Corporate Governance

UK Corporate Governance Code

We have agreed to report against the UK Corporate Governance Code (the “Code”).

A copy of the Code is available from the website of the Financial Reporting Council (www.frc.org.uk).

An overview of the Company’s compliance with the principles of the UK Corporate Governance Code is set out in the Directors’ Report included in the latest annual report and accounts, a copy of which can be found here http://www.benchmarkplc.com/investors/company-reports-and-documents/ and below. This information is reviewed annually and was last reviewed on 23 January 2018.

A. Leadership

A.1 Role of Board
The Board is collectively responsible for the long-term success of the Group, and oversees the development and delivery of its strategy. It does this by exercising oversight and control over the performance of the Company through review of management financial information; agreeing budgetary targets; approving investment programmes and monitoring their execution against budget and returns on investment.

A.2 Clear division of responsibilities
There is a clear division of responsibilities between the Chairman and the Chief Executive Officer:

Chairman

  • Leads the Board to ensure effective functioning in all aspects of its role.
  • Promotes an open culture of debate.
  • Ensures that the membership of the Board is appropriate for the needs of the business.
  • Oversees Board committees as they carry out their duties, including reporting to the Board.
  • Sets and manages the agenda for Board meetings.
  • Ensures the provision of information necessary for Directors to take a full and constructive part in Board discussions.
  • Develops and maintains effective communications with shareholders.
  • Establishes appropriate personal objectives for the Chief Executive Officer.
  • Ensures the Directors are up to date and receive suitable training and development.

Chief Executive Officer

  • Leads the development and delivery of strategy and budget, to enable the Group to meet the requirements of its shareholders.
  • Oversees operation of the day-to-day business of the Group.
  • Leads and oversees the executive management of the Group.
  • Establishes an environment which allows the recruitment, engagement, retention and development of the people needed to deliver the Group’s strategy.

A.3 Role of Chairman

The Chairman leads the Board, setting and managing the agenda, and promoting open and constructive discussion and challenge. The Chairman is responsible for ensuring that new Directors receive a comprehensive and formal induction. This includes:

The Chairman leads the Board, setting and managing the agenda, and promoting open and constructive discussion and challenge. The Chairman is responsible for ensuring that new Directors receive a comprehensive and formal induction. This includes:

• An overview of the Group, its functions and governance framework.

•Briefings on Directors’ responsibilities and compliance responsibilities.

• Site visits to key Group locations.

• Detailed reviews of the Group’s strategic projects and initiatives.

• One-to-one meetings with senior management.

Kevin Quinn was appointed in November 2016, and Hugo Wahnish and Yngve Myhre appointed in November 2017. Kevin has received, and Hugo and Yngve are receiving, a full induction covering all of the above matters.

A.4 Role of Non-Executive Directors
The Board has a culture of transparency and open debate, and the Non-Executive Directors constructively challenge the Executive Directors regarding the strategy and its implementation.

The Executive Directors are responsible for the delivery of strategy, business operations, risk management, and ensuring that the right financial and people resources are in place to achieve the Company’s aims. The Non-Executive Directors are responsible for assisting in the development of and constructively challenging strategy, overseeing the performance of management, satisfying themselves that financial controls and risk management systems are robust, and safeguarding the integrity of financial information, determining the Directors’ remuneration, and succession planning for the Executive Directors and senior management.

A formal schedule of matters reserved for the Board is maintained and communicated throughout the Group with regular training, to ensure that decisions which are significant due to their strategic, financial or reputational implications are reserved for approval by the Board. The key areas of decision-making reserved for the Board are set as follows:

Matters reserved for the Board
Strategic decisions

  • Review and approval of the long-term objectives and strategic direction of the Group
  • Approval and monitoring of strategic and annual business plans and budget
  • Approval of significant acquisitions, mergers, disposals and other transactions
  • Approval of diversification into new business activities and new geographies

Reporting

  • Approval of the Annual Report and Accounts and of the interim financial statements
  • Oversight and approval of significant changes to reporting policies and practices

Regulatory matters

  • Compliance with the AIM Rules for Companies, principles of the UK Corporate Governance Code, procedures for regulating dealing in the Company’s shares by its employees and Directors

Finance, governance and controls

  • Review and approval of internal control and risk management systems
  • Approval of significant projects, contracts and disputes
  • Approval of financing policy including the issue of shares and significant borrowings
  • Appointment or removal of the auditors and determination of the audit fee
  • Oversight and approval of Directors’ conflicts of interests
  • Approval of interim dividends and recommendation of final dividends

Succession planning and reward
Operations Board
Responsible for developing and delivering cross-Group opportunities, revenue and costs synergies, advancing integration, and overseeing the financial and operational performance of the Group as a whole.

