UK Corporate Governance Code
The DFS Board of Directors (the “Board”) is committed to the highest standards of corporate governance. The UK Corporate Governance Code (the “Code”) sets out standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders.
We report as fully and transparently as possible each year in our annual report and accounts on our position on Corporate Governance and the Code. Our latest annual report can be found here.
Board composition and independence
The DFS Board comprises eight members, the Non-Executive Chairman, five Independent Non-Executive Directors and two Executive Directors, fulfilling its independence objectives.
A summary of the work of the principal Board Committees is provided below.
The Board has established and delegated specific responsibilities to the following Committees. All Committee meetings are attended by the Company Secretary, are minuted and a Committee update is provided to the Board after each meeting. Each Committee has its own terms of reference which covers issues such as membership and the frequency of meetings, together with requirements for quorum and notice procedure and the right to attend meetings.
The Audit Committee has responsibility for, among other things, the monitoring of the Company and its subsidiaries’ financial integrity of the financial statements and the involvement of its auditors in that process. It focuses in particular on compliance with accounting policies and ensuring that an effective system of internal financial controls is maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly reports remains with the Board. The Audit Committee will normally meet at least three times a year at the appropriate times in the reporting and audit cycle.
The responsibilities of the Audit Committee covered in the terms of reference include external audit, internal audit, financial reporting and internal controls and risk management. The terms of reference also set out the authority of the committee to carry out its responsibilities.
The UK Corporate Governance Code recommends that, for companies in the FTSE 350, the Audit Committee comprises at least three members who are Independent Non-Executive Directors and includes one member with recent and relevant financial experience. The Audit Committee’s terms of reference require that its composition comply with these recommendations.
The Nomination Committee has responsibility for considering and making recommendations to the Board in respect of appointments to the Board and to the Board committees. The Committee is responsible for keeping the structure, size and composition of the Board under regular review, the annual evaluation of the Board performance and for making recommendations to the Board with regard to any changes necessary.
The responsibilities of the Nomination Committee covered in its terms of reference include review of the Board composition, appointing new Directors, re-appointment and re-election of existing Directors, succession planning taking into account the skills and expertise that will be needed on the Board in the future, reviewing time required from Non-Executive Directors, determining membership of other Board committees and ensuring external facilitation of the evaluation of the Board. The Nomination Committee will meet at least twice a year.
Responsible and Sustainable Business Committee
The Responsible and Sustainable Business Committee is responsible for ensuring the Board has oversight of the Environmental, Social and Governance (“ESG”) issues relevant to the business and to ensure that adequate resources are assigned to allow the business to “do the right thing”. The Committee will be responsible for the setting of and monitoring the progress made against the targets in our ESG Strategy.
The responsibilities of the Responsible and Sustainable Business committee covered in its terms of reference include overseeing the Groups ESG strategy and monitoring progress against metrics, establishing ESG policies and codes of practise, to work in conjunction with the other committees, including the Audit Committee for the purposes of identifying ESG related risks and ensuring any materials produced by the Committee is accurate and transparent. The Responsible and Sustainable Business Committee will meet at least three times a year.
The Remuneration Committee has responsibility, subject to any necessary Shareholder approval, for the determination of the terms and conditions of employment, remuneration and benefits of each of the Executive Directors and certain other senior executives, including pension rights and any compensation payments, and recommending and monitoring the level and structure of remuneration for senior management and the implementation of share option or other performance-related schemes. The Remuneration Committee will normally meet at least three times a year.
The responsibilities of the Remuneration Committee covered in its terms of reference include determining and monitoring policy on and setting levels of remuneration, termination, performance related pay, pension arrangements, reporting and disclosure, share incentive plans and remuneration consultants. The terms of reference also set out the reporting responsibilities and the authority of the committee to carry out its responsibilities.
The UK Corporate Governance Code recommends that, for companies in the FTSE 350, the Remuneration Committee comprises at least three members who are Independent Non-Executive Directors, one of whom may be the Chairman (but who may not chair the Remuneration Committee). The terms of reference of the Remuneration Committee require that its composition comply with these requirements.
The Company’s remuneration strategy is to provide a remuneration framework that will:
- attract, motivate and retain executives and senior management in order to deliver the Company’s strategic goals and business outputs;
- encourage and support a high performance sales and service culture, ensuring good customer outcomes;
- reward delivery of the Company’s business plan and key strategic goals;
- adhere to the principles of good corporate governance and appropriate risk management; and
- align employees with the interests of Shareholders and other external stakeholders and encourage widespread equity ownership across DFS.
It is intended that salaries and packages that DFS will pay will be broadly in line with those of UK listed companies of a similar size and complexity.