Corporate Governance

The Board

The Board is responsible for the governance of the Company, governance being the systems and procedures by which the Company is directed and controlled. A prescribed set of rules does not itself determine good governance or stewardship of a company and, in fulfilling their responsibilities, the Directors believe that they govern the Company in the best interests of the shareholders, whilst having due regard to the interests of other 'stakeholders' in the Group including, in particular, customers, employees and creditors.

The Chairman

The Chairman is responsible for making sure that the Board agenda concentrates on the key issues, both operational and financial, with regular reviews of the Company's strategy and its overall implementation. The Chairman should ensure that the Board receives accurate, timely and clear information and there should be good information flows within the Board and its committees as well as between the non-executive directors and senior management.

Non-executive directors

Non-executive directors should be independent to be able to provide appropriate oversight and to perform their role. The non-executive directors of FIH group plc (FIH):

  • have a formal appointment process and a structured induction process of not less than four days, to include meetings with key shareholders, site visits to all subsidiaries of the group, meetings with senior and middle management and meetings with the Company’s auditors, legal counsel and nominated advisor;
  • are required to commit an appropriate amount of time to the Company of approximately 10-15 days on an ongoing basis, including attendance at approximately five Board meetings per year, and on regular conference calls with the Board, and to be available to shareholders as required;
  • are appointed to the three Board committees with formal terms of reference;
  • satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible;
  • are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing and, where necessary, removing senior management and in succession planning;
  • uphold high standards of integrity and probity and support the chairperson and executive directors in instilling the appropriate culture, values and behaviours in the Boardroom and beyond;
  • will receive high-quality information sufficiently in advance of Board and committee meetings, which is accurate, clear, comprehensive, up-to-date and timely;
  • have access to the Chief Executive, the company secretary, the group financial controller and the Company's advisers;
  • are able to call upon independent professional advice at the Company's expense if they consider it necessary to discharge their responsibilities as directors;
  • are expected to receive ongoing training and development; and
  • will have their performance assessed on a regular basis (along with the executive director).

The three principal standing committees of the Board are the Audit, Nominations and Remuneration Committees.

The Audit Committee comprises Jeremy Brade, Robin Williams and Robert Johnston and is chaired by Jeremy Brade. The Company's Auditor is normally in attendance. The Audit Committee reviews the external audit activities, monitors compliance with statutory requirements for financial reporting and reviews the half year and annual financial statements before they are presented to the Board for approval. The Audit Committee also keeps under review the scope and results of the audit and its cost effectiveness and the independence and objectivity of the Auditor and the effectiveness of the Group's internal control systems.

The Nominations Committee comprises Robin Williams, Jeremy Brade and Robert Johnston and is chaired by Robin Williams. The Committee nominates candidates (both executive and non-executive) for the approval of the Board to fill vacancies or appoint additional persons to the Board. It also makes recommendations regarding the composition and balance of the Board.

The Remuneration Committee comprises Robert Johnston, Robin Williams and Jeremy Brade, and is chaired by Robert Johnston. Although not a member of the Committee, the Committee would normally consult the Chief Executive on proposals relating to the remuneration of members of the Group's senior management team, though never for matters related to his own remuneration package,. The Committee, on behalf of the Board, determines all elements of the remuneration packages of the executive Directors and would also approve any compensation arrangements resulting from the termination by the Company of a Director's service contract. The Committee also approves the grant of share options.

Principles and Approach

As an AIM listed company, FIH group plc (FIH) has adopted the Quoted Companies Alliance (QCA) Corporate Governance Code (the Code). The Code identifies ten corporate governance principles that AIM companies should follow. Details of how FIH follows these ten principles are set out below.

The strategy and business model of the Group are set out in the in the Strategic Review on pages 3 to 19 of the Group’s 2018 Annual Report.

The Group’s strategy and business model are developed by the Chief Executive and his team, and approved by the Board. The management team, led by the Chief Executive, is responsible for implementing the strategy and managing the business of the Group.

The Group’s vision is to continue with the review of potential acquisitions for a high quality business to strengthen the Group and further increase its appeal to investors and to invest in and develop its existing operating businesses to deliver long term, sustainable growth in shareholder value with particular focus on exploiting the outstanding business opportunities in the Falkland Islands.

The Group seeks to maintain a dialogue with its shareholders in order to communicate the Group’s strategy and results and to understand the needs and expectations of its shareholder base.

The Board is aware of the need to protect the interests of minority shareholders, and balancing those interests with those of any more substantial shareholders, including those interests of the Jerry Zucker Revocable Trust, a major shareholder holding nearly 29% of the issued share capital and voting rights, who is represented on the Board by the non-executive director, Robert Johnston.

Mr Johnston is an experienced non-executive director and investment professional and has served on the Boards of several quoted companies in both North America and in UK, including Fyffes PLC and Supremex, Inc. The continuation of Mr Johnston’s appointment is subject to his ongoing satisfactory performance and re-election by shareholders at every third AGM.