Divisional Boards — Advanced Nutrition; Genetics; Animal Health; Knowledge Services
Responsible for the development and delivery of the strategy of the relevant division and its businesses, its financial performance, and the implementation of cross-Group opportunities and synergies.

B. Effectiveness

B.1 Composition of the Board
Two new Non-Executive Directors were appointed in 2017 to strengthen the pharmaceutical and aquaculture expertise on the Board. The Board and the Nomination Committee is of the view that the Board contains an appropriate breadth and balance of skills, knowledge, experience and independence.

B.2 Board appointments
The Nomination Committee leads the process for the appointment of new Directors, and follow a formal and rigorous process, with the assistance of independent external recruiters, and taking into account the Group’s policies regarding diversity. This process was followed in relation to the appointments of Hugo Wahnish and Yngve Myhre in 2017.

B.3 Time commitments
Non-Executive Directors are notified of and agree to the required time commitments prior to appointment, and external directorships which may impact existing time commitments must be agreed with the Chairman.

B.4 Training and development
New Directors receive a comprehensive and formal induction programme which is tailored to their role and needs, and the Board receives updates regarding the business and regulatory developments.

B.5 Provision of information and support
The Chairman, supported by the Company Secretary, ensures that Board members receive accurate and timely information and other support requested, including access to external legal advice.

B.6 Board and Committee performance evaluations
Following a formal evaluation of the Board’s performance, size and composition in 2015, which was kept under review, it was determined in 2017 to strengthen the Board with pharmaceutical and aquaculture sector expertise, in an international forum. Two new Non-Executive Directors were appointed shortly after the year end.

B.7 Re-election of Directors
The Articles of Association require Directors to retire by rotation at the third Annual General Meeting after the Annual General Meeting at which they were elected.

C. Accountability

C.1 Financial and business reporting
The Board reviewed the Annual Report and the results for the year to 30 September 2017 to ensure that the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable.

C.2 Risk management and internal control systems
The Board is responsible for ensuring that the Company has in place effective procedures for the management of risk, and that the principal risks faced by the Group are identified, assessed, appropriately mitigated and monitored.

C.3 Role and responsibilities of the Audit Committee
Responsibility for oversight of the Group’s financial reporting procedures, internal controls and audit process is delegated to the Audit Committee, which also oversees the Group’s risk management framework.

D. Remuneration

D.1 Executive Directors’ remuneration
The policy for determining the remuneration of Executive Directors is set out in the Remuneration Report of our latest Annual Report. No Director is involved in setting his/her own remuneration.

D.2 Remuneration policy
The Company’s remuneration policy is set out in the Remuneration Report in its latest Annual Report.

E. Relations with Shareholders

E.1 Shareholder engagement
The Board engages actively and regularly with its shareholders. The Chairman and Senior Independent Director are available for discussions with major shareholders, and the Board is kept appraised of their views and feedback.

A number of meetings were held between institutional shareholders and both Executive and Non-Executive Directors (together and independently) throughout the year.

The Company regularly holds a capital markets day for institutional shareholders which includes presentations regarding the macro environment; the aquaculture industry and Benchmark’s positioning within it; and the strategies, assets, capabilities, and markets of each of the Genetics, Animal Health, Advanced Nutrition and Knowledge Services divisions; and the Company’s financial model and capital structure. Institutional shareholders have the opportunity to meet with the Board and senior management and to discuss and challenge the strategy of the Company. The Directors attend the Annual General Meeting and were available for questions and discussion both in and following the meeting with all shareholders.

The Chairman is responsible for ensuring that major shareholders are able to access and engage with all members of the Board. The Chairman is also responsible for ensuring that the Board is aware of any feedback received from, or concerns raised by, major shareholders, and that these views are taken into account. The Board regularly discusses feedback from meetings and other liaison with major shareholders. If shareholders have concerns which have not been resolved by means of contact through other channels, or for which such channels are inappropriate, they are welcome to contact the Senior Independent Director.

E.2 Use of general meetings
The Directors are always available at the AGM to meet with shareholders, who are invited to raise questions and also to meet with the Board following the formal business of the meeting.

