The policy of the Board is to manage the affairs of Oxford Biomedica to the highest standards of corporate governance and in accordance with the principles of good governance and code of best practice as set out in the Financial Reporting Council revised UK Corporate Governance Code in July 2018 (the “2018 UK Corporate Governance Code”).
A copy of the code is available from the Financial Reporting Council’s website at www.frc.org.uk.
The current governance framework comprises of the Board and the Senior Executive Team, and their respective sub-committees, are as set out below:
The Board is collectively responsible for promoting the success of the Group by directing and supervising the Group’s activities to create shareholder value. In doing so it ensures that there are robust corporate governance and risk management processes in place.
Following changes during 2019 the Board comprised six Non-Executive Directors and two Executive Directors.
The Board considers that it has been largely compliant with the 2018 UK Corporate Governance Code during 2019. The exception being that following the appointment of Robert Ghenchev in June 2019 the Board no longer met the requirement for half the Board to be comprised of independent Non-Executive Directors. The Board has addressed this issue by initiating a search for additional independent Non-Executive Directors.
The Board’s powers and responsibilities are set out in the Company’s articles of association and it has a formal schedule of matters reserved for the Board’s approval which include:
- the Group’s strategy;
- the financial statements and accounting policies;
- acquisitions, disposals and capital expenditure;
- financing and capital structure;
- corporate governance;
- internal control and risk management;
- Board membership and remuneration;
- appointment and remuneration of auditors.
The Board takes a close interest in Quality, Health, Safety & Environment and Risk Management. Each of these areas prepare reports for the Board ahead of each Board meeting.
The Chairman sets the agenda for the Board meeting in consultation with the Chief Executive Officer and the Company Secretary. Board papers covering the agenda and taking into account section 172 responsibilities items are circulated several days ahead of each meeting. Regular board papers cover Research, Quality, Process R&D, Client Programmes & Alliance, Management, Analytical Services, Clinical Development & Regulatory, Digital Strategy and Business Change Projects, Business Development, Finance, Investor Relations, HR, Operations and Health & Environment and Risk Management.
Factoring stakeholder engagement into Board decisions (section 172 of the Companies Act 2006)
By thoroughly understanding the Group’s key stakeholder groups, the Group can factor their needs and concerns into Boardroom discussions (further information on the Group’s stakeholders is on pages 22 to 23 in the 2019 Annual Report found on the Group’s website. The Board’s procedures have been updated to require a stakeholder impact analysis to be completed for all material decisions requiring its approval that could impact on one or more of its stakeholder groups.
The stakeholder impact analysis assists the Directors in performing their duties under s172 of the Companies Act 2006 and provides the Board with assurance that the potential impacts on its stakeholders are being carefully considered by management when developing plans for Board approval. The stakeholder impact analysis identifies:
- potential benefits and areas of concern for each stakeholder group;
- the procedures and plans being implemented to mitigate against any areas of concern; and
- who is responsible for ensuring the mitigation plans are being effectively implemented.
In accordance with s172 of the Companies Act 2006, the Group communicates and consults regularly with employees throughout the year. In addition, the Group has designated Non-Executive Director, Stuart Henderson, for gathering the views of the workforce and to oversee employee engagement.
There is clear division of responsibilities between the Chairman and the Chief Executive Officer.
Certain responsibilities are delegated to three board committees – the Audit, Nomination and Remuneration Committees. These committees operate under clearly defined terms of reference which are disclosed on the Group’s website under Board committees.
Each director is provided with an appropriate induction on appointment.
All Directors and the Board and its committees have access to advice and services pf the Company Secretary and also to external professional advisors as required. The appointment and removal of the Company Secretary is a matter for the Board as a whole to consider.
The Board meets regularly with the meeting dates agreed for each year in advance. In addition to the regular Board meetings, the Board (or an appointed sub-committee of the Board) also meets on a number of other occasions to consider other ad hoc matters such as the approval of financial statements and the interim financial results.
There is frequent contact between Executive and Non-Executive Directors, and each Director is supplied with financial and operational information sufficient for the Board to discharge their duties.
The Chairman holds meetings time to time with Non-Executive Directors without the Executive Directors in attendance.
