Summary of principal activities
- Appointment of Nick Wilkinson as Chief Executive Officer in February 2018
- Appointment of Rachel Osborne as a Non-Executive Director in April 2018
- Appointment of Laura Carr as Chief Financial Officer, to start in November 2018
- Board now 37% female (44% including the Company Secretary)
This report provides details of the role of the Nominations Committee and the work it has undertaken during the year.
The purpose of the Committee is to assist the Board by keeping the composition of the Board under review and conducting a rigorous and transparent process against objective criteria, and with due regard for the benefits of diversity of the Board, when new appointments to the Board are made. The full terms of reference for the Committee can be found on the Company's website, www.dunelm.com.
While all Board appointment processes and succession discussions are led by the Nominations Committee, these are viewed as important whole-Board topics and no appointment has been or will be made to the Board without agreement of all Directors.
The following Directors served on the Committee during the year:
|Andy Harrison (Chair)||1 September 2014||To date|
|Will Adderley||17 February 2011||To date|
|Liz Doherty||1 May 2013||To date|
|William Reeve||1 July 2015||To date|
|Peter Ruis||10 September 2015||To date|
|Marion Sears||18 January 2005||To date|
|Rachel Osborne||1 April 2018||28 August 2018|
|Simon Emeny||25 June 2007||21 November 2017|
There were seven Committee meetings held in the year and members' attendance was as shown in the table below. The Company Secretary acts as secretary to the Committee.
No Director attended that part of a meeting during which his or her own position was discussed.
|Andy Harrison (Chair)||7/7|
Committee Activities in 2017-18
Board changes in 2017–18
We have had a number of significant Board changes during the year, and the Nominations Committee has led the process throughout.
We started a search process for a new Chief Executive Officer in August 2017, after John Browett stepped down from the Board, and we were pleased to announce the appointment of Nick Wilkinson in December. Nick has extensive retail experience across a number of consumer brands, most recently as Chief Executive of Evans Cycles, the UK's leading cycling specialist. Previous roles included Chief Executive of Maxeda DIY, a Belgian and Dutch home improvement retailer; and MD of Currys, part of Dixons Retail. Importantly, Nick is also a good cultural fit with the Board and shares the Dunelm values. We were pleased that Nick was able to start with us in February.
Shortly after Nick's appointment, our Chief Financial Officer, Keith Down, advised the Board that he wished to step down in the summer for personal reasons, to take up a role closer to his family home. In May, we announced the appointment of Laura Carr, who joins us in November from Compass Group, the FTSE 30 multinational contract food, hospitality and support services company, where she was Group Financial Controller. Roles prior to this include CFO of Indigo Books & Music, Canadian listed company, and senior finance roles with Japan Tobacco International and PriceWaterhouseCoopers We are confident that Laura will work well with the Board and management team.
Finally, we appointed Rachel Osborne as a Non-Executive Director, to replace Simon Emeny, who retired in November 2017 as planned. Whilst we were able to finalise Rachel's appointment in November, she was unable to join us until April 2018 due to her other commitments. Rachel was until recently Chief Financial Officer of Domino's Pizza Group plc, and is an experienced finance and strategy specialist. She is a chartered accountant, and has held a number of finance director and strategic planning roles with large consumer and retail businesses, including Vodafone, John Lewis, Sodexo, Kingfisher and Pepsi Co. Rachel resigned from the Board on 28 August 2018, to take up an executive role with a competitor.
We adopted a similar search process for all three directors: the Nominations Committee drew up a detailed role and person specification. An independent external search consultant (MWM Consulting) was appointed to conduct the process, and as is usual, we asked for an equal number of male and female candidates to feature on the "long list". Candidates met initially with the Chairman and at least one other Board member, and finalists met with other Board members. Extensive references were taken, and both Nick and Laura completed psychometric tests. Whilst the process was led by the Committee, who made the final recommendation, any Board appointment is regarded as a "whole Board" issue, no appointment is made without unanimous Board support.
Board Succession Planning
For a number of years we have had a formal, long range plan for how Board membership should develop. As usual, we aim to balance continuity with regular refreshment of skill and experience and the corporate governance guidance on Chairman and Non-Executive Director tenure.
As part of our Board evaluation process, we review the balance of skills on the Board as a whole, taking account of the future needs of the business, and the knowledge, experience, length of service and performance of the Directors. In accordance with our policy, we also had regard to the requirement to achieve a diversity of characters, backgrounds and experiences amongst Board members.
We also have a short term / contingency plan, which we have put into operation during the year. During the five months between the resignation of our former Chief Executive Officer and our new Chief Executive Officer joining us, I provided interim leadership, supported by Will Adderley, the Deputy Chairman, and Keith Down, the CFO. We also have an experienced and capable Executive Board, who were able to continue to run the business in the absence of a permanent CEO. During the period between Keith Down stepping down as CFO and Laura Carr joining us, members of the CFO's management team were able to ensure that the Finance function continued to operate effectively. We were also fortunate that David Stead, our former CFO, was able to provide interim support on a part time basis.