Beyond the Annual General Meeting, the Chief Executive and the Chairman offer to meet with all significant shareholders after the release of the half year and full year results. The Chief Executive and the Chairman are the primary points of contact for the shareholders and are available to answer queries over the phone or via email from shareholders throughout the year.

The Directors are aware of the impact that its business activities have on the communities in which the Group's businesses operate, particularly in the small remote community in the Falkland Islands, and also the importance of the ferry business to the population of Gosport.

The Group is aware of its corporate responsibilities to its stakeholders including staff, suppliers, customers and the wider society. The Group endeavours to take into account feedback received from stakeholders, by making amendments to its business plans and operations as appropriate.

The environmental impact of the Group's activities is carefully considered and the maintenance of high environmental standards is a key priority.

The Chief Executive regularly meets with the Gosport Ferry and Momart senior management and speaks with the Falkland Islands senior management to discuss the impact and the reputation of the Group’s activities within their local communities.

As an AIM listed company with a relatively small head office function, the Company is also reliant on its legal and professional advisors for updates to requirements of social responsibility legislation, such as the Social Media Policy recommended to be in place at all AIM listed companies.

The Board has overall responsibility for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss.

The Board has established Audit, Remuneration, and Nominations Committees a summary of which is set out above, and in this Corporate Governance section.

The Company receives regular feedback from its external auditors on the state of its internal controls and has established an internal audit function led by the Group Financial Controller, reporting to the Chairman and Chief Executive, to systematically review each area of its business to monitor the effectiveness of internal control.

The more significant risks to the Group’s operations and the management of these have been disclosed in some detail in the Chief Executive’s Strategic Review on pages 17 to 19 of the 2018 Annual Report.

The Group maintains appropriate insurance cover in respect of actions taken against the Directors, as well as against material loss or claims against the Group. The insurance cover in place is reviewed on a periodic basis.

The Board considers itself sufficiently independent. The QCA Code suggests that a board should have at least two independent non-executive directors. The Board have considered each non-executive directors’ length of service and interests in the share capital of the Group and consider that Mr Williams, Mr Brade and Mr Johnston are independent of the executive management and free from any undue extraneous influences which might otherwise affect their judgement. All board members are fully aware of their fiduciary duty under company law and consequently seek at all times to act in the best interests of the Company as a whole.

Whilst the Company is guided by the provisions of the Code in respect of the independence of directors, it gives regard to the overall effectiveness and independence of the contribution made by directors to the Board in considering their independence, and does not consider a director’s period of service in isolation to determine this independence. The Board acknowledge that Robert Johnston, who joined the Board on 13 June 2017, represents the Company’s largest shareholder, “The Article 6 Marital Trust, created under the First Amended and Restated Jerry Zucker Revocable Trust dated 4-2-07”, i.e. the “Zucker Trust”, which has a beneficial holding of 3,596,553 ordinary Shares, representing 29% of the Company’s issued share capital. The Board has considered Mr Johnston’s independence, given his representation of this shareholding and all board members have satisfied themselves that they consider Mr Johnston to be independent. This is as a consequence of (i) the fact that Mr Johnston has considerable international investment expertise, and (ii) that the shareholding of his employer in FIH represents only a small part of its wider portfolio, but nonetheless aligns him with the interests of FIH shareholders generally. It is also relevant that Mr Johnston has recently joined the Board of FIH and does not have long established relations with any of the Group’s management or businesses.

Directors who have been appointed to the Company have been chosen because of the skills and experience they offer and their personal qualities and capabilities. Full biographical details of the Directors are included under “the Board” section of the website which give an indication of their breadth of skills and experience.

The Board regularly reviews the composition of the Board to ensure that it has the necessary breadth and depth of skills to support the ongoing strategy of the Group.

The Chairman and the Company Secretary ensure each director’s skillset is kept up to date. During the course of the year, the Directors received updates from the Company Secretary in relation to corporate governance matters. Each Director takes responsibility for maintaining his skill set, which includes roles and experience with other boards and organisations as well as formal training and seminars.

Non-executive directors have a contractual right to external advice, at the Company's expense, when necessary.

The Board is aware that a board comprising four men and no women does not reflect current views of best practice. We continue to keep this issue under review.

The non-executive directors monitor the personal and corporate performance of the Chief Executive, including asking the Company’s senior management, auditors, and other advisors to report on his performance.

The Chief Executive participates in an annual performance related bonus arrangement. As soon as reasonably practicable after the announcement of the preliminary results or the publication of the accounts of the Company for each financial year, the Remuneration Committee considers the performance of the Company and the Chief Executive in that year against relevant targets and then, in its absolute discretion, determines the value of any bonus to be received by the Chief Executive in respect of that year. This bonus shall not exceed 100 per cent of his base salary. None of the non-executive directors receive any share options or any performance related bonuses.

