Our committees

The nomination committee is responsible for managing Board composition to ensure a mix of relevant skills and experience, including diversity, succession planning, recruitment, skill-profiling and responding to the changing business and economic environment.

The principal responsibilities of the nomination committee are:

• Board compositions – review the structure, size and composition of the Board
• Board balance – evaluate the balance of skills, knowledge, experience and diversity on the Board
• Succession planning – consider succession planning for the Board and other senior management, taking into account the challenges and opportunities facing the Group and expertise needed on the Board in the future
• Inclusion and diversity – review and update the Board Inclusion and Diversity Policy
• Effectiveness – review the effectiveness of the committee, including an annual review of the committee’s terms of reference

Nomination committee terms of reference

2017/18 Nomination committee report

The audit committee is responsible for providing assurance to the Board that the nature of the relationship between the auditor and the Group around the preparation of the accounts is rigorous, objective and not in any way compromised.

The principal responsibilities of the audit committee are:

• External audit – manage and review the reports from the external auditor, recommend any change of external auditor, oversee any retendering process and review remuneration
• Financial reporting – monitor the integrity of the Group’s Annual Report and Accounts and any formal announcements relating to financial performance and consider significant financial reporting issues, judgements and estimates
• Risk management and internal controls – review the system of internal control and risk management, including financial controls
• Internal audit – set and monitor the internal audit plan and review its findings
• Performance – review the performance and work of both the internal and external auditors
• Whistleblowing and anti-bribery procedures – monitor and review the effectiveness of the whistleblowing and anti-bribery procedures in place

Audit committee terms of reference

2017/18 Audit committee report

A new remuneration policy was approved at our last Annual General Meeting (AGM) on 1 November 2018 and received 99.00% of the votes held in favour.

Following a detailed review, the committee considered that the previous policy remained largely fit for purpose, with many best practice features including additional holding periods on vested long term incentives, malus and clawback.

The remuneration committee, however, took the opportunity to make a few minor changes to the policy, all of which were 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. Prior to the new policy being proposed to shareholders at the 2018 AGM, the remuneration committee consulted with major shareholders and shareholder representative bodies on the main changes.

The changes implemented under the new policy are outlined below:

• Annual bonus now include flexibility in the choice and weighting of metrics. The metrics used are 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 now includes 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 is now applied 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 (previously this was applicable for the Group Chief Executive only)

Remuneration linked to strategy

The remuneration 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 are as follows:

• Prioritising long term shareholder value – a large proportion of the 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.

Remuneration committee terms of reference

2017/18 Remuneration committee report