Corporate Governance StatementChairman’s Introduction
The Board of Directors acknowledges that adhering to the rules of good corporate governance is in the best interests of the Company and its shareholders.
As an AIM quoted company, the Company has chosen to follow the Quoted Companies Alliance’s (“QCA”) Corporate Governance Code 2018 (the “Code”) for small and mid-size companies. The Board believes that this provides an appropriate and suitable framework for a group of our size and complexity. Alongside this, we monitor developments in the Financial Reporting Council’s UK Corporate Governance Code, applicable to listed companies traded on the London Stock Exchange’s main market, to keep abreast of best practices but we are not required to apply it.
During the year, the Board recommended and approved the formation of a Nominations Committee in order to review the composition and performance of the Board along with the skills, experience and independence of each Director to ensure that they best fit the evolution of the Group’s business.
The Board is responsible to the Company’s shareholders for the leadership and control of the Group and provides direction for management. It is responsible for the long-term success of the Group and for ensuring the appropriate management and operation of the Group in pursuit of its objectives.
The Board’s responsibilities include:
- Setting the Group’s strategy, values and standards
- Approving the Group’s long-term objectives
- Approving annual budget and monitoring performance against such financial and non-financial indicators
- Establishing and maintaining the Group’s system of internal control and reviewing their effectiveness on an annual basis
- Identifying the major business risks faced by the Group and determining the appropriate course of action to manage those risks
- Approving major capital projects, financing and investments
- Extending or dissolving the Group’s business activities or major assets
While there is a formal schedule of matters specifically reserved for decision by the Board, each senior executive has been given responsibility for specific functional aspects of the Group’s affairs.
The Group’s strategy exposes it to various risks and uncertainties. The Board is ultimately responsible for determining the type and extent of risks the Group is willing to take in achieving its strategy. The Board has an ongoing process for identifying, evaluating and managing the principal risks faced by the Group. This process is driven and monitored by the Group’s senior executives and is reviewed by the Board on a regular basis. The Group has established clear policies and responsibilities to mitigate their possible negative impact on the business. The Group’s principal risks and uncertainties can be found with the Company’s Annual Report and Accounts.
The Group maintains systems of internal control designed to meet the particular needs of the Group and the risks to which it is exposed, and by its nature can provide reasonable but not absolute assurance against material misstatement or loss. The key procedures, which the Directors have established with a view to providing effective internal control, can be found with the Company’s Annual Report and Accounts.
The Board comprises three Non-executive Directors and one Executive Director. The Executive Director is Mikel Faulkner, who serves as the executive Chairman of the Company. The three Non-executive Directors are Alan Henderson, David Quint and Zac Phillips. Details of the Directors’ skills and experience are included in the Directors’ Biographies.
Notwithstanding the fact that two of the Non-executive Directors were appointed in March 2002 and have served on the Board for more than 16 years, the Board considers that each of the Non-executive Directors is independent. The Board believes that the tenured Directors continue to demonstrate an independence of character and judgement in the performance of their roles as Non-executive Directors. Furthermore, none are executive officers or employees of the Group and none have a relationship with the Group that will interfere with the exercise of independent judgement in carrying out the responsibilities of such Directors. Although share option awards and/or long-term incentive grants have been made to the Non-executive Directors these are not considered to impact their independence.
All Directors have disclosed any significant commitments outside their respective duties as Non-executive Directors and confirmed that they have sufficient time to discharge their duties.
The Board formed the Nominations Committee in 2018 in order to review the composition and performance of the Board as well as the skills, experience and independence of each Director to ensure that they best fit the evolution of the Group’s business. The Committee is responsible for making recommendations to the Board with regard to any required changes. The Board believes there is an appropriate balance of skills and knowledge on the Board, which provides a wide range of expertise on issues relating to the Group’s mission, operations, strategies and, most importantly, its standards or conduct.
Senior management is available to the Board to ensure all Board and Committee meetings are conducted properly and procedures are in place for distributing meeting agendas and reports so that they receive the appropriate information to be discussed timely. The Directors each receive reports which include monthly finance and management accounts and operational updates.
Where it considers necessary to do so, the Board may utilize external profession advisors to provide advice and guidance on any matter where it considers it prudent to seek such advice, at the Group’s expense.
The Board meets formally a minimum of four times a year, excluding Board Committee meetings. The total number of meetings held by the Board and its Committees and records of attendance by each member eligible to attend can be found with the Company’s Annual Report and Accounts.
The responsibilities of Chairman and Chief Executive are held together. As Chairman, Mr. Faulkner is responsible for the leadership and effective running of the Board and for ensuring that the corporate governance of the Group is maintained in line with appropriate practice and policies agreed by the Board. As Chief Executive, he is responsible for the running of the Group’s business and implementation of strategy and policy adopted by the Board.
The Non-executive Directors have a responsibility to challenge independently and constructively the performance of management and to help develop proposals on strategy. Each of the Non-executive Directors sits on the Nominations and Remuneration Committees, enable them to have a role in determining the pay and benefits of the senior management and to play a key role in planning Board succession including the appointment of, and if necessary, removal of Directors. In addition, each of the Non-executive Directors sits on the Audit Committee which enables them to review internal control and financial reporting matters, and to have a direct relationship with the external auditors.
Beginning in September 2018, the Company implemented a policy that a Board effectiveness review is undertaken biennially through the completion of an internal questionnaire circulated to all Directors. The structured questionnaire asks them to rate the Board’s performance in a number of strategically important areas and provide the rationale for their view. The results are analyzed by the Chairman and executive management team and any key themes are discussed with the Board. Any recommendations arising from such review are designed to specifically address any areas for improvement identified (which form the basis for training and development made available to the Directors) and are implemented by the Board. The Board plans to undertake this initial evaluation of its performance in the fourth quarter 2018.
The Board is comfortable with its current composition, however, as part of the ongoing succession planning, the Board continues, with the advice of the Nominations Committee, to consider any additions to the Board to further broaden the experience and effectiveness of the Board as the Group continues to grow. As part of this process the Board has also considered and concluded that the appointment of an additional Independent Director is not necessary at this time but keeps this issue under review.
The Board has delegated certain aspects of its responsibilities to the following three committees to assist in meeting its business objectives while ensuring a sound system of internal control and risk management. Each committee has written terms of reference, which are available on the Company’s website. The committees meet independently of Board meetings.
The Board recognises the importance of maintaining good communications with the Company’s shareholders to ensure mutual understanding of the Group’s strategy, objectives, governance and performance.
During the year shareholders are kept informed through regular updates to the Group’s website, www.nautilusmarineplc.com , which houses a wide range of information about the Group including the Annual and Interim Reports and Accounts, press releases and share price data. The website provides investors and shareholders with points of contact for such matters, and inquiries from the website are reviewed daily and routed to the appropriate member of the management team on a timely basis.
In addition, senior management regularly meet with concert party shareholders, which constitute a majority of the shareholdings, and provide feedback to the Board following these meetings.
Shareholders can receive documentation such as the Annual Report and Accounts and Meeting Notices electronically and are also able to cast their votes by proxy. The Company also has an electronic proxy appointment service for CREST members.