The Company has taken authority under the Companies Act 2006 to call general meetings of the Company, other than AGMs, on 14 days notice. The 14 day notice period will only be used where the flexibility is merited by the business of the meeting, and is thought to be in the best interests of shareholders as a whole. The Company offers the facility for shareholders to vote by electronic means. This facility is open to all shareholders and would be available if the Company were to call a meeting on 14 clear days’ notice.

board composition

The Board comprises seven Directors; two Executive Directors, a Non-Executive Chairman, Senior Independent Director and three further Non-Executive Directors.

The Board is responsible for the long-term success of the Group, overseeing the development and delivery of strategy and conduct of the business, to generate sustainable value for shareholders. Eight Board meetings are scheduled each year, alongside dedicated strategy days, and additional meetings are held as and when required.

The Company has established committees as follows:

Board Committees

Nomination Committee

The Nomination Committee is responsible for safeguarding the effectiveness of the Board by regularly reviewing its composition, and leading a rigorous and transparent process for the identification and appointment of new Directors. The Committee makes recommendations to the Board with regard to any changes.

The Nomination Committee comprises:

  • Chairman: Susan Searle
  • Members: Kevin Quinn
  • Secretary: Athene Blakeman

Other Non-executive and Executive Directors may be invited to attend meetings as appropriate.

Frequency of meetings: The Nomination Committee meets at least once per year and otherwise if required.

Responsibilities: The main responsibilities of the Nomination Committee are:

  • To review the composition of the Board, including its size, balance of skills, knowledge, experience and diversity.
  • To lead the process of the Board appointments and recommend the appointment of new Directors.
  • To review the re-appointment of Non-Executive Directors.
  • To make recommendations on the composition of the Board Committees.
  • To consider succession for Board members and senior management.

The Nomination Committee’s terms of reference are reviewed annually and a copy of these are available on the following link here.

Audit Committee

The Audit Committee has the primary responsibility of monitoring the quality of internal controls and ensuring that the financial performance of the Group is properly measured and reported on. Its remit includes reviewing reports from the Group’s management and external auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Group. The Committee and has unrestricted access to the Group’s external auditors.

The Audit Committee comprises:

  • Chairman: Kevin Quinn
  • Members: Susan Searle, Hugo Wahnish
  • Secretary: Athene Blakeman

Other Non-executive Directors, the Group Financial Controller, and the Company’s auditors are invited to attend meetings as appropriate.

Frequency of meetings: The Audit Committee is required to meet not less than twice in each financial year, and usually meets at least three times per year.

Responsibilities: The main responsibilities of the Audit Committee are:

  • To review accounting policies and the integrity and content of the financial statements.
  • To monitor disclosure controls and procedures and the Group’s internal controls.
  • To monitor the integrity of the financial statements of the Group, and to assist the Board in ensuring that the Annual Report and Accounts when taken as a whole, are fair, balanced and understandable.
  • To consider the adequacy and scope of the external audits.
  • To monitor the objectivity, independence and effectiveness of the external auditor, including the scope and expenditure on non-audit work.
  • To review and approve the statements to be included in the Annual Report on internal control and risk management.
  • To review and report on the significant issues considered in relation to the financial statements and how they are addressed.

The Audit Committee’s terms of reference are reviewed annually and a copy of these are available on the following link here.

Remuneration Committee

The key objectives of the Remuneration Committee are to develop the Company’s policy on executive remuneration and to fix the remuneration of the Executive Directors, Chairman of the Board and senior management.

The Remuneration Committee comprises:

  • Chairman: Susan Searle
  • Members: Peter George, Kevin Quinn
  • Secretary: Athene Blakeman

Other Non-executive and Executive Directors may be invited to attend meetings as appropriate.

Frequency of meetings: The Remuneration Committee meets at least twice per year and otherwise if required.

Responsibilities: The main responsibilities of the Remuneration Committee are:

  • To monitor and develop the Company’s remuneration policy.
  • To determine the remuneration of the Executive Directors.
  • To approve the service agreements of the Executive Directors.
  • To approve the remuneration of the senior managers.
  • To determine the fees of the Chairman.
  • To review the Company’s annual bonus proposals and to approve bonuses for the Executive Directors and senior managers.
  • To approve the design of and oversea awards under the Company’s share incentive plans.
  • To consider risks to the Group in light of the remuneration policies.

In exercising this role, the Remuneration Committee has regard to the recommendations put forward in the UK Corporate Governance Code.

The Remuneration Committee’s terms of reference are reviewed annually and a copy of these are available on the following link here.

