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:
Further information regarding governance at Oxford Biomedica can be found in our 2020 Annual Report.
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.
The Group considers that it was largely in compliance with the terms of the Corporate Governance Code during 2020 but acknowledges that it did not comply in full. The Group has highlighted throughout the 2020 Annual Report areas where the Group has not been in compliance with the Corporate Governance Code. Specifically the Group acknowledges that it is not currently in compliance with the requirement in Provision 38; namely, that the pension contribution rates for Executive Directors should be aligned with those available for the workforce. The Executive Directors have received written notification that, from 31 December 2022, their pension contribution will be reduced to align with the wider workforce. Furthermore, the Group did not comply with the requirement in Provision 41 to engage with the workforce to explain how Executive pay aligns with the wider Company pay policy during 2020 due to the shareholder consultation process in relation to the introduction of the 2021 Remuneration Policy, but the Group intends to engage with employees on this matter during 2021.
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 also takes a close interest in Quality, Health, Safety and Environment and Risk Management. Each of these areas prepare reports for the Board ahead of each Board meeting.
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 2020 Annual Report available here. 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 s.172 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 s.172 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, as its representative for gathering the views of the workforce and to oversee employee engagement.
There is clear division of responsibilities between the Chair 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 available here.
Each director is provided with an appropriate induction on appointment.
All Directors and the Board and its Committees have access to advice and the services of 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.
The Chair holds meetings time to time with Non-Executive Directors, without the Executive Directors in attendance.
The Chair sets the agenda for the Board meetings in consultation with the Chief Executive Officer and the Company Secretary. Board papers, covering the agenda and taking into account items relating to the Board’s responsibilities under s.172 of the Companies Act 2006, are circulated several days ahead of each meeting. Regular Board papers cover Research; Quality; Process Research and Development; Client Programmes and Alliance Management; Analytical Services; Clinical Development and Regulatory; Digital Strategy and Business Change Projects; Business Development; Finance; Investor Relations; HR; Operations; and Safety, Health and Environment; and Risk Management.
Review of performance
In October 2020, the Company Secretary conducted an internal evaluation of the Board’s performance covering the period from January 2020 to the fourth quarter of 2020. The review process comprised the completion of an anonymous questionnaire covering the various aspects of Board activities and Committees. The resulting report was discussed at the Board meeting in January 2021 and the Board plans to implement appropriate changes based on the discussions of the report, including an increase in Directors training and effective ways of working together remotely. The Board intends to continue to comply with the Corporate Governance Code guidance that the evaluation should be externally facilitated at least every three years and expects to commission the next externally facilitated review in 2021.
Retirement of Directors
In accordance with the articles of association and to ensure compliance with the Corporate Governance Code all Directors are subject to annual re-election at each Annual General Meeting (AGM).
The Group recognises the importance of diversity and is committed to encouraging equality and diversity among its workforce. The Group 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 Review on gender balance. During 2020, the Board comprised one woman and eight men and, therefore, did not meet the Hampton-Alexander recommendation that 33% of the Board for FTSE350 companies consists of women by the end of 2020. The Board is aware of this issue and appointed Professor Kay Davies to the Board in March 2021. The Board has initiated a search to appoint a further female Independent Non-Executive Director to meet the Hampton-Alexander Review recommendations.
The Board currently comprises two women and six men equaling 25% and the Board has committed to comprise one third women by the AGM in 2022. The Group 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, during 2020, the Senior Executive Team (“SET”), excluding the Executive Directors, totaled seven, of which there were two female members. In the gender pay gap report for 2020 (available here) the Group was progressing towards an equal male/female split at the Head of Department level, and at the Senior Management level, there were more females than males, thereby meeting the Hampton-Alexander Review’s recommendation that 33% of senior leadership roles (defined as the SET and their direct reports) be held by women at the end of 2020. Part of the Group’s strategy will be to maintain and improve on the fulfilment of these targets, so that the objectives of the Hampton-Alexander Review will be met in full during 2021/2022.
The Board is aware of the recommendations of the Parker Review on Ethnic Diversity. The Parker Review set a target for companies to have at least one Board member from an ethnic minority background by 2021. Whilst none of the serving Board members identifies as belonging to an ethnic minority, the Board has a clear intention to continue to strengthen and diversify the Board. As part of its succession planning activities, the Nomination Committee has already initiated a search with external search consultants, Spencer Stuart, for an additional Independent Non-Executive Director. The Nomination Committee has requested that the search target female and ethnically diverse candidates whilst taking into account suitability for the role to ensure that the Group has the right mix of skills, experience, independence and knowledge for the Group’s strategic objectives.
In addition, the Group has in place an internal management development programme which provides a structured training programme for the purposes of identifying and progressing talent across all areas of the Group to senior management level and beyond. For more details of the Group’s Environmental Social and Governance (“ESG”) strategy and objectives for 2021, please see pages 51 to 66 in the 2020 Annual Report.
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 Chair, Senior Independent Director and Chair of the Remuneration Committee are also available for meetings with investors, if required. For more details of the Group’s shareholder communications, please see page 84 of the 2020 Annual Report.
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 subcommittees allows them to monitor and assess significant business, operational, financial, compliance and other risks.
The Directors are responsible for the Group’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.
Senior Executive Team
The Board retains overall responsibility for, and control of, the Group. The Chief Executive Officer is John Dawson and the Chief Financial Officer is Stuart Paynter. Operational management is conducted by the Executive Directors who, together with Dr. James Miskin, Dr. Kyriacos Mitrophanous, Nick Page, Dr. Jason Slingsby, Helen Stephenson-Ellis and Natalie Walter form the SET. The SET meets every week, has daily update meetings and has an extended SET meeting held every two weeks, with the agenda covering the full range of activities of the Group, including financial performance, organisational and employment matters, risk management and Safety, Health and Environment.
There are three SET sub-committees covering the major business operational areas. These sub-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.