The Board considers, via the Nominations Committee, the need for the periodic refreshing of its membership. The Chairman was appointed in September 2017, and a new non-executive director was appointed in June 2017.

Succession planning is considered by the Nominations Committee.

The Board intends to implement a process for evaluation of its own performance, its committees and individual directors, including the Chairman. The Board will create a set of evaluation criteria and intends to commence an annual evaluation process during the course of the current financial year.

FIH has no formal values statement but the businesses are still driven by a guiding set of principles or ways of behaving and doing business. The Group is focused on principled performance, and transparent reporting from the businesses to the Board, and from the Board to the Shareholders and advisors through regular meetings, presentations, the Annual Report and at the Annual General Meeting.

Senior management are encouraged to take personal responsibility for achieving the Group’s objectives and to act with openness, integrity and trust. Staff are encouraged to ask for help, admit to their mistakes and put things right. The Group does not operate a blame culture. The non-executive members of the Board are encouraged to have open dialogues with senior management around the Group about their opinions and concerns.

Senior management across the organisation are comfortable coming forward with legal, compliance, and ethics questions and concerns without fear of retaliation at the frequent subsidiary level Board meetings, which are all attended by the Chief Executive and the Group’s Financial Controller.

The Group recruits and screens employees based on integrity, as well as competence. Employees are well-treated when they leave or retire.

The Group has in place an anti-bribery policy and an anti-slavery policy which are both reviewed at appropriate intervals.

The Board has overall responsibility for the strategic direction and performance of the Group. The executive director has day-to-day responsibility for the operation of the Group’s businesses and implementing the strategy of the Board.

The Board meets at least five times per year. The Board is provided with detailed financial reports of the Group's financial performance on a regular monthly basis with more frequent updates if required. Detailed written reports are provided one week prior to the Company's Board meetings. Written recommendations from the executive director are delivered in a timely manner with supporting documentation, supplemented as required by reports from external professional advisers so that the Board can constructively challenge recommendations before making decisions.

The Company’s auditors report on the financial controls in detail at the Audit Committee meeting held in June.

The executive director and the Chairman are the primary points of contact for the shareholders and are available to answer queries over the phone or via email from shareholders throughout the year.

The Group has an Audit, Remuneration and Nomination committee. The Chairman is a member of the Audit committee and Remuneration committee and the chairman of the Nomination committee. Mr Brade is a member of the Remuneration committee and Nomination committee and is the chairman of the Audit committee. Mr Johnston is a member of the Audit committee and Nomination committee and is the chairman of the Remuneration committee. Formal terms of reference have been agreed for all Board Committees. The responsibilities of each of these have been summarised below:

Audit Committee

  • To meet at least twice a year and otherwise as required, with the external auditor in attendance
  • Appointment of external auditors
  • To agree the nature and scope of the audit with the external auditors
  • To review the effectiveness of Company's internal control framework,
  • To review effectiveness of the Company's risk management framework
  • To review the annual financial statements, and challenge where necessary, the actions and judgements of management in relation to these; and
  • To attend the Annual General Meeting to answer any shareholder queries

Remuneration Committee

  • To set the remuneration for the Board including basic pay, any bonus basis and awards and participation in share incentive schemes.
  • To agree the terms of employment of all Board members, including those on cessation of employment, ensuring all payments are fair to both the employee and the Company.
  • To continue to review the appropriateness of the remuneration policies, with reference to the conditions across the Group and up-to-date information in other companies.
  • To ensure that all requirements on the disclosure of remuneration are fulfilled
  • To meet at least twice a year and otherwise as required
  • To attend the Annual General Meeting to answer any shareholder questions on the Committee's activities

Nomination Committee

  • To review the size and composition of the Board
  • To consider succession planning for directors and other senior executives
  • To review the leadership needs of the organisation with a view to ensure the ability of all businesses to operate effectively in the marketplace
  • To keep up to date about commercial changes affecting the Company and the market in which it operates
  • To review annually the time required from non-executive directors.
  • To meet at least twice a year
  • To attend the Annual General Meeting to answer any shareholder questions on the Committee's activities

The Chief Executive and the Chairman offer to meet with all significant shareholders after the release of the half year and full year results, and encourage all shareholders to attend and ask questions of the Board as a whole at the Annual General Meeting.

The executive director and the Chairman are the primary points of contact for the shareholders and are available to answer queries over the phone or via email from shareholders throughout the year.

There is a strong focus on transparent reporting in the half year interim results and annual report, including the challenges faced by the Group both in the reporting periods and in the future.

The Group’s website is regularly updated. The Group’s financial reports and Annual Reports can be located under the “Financial Results and Reports” section of the website. Notices of the General Meetings of the Company can be located under the “AGM and General Meetings” section of the website.

The results of voting on all resolutions at future general meetings will be posted to the Group’s website, including any actions to be taken as a result of resolutions of which votes against have been received by a significant proportion of votes.

The Group intends to include a remuneration committee report and audit committee report in its next Annual Report.

Operating Companies