a further term in March 2020 were subject to a particularly rigorous review that carefully considered the need for progressive refreshing of the Board. The tenure terms of Non Executive Directors are transitioning towards one-year terms to reflect the current vote for re-election at the AGM. Over time it is expected that the terms will be co-ordinated with the timing of the AGM. During the year Tessa Bamford, Jacky Simmonds and Nadia Shouraboura’s terms were extended by one year. The Board is mindful that non executive director tenure that exceeds nine years is listed by the Code as a circumstance that might impair, or appear to impair a non executive director’s independence. Tessa Bamford was first appointed to the Board in March 2011 and, while her tenure now exceeds nine years, the Board continues to regard Tessa as independent. Tessa’s independence was subject to a thorough review by the Nominations Committee prior to its recommendation to the Board that she be reappointed for a further term as a Non Executive Director. During this review the Nominations Committee discussed a wide range of factors, noting that Tessa continues to demonstrate objective judgment and independence of thought and provides constructive challenge to management where required. The Nominations Committee also noted that, following recent changes to the executive leadership team, Tessa had not served concurrently with any current Executive Director for longer than three years and was satisfied that Tessa continued to demonstrate the high level of independence expected of a Non Executive Director. The Board considered that the reappointment of Tessa for a further one-year term to be in the best interests of the Company and the Group as her skillset and in-depth knowledge of significant and ongoing Group projects continues to be vital to the balance of the Board and that Tessa’s continued presence on the Board provides continuity and stability during a period of significant change. The Code indicates that a chairman should not remain in post beyond nine years from the date of their first appointment to the board. It also allows that this period can be extended for a limited time, particularly in those cases where the chairman was an existing non executive director on appointment, in order to facilitate effective succession planning and the development of a diverse board. The Code came into effect in relation to the Company on August 1, 2019 and the Board had prior to this undertaken a succession process for the role of Chairman to ensure that the Company continued to comply with the Code. The succession process for the role of Chairman was led by the Senior Independent Director. In accordance with the Code, the Senior Independent Director chaired the Nomination Committee meetings when Chairman succession was discussed. Gareth Davis stepped down from the Board after 16 years of service, nine of which as Chairman. As announced on May 22, 2019, Geoff Drabble was appointed to the Board as Chairmandesignate with Gareth remaining as Chairman for a short period before handing over the role to Geoff at the 2019 AGM. This facilitated an orderly succession process and transition of responsibilities and enabled Geoff to receive an appropriate induction and have time to familiarize himself with the business and the Board before taking over Chairmanship.

External appointments during the year

As announced on June 26, 2020, Nadia Shouraboura joined Mobile TeleSystems Public Joint Stock Company as a non executive director on June 24, 2020. The Board considered and approved in advance Nadia’s appointment having been satisfied that the time commitment for the role would not affect her ability to devote sufficient time to her duties as a Director of the Company. On June 17, 2020, it was announced that Geoff Drabble had been appointed as a non executive director and chairman designate of DS Smith Plc with effect from September 1, 2020 and then as Chairman from January 3, 2021. Geoff’s appointment was approved in advance by the Board. The Board took into account the likely time commitment of the role and was satisfied that it would leave sufficient time for him to discharge his duties as Chairman of the Company. The Board also agreed that the Company and Group would benefit from Geoff’s experience at another internationally publicly quoted company and as its chairman.

Induction

Upon appointment, all new Directors are provided with a comprehensive induction program designed to ensure they develop an understanding and awareness of our businesses, people and processes, and of their roles and responsibilities as a Director of a public company. The program is structured to reflect best practice and includes the provision of current and historical information about the Company, visits to operations around the Group, induction briefings from function leaders and meetings with Directors, senior executives, the Group Company Secretary and the Company’s advisers. We aim to limit the amount of information provided as reading material during an induction process. All new Directors are provided with access to our electronic Board paper system which provides easy and immediate access to a number of key documents. During the year, Geoff Drabble undertook an induction process following his appointment as Non Executive Director and Chairman designate. During his induction he met with a number of senior executives, the Company’s advisers and operationally focused associates in the business.