Review of performance
In accordance with the articles of association, at each annual meeting any Director who was appointed after the last annual general meeting or has served for three years, and one third of the other Directors (or if their number is not a multiple of three the number nearest to but not exceeding one third) retire from office by rotation.
Retirement of Directors
In accordance with the articles of association, at each Annual General Meeting (AGM) any Director who was appointed after the last AGM or has served for three years, and one third of the other Directors (or if their number is not a multiple of three the number nearest to but not exceeding one third) retire from office by rotation. However, to ensure compliance with the 2018 UK Corporate Governance Code all Directors will now be subject to annual re-election.
Review of performance
Between December 2018 and February 2019 the Board had Deloitte LLP perform an external evaluation of the Board’s performance during 2018/2019. The review process comprised the completion of a questionnaire covering the various aspects of Board activities, interviews with each Director individually by the external evaluator and an active observation of a Board meeting. The independent report was received in first quarter of 2019 and the Board is implementing the appropriate changes based on the recommendations of the report. A review of the 2019 performance in relation to whether the appropriate changes have been successfully implemented via an externally generated questionnaire will occur during 2020.
The Group recognises the importance of diversity and is committed to encouraging equality and diversity among its workforce. Oxford Biomedica aims to create an inclusive working environment based on merit, fairness and respect to enable it to attract and retain the most talented people from all backgrounds and cultures. The Group is also working to achieve a diverse Board and, just as importantly, diverse management teams.
Appointments to the Board are based on merit taking into account suitability for the role, composition and balance of the Board to ensure that the Group has the right mix of skills, experience, independence, knowledge and consideration of the Group’s strategic objectives. The Nomination Committee has a formal and rigorous appointment process involving most if not all Board members and makes recommendations based on the capabilities of individual candidates, having due regard for the benefits of diversity with no restrictions on age, gender, religion, ethnic background whose competencies will enhance the Board.
The Group supports the principles of the Hampton-Alexander report on gender. At present, the Board is comprised of one woman and seven men and therefore does not meet the Hampton-Alexander recommendation that 33% of a FTSE 350 Board be women. Even though Oxford Biomedica plc was not a FTSE 350 company in 2019, the Group likes to adhere to the principles as such. The Board is, therefore, aware of this issue and is currently looking to appoint two new independent Non-Executive Director’s which, of course, will take diversity into consideration when appointing.
Oxford Biomedica believes that members of the Board and senior management should collectively possess a diverse range of skills, expertise and ethnic and societal backgrounds. In terms of the next level of management, the Senior Executive Team, excluding the Executive Directors, totalled eight, of which there are two female members. In 2019 in the gender pay gap report, (for the full report see our website Responsible business) the Group is progressing towards an equal male/female split at the Head of Department level and at the Senior Management level there are more females than males and as such the Group met the 33% requirement.
As a Group, its strategy will be to maintain and improve on these both at Board and the Senior Executive Team level, so that the objectives of the Hampton-Alexander Review will hopefully be met during 2020/2021. The Board is aware of the recommendations of the Parker Review on Ethnic Diversity. This is being taken into account in future succession planning activities.
Communication with shareholders
The Board recognises the importance of effective communication with shareholders and potential investors. The primary points of contact are the Chief Executive Officer and Chief Financial Officer but the Chairman and Senior Independent Director are also available for meetings with investors if required. Vulpes Life Sciences Fund (“VLSF”), the Group’s largest investor, is represented on the Board by Martin Diggle and Novo Holdings (10.1% shareholder), is represented on the Board by Robert Ghenchev ensuring a clear channel of communication with VLSF and Novo Holdings.
