Go-Ahead is headed by a Board whose members are collectively responsible for creating and delivering long term sustainable value for the business. A key responsibility of the Board is to balance the interests of the Group, including our shareholders and stakeholders, colleagues and the communities we serve. The Board has ultimate responsibility for setting the Group’s strategic direction, leading and overseeing culture and ensuring the Group upholds the highest standards of corporate governance.
Other responsibilities of the Board include:
- Strategy development, targets and objectives
- Corporate planning and Key Performance Indicators
- Health and safety
- Stakeholder engagement
- Corporate culture and reputation
- Contracts, bids and acquisitions
- Risk management, appetite and internal controls
- Governance and regulatory compliance
- Board development and effectiveness
Further details of the Board’s responsibilities, and the matters which are reserved for the decision of the Board, are set out in the schedule of matters reserved for the Board
Go-Ahead’s culture is defined through the Group vision ‘A world where every journey is taken care of’ and in combination with our beliefs and attitudes, this sets out the behaviours that are expected of all colleagues. Our people bring the value of our culture to life in their day-to-day roles and the Board regularly reviews inclusion and diversity initiatives across the Group, colleague engagement, succession planning, talent management and development.
Ensuring the Board is as effective as it can be is always a priority.
All Board members need to bring the right behaviours and values to Go-Ahead to create the blend which is vital to a healthy boardroom culture. Making sure all Board members are aligned to Go-Ahead’s corporate culture remains a key focus area for the Board.
Setting the Board agenda is a collaborative effort between the Chairman, Group Chief Executive and Group Company Secretary, which ensures that matters relating to both the Group’s operations and its governance are on the agenda.
The Board holds nine scheduled formal face-to-face meetings a year, in addition to ad-hoc unscheduled meetings to deal with matters as they arise. Board meetings are structured to ensure that adequate time is available for discussion of all agenda items, in particular strategic issues where more time is now spent in Board meetings debating key issues and key financial matters. The Chairman promotes strong relationships and facilitates constructive challenge between executive and non-executive directors.
Board balance and independence
The chairman of the Board was independent upon appointment and all other non-executive directors are considered independent, in compliance with the 2016 UK Corporate Governance Code, which requires at least half of the Board, excluding the chairman, to be independent.
Election and re-election of directors
In accordance with the UK Corporate Governance Code, all directors will be submitting themselves for re-election at the 2018 Annual General Meeting. The Board is satisfied that each director is qualified for re-election by virtue of their skills, experience and contribution to the Board.
We will be proposing a new remuneration policy at our Annual General Meeting on 1 November 2018. The current policy was last approved at the annual general meeting in 2015 and received 97.77% of the votes held in favour.
Following a detailed review, the committee considers that the current policy remains largely fit for purpose, with many best practice features including additional holding periods on vested long term incentives, malus and clawback. The committee would, however, like to take the opportunity to make a few minor changes, all of which are intended to bring the policy further in line with best and market practice while also allowing for a modest amount of additional flexibility in the way the policy is operated. The committee consulted with major shareholders and shareholder representative bodies on the main changes proposed as outlined below:
- Annual bonus to include flexibility in the choice and weighting of metrics. The metrics used will be aligned to the Group’s strategic objectives, with the majority of the bonus subject to challenging financial targets and no more than 25% of the maximum being payable at threshold on any element
- Long term incentives to include flexibility around performance conditions measured over a period of at least three years. These may in future include both the current financial metrics of growth in earnings per share (EPS) and relative total shareholder return (TSR), and non-financial metrics selected to promote the long term success of the Group. The committee would consult with the Group’s major shareholders before making any significant change to the measures used during the life of the new policy
- Greater clarity in our approach to setting the remuneration of new executive directors. This may include the timing and measures used for incentive awards made in the first year of appointment, depending on the timing of appointment, or setting salaries at a level to allow future salary progression to reflect performance in the role
- Increase in the shareholding requirement to 200% of base salary for executive directors, to be achieved by the retention of at least 50% of the net of tax gain on vested long term incentive awards until the shareholding has been reached (currently this is applicable for the Group Chief Executive only)
Remuneration linked to strategy
The committee believes it is very important that our overall Policy is structured to support both the financial objectives and the strategic priorities of the Group in a manner which is aligned with shareholders’ and stakeholders’ long term interests. The key principles underpinning our new Policy remain unchanged as follows:
Prioritising long term shareholder value – a large proportion ofthe executive directors’ remuneration is payable in shares. Half of the total annual performance-related bonus is awarded as deferred shares, to be held for a period of three years and subject to recovery and withholding provisions. Awards under the LTIP are also made in shares, further aligning the interests of our executive directors with those of our shareholders. Awards granted under the LTIP are subject to an additional two year holding period following the vesting of awards.
Balance – we assess performance through a balanced range of measures to ensure we cover all aspects of our executive directors’ performance.
Pay for performance – there is a clear link between the performance of the Group and payments made to the executive directors and senior managers. Performance-related elements of remuneration are relevant, transparent, stretching and rigorously applied. Care is taken to avoid paying more than necessary and due regard is given to pay and employment conditions elsewhere in the Group.
Risk – remuneration incentives are designed to be aligned with the Group’s risk policies and systems.
Culture – incentives are structured to support Go-Ahead’s vision and culture by focusing on both individual director and collective Board accountability. With alignment to our strategic objectives, we target long term sustainable performance, with fair recruitment and leaver policies.