Development of the Board

All Directors are provided opportunities for further development and training and, during the year, each Director has the opportunity to discuss development with the Chairman. The Board receives regular updates on governance, legal and regulatory matters relevant to the Group’s operating environment and receives detailed briefings from advisers on a variety of topics that are relevant to the Group and its strategy.

The annual Board and Committee effectiveness review provides the Directors with an opportunity to assess individual and collective effectiveness. During the 2018/19 effectiveness review the Board identified increased opportunities for succession planning, further briefings on technology and a continued increase in the Board’s focus on culture. Geoff Drabble worked closely with Gareth Davis to ensure a successful handover of responsibilities. In addition, the Board received regular reports from the Nominations Committee on succession planning during the year. The Board received regular briefings and presentations from the Chief Information Officer throughout the year on the implementation of the Group’s technology strategy and roadmap, including any key risks and opportunities which may have had an impact on the project. During the year the Chief Human Resources Officer briefed the Directors on associate engagement and culture, including an overview of the US culture surveys that had been undertaken during the year. Details of the 2019/20 review are provided below.

Succession

The Nominations Committee keeps the composition of the Board and its Committees under regular review to ensure that they maintain an appropriate balance of skills, experience, independence, knowledge and diversity to support the successful execution of the Group’s long-term strategy. Further details on the Nominations Committee’s work on Board succession planning and Non Executive Director recruitment is provided on page 72.

Evaluation of performance

The Board undertakes a formal review of its performance and that of its Committees each year, with an external evaluation every three years. This year’s Board and Committee effectiveness review was facilitated internally. As an externally-facilitated review was conducted in 2017/18, it is expected that the next externally-facilitated review will be conducted during the year ending July 31, 2021. The 2019/20 review was conducted using an online survey with a discussion at the Board meeting and with follow-up discussions between the Chairman and Board members. The survey was structured around open questions that encouraged candid feedback and covered areas such as the composition and diversity of the Board, how effectively members worked together, how the Board provided appropriate strategic oversight and the management and effectiveness of meetings. Overall the Board’s performance was highly rated with positive feedback given in relation to areas such as the Board’s testing and development of the Group’s strategy, the dynamics of the Board and the relationships between Board members and the understanding of associates, investors and customers. The results of the review were discussed by the Board and priority actions for further enhancements to the Board’s effectiveness were identified. Overall, following consideration of the findings of the 2019/20 review, the Directors remain satisfied that the Board and each of the Committees of the Board are operating effectively. Key areas of focus for continued improvement identified in the 2019/20 review were:

– continuing to develop the Board composition to reflect the Group’s ongoing business and potential future listing location; – improving the agendas for Board meetings and evolving the

Committees and their structure and composition to enable them to operate more efficiently while also maintaining appropriate levels of oversight; and – the creation of new committees to facilitate more in-depth oversight in appropriate areas.

Actions have already been taken in relation to these areas of focus. The Board has updated the composition of the Audit and Remuneration Committees. In addition, new ad hoc committees have been created to focus on technology developments (see page 23), the additional listing of the Company’s shares on a major US stock exchange and the exit of the UK business.

Chairman effectiveness review

During the year the Non Executive Directors, led by the Senior Independent Director, undertook the performance evaluation of the Chairman. The evaluation, which took into account the views of the Executive Directors, concluded that the Chairman had been very effective in the role, which he had smoothly transitioned into, and had established effective relationships with the Non Executive Directors. The Chairman’s relationship with the Executive Directors struck an appropriate balance between support and constructive challenge.

Individual Non Executive Director effectiveness review

The Chairman maintains frequent contact with each Director throughout the year on an individual basis and provides feedback where relevant. The Chairman considers all Directors to have engaged fully throughout the year, openly sharing their views and experience at Board and Committee meetings and providing constructive challenge and support to management as required. The ability of Directors to devote sufficient time to their respective roles is also monitored by the Chairman on an ongoing basis and he continues to be satisfied that each Director has been able to do so during the year under review, with full attendance at all scheduled Board and Committee meetings. The Chairman and the Board continue to consider each of the Directors to be effective and to demonstrate commitment to his or her role.