The Board held a scheduled external evaluation in 2016, and a follow up by the same provider in 2017. In 2018 I led an internal evaluation, based on a discussion with each Board member focused on a number of relevant topics, followed by a Board discussion of the output from this.
The results of the evaluation are described in the Corporate Governance report.
Culture and values
Dunelm was founded by the Adderley family, and Will Adderley, our Deputy Chairman, has a particular interest and accountability for ensuring that the Dunelm culture is preserved. Will formulated the Business Principles which describe the Dunelm culture, these form part of induction, appraisal and colleague communications. A key theme running through our principles is to "do the right thing", whether this relates to our decisions, or how we deal with customers, colleagues, suppliers, the community, investors, and regulators. Our approach is also reflected in our Code of Business Conduct, our Anti-bribery policy, our Ethical Policy and our Tax Strategy.
In April, the Board reviewed how it sets and monitors our business culture. Following the guidance issued by the Financial Reporting Council in 2016, we looked at how we have defined the Group's purpose, vision and values, and the business principles referred to above. We then considered what "culture indicator" KPIs are available to give assurance that the systems that management have in place to embed these are working effectively. The Board has oversight through regular agenda items, such as our risk management procedures, regular presentations from the People Director, and meetings with senior management and visits to stores and other company operations. We also review a number of "culture" KPIs regularly (customer satisfaction, employee engagement, regulatory breaches for example). To provide a more specific focus, we decided to draw up a "culture scorecard" bringing all of our culture KPIs together, which is reviewed alongside our risk register twice a year.
Diversity and gender pay
In 2011 we set out the Board's policy on diversity which we believe remains appropriate for Dunelm. It can be summarised as follows:
- Our overriding concern is to ensure the Board comprises outstanding individuals who can lead the Group, and we believe the Group's best interests are served by ensuring that these individuals represent a range of skills, experiences, backgrounds and perspectives, including gender. Naturally it is our policy is that the Board should always be of mixed gender
- We support the objective of promoting diversity on our Board and throughout the Group. Quotas are a blunt instrument but they do bring focus, as well as the risk of compromised decisions on Board membership, quality and size, particularly with a small and collegiate Board
- We shall continue to ensure that specific effort is made to bring forward female candidates for Board appointments
- We will monitor the Group's approach to people development to ensure that it continues to enable talented individuals, regardless of gender and background, to enjoy career progression within Dunelm
Details of the gender balance within the Group are set out in the Sustainability report. The Committee is pleased that there is a good level of gender diversity at Board, Executive Board and senior management level (37%, 50% and 33% respectively).
In the financial year we made our first gender pay disclosures, these are described more fully in the Remuneration Report. This year we will also be collecting data about ethnic diversity within our business and considering whether there is more action needed in this area.
The Board as a whole understands the importance of engaging our colleagues in order to deliver our strategy. The Board has oversight of all matters relating to our People, including diversity and the gender pay gap, and we receive presentations from our People Director twice a year. In addition, Marion Sears is our "Designated NED" for colleague matters, and in November the Board will receive its first presentation from the National Colleague Council.
Tenure and Re-election of Directors
The tenure of the Non-Executive Directors is set out below.
|Next renewal||Additional Board role|
|Andy Harrison||September 2014||4||September 2020||Chairman|
|Marion Sears||July 2004||14||July 2019|
|Liz Doherty||May 2013||5||May 2019||SID, Audit and Risk|
|William Reeve||July 2015||3||July 2021||Remuneration|
|Peter Ruis||September 2015||3||September 2021|
Marion Sears has served 14 years on the Board. Marion is now considered by the Board to be 'non-independent' in view of her tenure.
In accordance with the UK Corporate Governance Code, all Directors, will seek re-election at the 2018 AGM, and as now required by the Listing Rules, the Non-Executives will be subject to an additional vote by shareholders independent of the Adderley family.
Executives below Board
The Committee has for some years had both formal and informal oversight of the Executive team below Board. Dunelm Board members have regular contact with these Executives, both through formal Board presentations, attendance of the Executive Board at the annual Strategy Days, and in regular store visits, where a Non-Executive
Director meets a member of the Executive Board on a less formal basis. The Board receives an annual Talent Management presentation from the People Director which provides an assessment of performance of the Executive Board and other members of the Leadership Team, together with succession planning.
Although these activities are not formally conducted as part of the work of the Nominations Committee, we see this as a useful way of preserving our culture and an important aspect of our oversight of the Executive team development and succession process.
Approved by the Board on 12 September 2018.
Chair of the Nominations Committee
12 September 2018