The Group has engaged with shareholders and potential investors through various channels below:
|Meetings with existing shareholders||John Dawson and Stuart Paynter met with major shareholders during 2019. Lorenzo Tallarigo has also met with major shareholders during 2019.|
|2020 Annual General Meeting||The 2020 AGM was held in Oxford on 23 June 2020. As a result of the COVID-19 restrictions shareholders were inot allowed to attend the AGM. The Board arranged for a listen-only conference call facility to allow the shareholders to dial in and follow procedings remotely. Shareholders could submit questions to the Board in advance of the AGM.|
|Meetings with potential investors||The CEO and CFO regularly make presentations and meet potential investors on a one-to-one basis at investor conferences in Europe and the USA. The Company also conducts investor roadshows periodically which provide further opportunities to meet potential investors.|
|Results announcements and presentations||The Group announced its 2019 full year performance and financial results in May 2020, and its 2019 half year interim results in September 2019 through RNS announcements accompanied by analyst conference calls which are accessible to all shareholders and recordings of which are made available on the Group’s website.|
|2019 Annual Report||The Group published its 2019 Annual Report in May 2020.|
|Website||The Group’s website http://www.oxb.com contains details of the Group’s activities as well as copies of regulatory announcements and press releases, copies of the Group’s financial statements, and terms of reference for the Board Committees. Investors and others can subscribe to an e-mail alert service which provides notifications of announcements.|
|Investor relations||The Group also endeavours to respond to all enquiries from shareholders and potential investors received through its enquiry inbox firstname.lastname@example.org|
|Social media||The Group also uses LinkedIn and Twitter to alert followers to relevant sector news which is relevant to the Group.|
The Board is responsible for determining the nature and extent of the risks it is willing to take in achieving the objectives of the Group and it reviews current key risks at every Board meeting. The Audit Committee monitors the conduct of the risk management processes within the Group whilst the SET is accountable for those processes, identifying the risks facing the Group and formulating risk mitigation plans. The active involvement of the Executive Directors in the management sub-committees allows them to monitor and assess significant business, operational, financial, compliance and other risks.
The Directors are responsible for Oxford Biomedica’s system of internal control and for reviewing its effectiveness. The system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss. The Audit Committee annually reviews the effectiveness of all significant aspects of internal control, including financial, operational and compliance controls and risk management. The review for 2019 was prepared by the Chief Financial Officer and the Group Financial Controller and was further reviewed at the October 2019 Audit Committee meeting, where it was determined that certain internal functions will be outsourced in 2020 and that the finance function will be further strengthened to reflect the growth and the complexity of the business. The main features of the internal control and risk management processes which apply to the Group’s financial reporting processes include clear separation of duties within the financial processes such as approval of invoices, purchase orders, payroll and disbursements, and an organisation of the finance function such that monthly management results and externally reported financial statements are subject to thorough review by the Group Financial Controller and Chief Financial Officer. The financial results are also reviewed by the Senior Executive Team and the Board.
Management committee (Senior Executive Team)
The Board retains overall responsibility for, and control of, the Group. Operational management is conducted by the Executive Directors who, together with James Miskin, Kyriacos Mitrophanous, Nick Page, Jason Slingsby, Helen Stephenson-Ellis, Natalie Walter and Dmitry Zamoryakhin form the Senior Executive Team (SET). The Chief Executive Officer, John Dawson, Chairs the SET meetings.
SET meets every week and its agenda covers the full range of activities of the Group, including financial performance, organisational and employment matters, risk management and Safety, Health & Environment.
There are three SET sub-committees covering the major business operational areas. These committees meet monthly and are attended by SET members and other relevant senior managers from the business. These sub-committees are:
- Product Development Committee (PDC) – covering the development of new gene and cell therapy products from initial concept through to clinical development;
- Technical Development Committee (TDC) – covering the development of new and improved assays and production and other processes, including cell and vector engineering; and
- Extended Operational Leadership Team (eOLT) – incorporates the Quality and Manufacturing Operations Committee and covers quality, operational and manufacturing matters.
Within their area of responsibility these committees cover objective and target setting, monitoring performance against targets, ensuring compliance with GxP and other relevant requirements, monitoring expenditure against budget and risk management.
There are two other important committees:
- Commercial Development Committee (CDC) – which covers the external opportunities to out-licence and in-licence technology or product candidates, and also to generate partnership opportunities for manufacturing and product development; and
- Risk Management Committee (RMC) – this committee comprises senior managers from all parts of the business. The committee meets at least quarterly to identify and assess risks facing the business and to propose risk mitigation and management actions.
Important matters from all of these committees are referred to the SET. As a consequence, there is a direct link between the determination of strategy by the Board and the execution of the Company’s policies by management and its employees.