Sustainability Committee

The key objectives of the Sustainability (3ESG) Committee are to ensure that the Company’s strategy and operations are carried out under the Company’s 3Es framework of care for the environment, people and animals whilst maintaining economic stability. It’s work aligns with major frameworks including the London Stock Exchange Guidance for Environmental, Social and Governance reporting and the UN Sustainable Development Goals.

The Sustainability Committee comprises:

  • Chairman: Kevin Quinn
  • Members: Ruth Layton, Ivonne Cantu, Athene Blakeman
  • Secretary: Athene Blakeman

Other Non-executive and Executive Directors may be invited to attend meetings as appropriate.

Frequency of meetings: The committee meets at least twice per year and otherwise if required.

Responsibilities:

The main responsibilities of the Sustainability Committee include:

  • To ensure that the Group’s strategy and operations are aligned with its social responsibilities to its people and those its operations affect, including with regard to labour standards, employee health and wellbeing, health and safety, community initiatives, and human rights and responsibilities.
  • To ensure that the Group’s strategy is aligned with its goal to reduce the impact of food production on the environment, and to oversee the impact of its operations on the environment, having regard to the maintenance of biodiversity, fresh water use, climate change, pollution risk, land-use change, and ozone depletion.
  • To oversee the impact of the Group’s operations on animals on land and in water, having regard to the health and welfare of animals under our care and those our operations impact, including food animals, wild animals, animals used in R&D and companion animals.
  • To oversee appropriate governance across the group, including in relation to anti-corruption and shareholder and tax transparency.

The Company’s values live in all that we do:

  • We are collaborative.
  • We are practical
  • We are courteous and have fun
  • We are brave and ambitious
  • We are focused

A copy of the Sustainability Committee’s terms of reference is available here.

Disclosure Committee

The key objective of the Disclosure Committee is to maintain procedures, systems and controls for the identification, treatment and disclosure of inside information and for complying with the obligations falling on the Company and its Directors and employees under MAR and the AIM Rules.

The Disclosure Committee comprises as permanent members:

  • Chairman: Mark Plampin
  • Members: Malcolm Pye, Kevin Quinn
  • Secretary: Athene Blakeman

In the absence of the permanent members of the Disclosure Committee, any two Directors, one of which is Mark Plampin or Malcolm Pye, may exercise the powers of the Disclosure Committee. Other Non-executive and Executive Directors may be invited to attend meetings as appropriate.

Frequency of meetings: The Disclosure Committee meets when required during the year.

Responsibilities: The main responsibilities of the Disclosure Committee include:

  • To identify inside information giving rise to the need for the Company to create new insider lists or amend its existing insider lists and alert the Company Secretary to the existence of such inside information.
  • To consult where necessary with the Company’s advisers regarding the identification and treatment of inside information.
  • To keep the adequacy of the Disclosure Procedures under review and monitor compliance with the same.
  • To keep a written record of any decision to delay disclosure in accordance with MAR, and to consider the requirements for announcements in the case of rumours or leaks, including the need to issue holding announcements.
  • To oversee and, if deemed fit, approve any proposed market soundings and compliance with applicable regulatory requirements.
  • To ensure that all regulatory announcements, shareholder circulars, prospectuses and other documents issued by the Company under any legal or regulatory requirements comply with applicable disclosure requirements.
  • To review the need to make market announcements of inside information.

A copy of the Disclosure Committee's Terms of Reference is available here

Areas of code not applicable to the Company

During the financial year 2017, the Company did not comply with the following aspects of the Code:

  • The Nomination Committee evaluates the performance of the Board as a whole and in doing so evaluates the performance of each of the Directors, but a formal evaluation of the performance of individual Directors is not undertaken.
  • The Company is not subject to the Listing Rules and is not required to make a longer term viability statement.
  • The bonus element of the Executive Directors’ remuneration is performance related and based on four key performance indicators. The Company believes that purely financial targets can lead to focus on delivery of short-term goals at the expense of long-term success, and the key performance indicators used to determine performance based remuneration involve an element of discretion, which is exercised critically by the Remuneration Committee. The Remuneration Committee intends to review these key performance indicators in the coming year to ensure that they remain relevant and appropriate for the Group in light of its growth.

Share dealing code

The Board intends to comply, and to procure compliance, with Rule 21 of the AIM Rules for Companies and the EU Market Abuse Regulation relating to dealings in the Company’s securities by the Directors and other applicable employees. The Company has therefore adopted a Share Dealing Code and has applied this, in the interests of best practice, to all of its employees. The Company takes all reasonable steps to ensure compliance by the Directors and its employees with this Code.