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Matters Reserved for the Board

ConvaTec Group PLC

SCHEDULE OF MATTERS RESERVED FOR THE BOARD

The following are the matters which are reserved for the board of the Company. In this schedule ‘Group’ means the Company and its subsidiary undertakings.

 

  1.    Leadership, strategy, budgets and management

    1.1      Providing leadership and setting the values and standards of the Company and the Group.

    1.2      Approving the Group’s business strategy and objectives, budget and forecasts and any material changes to them. The executive directors are responsible for the day-to-day management of the Group and developing the Group’s business strategy, objectives, budget and forecasts and, once approved by the board, ensuring their successful implementation.

    1.3      Monitoring the delivery of the Group’s business strategy and objectives and that necessary corrective action is taken.

    1.4      Overseeing the Group’s operations, ensuring competent and prudent management, sound planning, maintenance of sound management and internal control systems, adequate accounting and other records and compliance with statutory and regulatory obligations.

    1.5      Approving any material extension of the Group’s activities into new business or geographic areas and any decision to cease to operate all or any material part of the Group’s business or make any material changes to the business.


  2.    Structure and Capital

    2.1      Approving changes to the Company’s capital structure including any reduction of capital, share buy-backs except under employees’ share plans and issue of shares or other securities.

    2.2      Approving any issue of securities of a company in the Group to a person not a member of a Group, where such issue is material in the context of the Group.

    2.3      Approving any proposed alteration to the articles of association of the Company.

    2.4      Approving any changes to the Company’s listing or the markets on which its securities are traded.

    2.5      Approving any major restructuring or reorganisation of the Group including any acquisitions or disposals which are material relative to the size of the Group.

    2.6      Approving any major changes to the Group’s management or control structures.

    2.7      Approving any borrowings by the Group in excess of $2.5m (or its equivalent).

    2.8      Approving guarantees or indemnities given by the Group for amounts in excess of $10m (or its equivalent).

    2.9      Approving any injection of capital into a member of the Group, whether by way of loan or subscription to shares.


  3.    Financial reporting

    3.1      Approving the half-yearly report, interim management statements and all preliminary announcements of final results.

    3.2      Approving the annual report and accounts including the corporate governance statement and directors’ remuneration report.

    3.3      Approving the dividend policy, determination of any interim dividend and the recommendation (subject to the approval of shareholders in general meeting) of any final dividend to be paid by the Company or of any other distributions by the Company.

    3.4      Approving any material changes in accounting policies and practices.

    3.5      Approving any expenditure not in the Group’s approved business plan and beyond the delegated authority of the chief executive officer or the board of the relevant member of the Group.


  4.    Risk management and internal controls

    4.1      Ensuring the Group has effective systems of internal control and risk management in place, including approving the Group’s risk appetite and its procedures for the detection of fraud and the prevention of bribery.

    4.2      Undertaking an annual review of the Group’s systems of control and risk management.

    4.3      Making any major decision relating to the conduct (or settlement) of any material legal proceedings to which the Company or another member of the Group is a party where the potential liability or claim is in excess of $2.5m (or its equivalent).

    4.4      Adopting (or making a material amendment or variation to) the Group’s major policies on the conduct of business, environmental, health and safety, insurance and risk management, reasury (including, for the avoidance of doubt, interest rate and foreign exchange and financial derivatives) and employment law issues.

  5.    Contracts and expenditure

    5.1      Approving any major capital project, corporate action or investment by the Company or another member of the Group that will have, or is likely to have, a financial cost greater than $10m where included in annual budget approved by Board or greater than $5m where outside of such annual budget (or its equivalent). 6

    5.2      Approving any contract entered into by the Company or any member of the Group in the ordinary course of business which :

    (a)      is material strategically or by reason of size; and/or

    (b)      exposes the Group to unlimited legal liability.

    5.3      Approving any Class 1 or 2 transaction or related party transaction, as defined by the Listing Rules of the Financial Conduct Authority.

    5.4      Approving any takeover offer for another company subject to the City Code on Takeovers and Mergers.

    5.5      Making of a recommendation to accept any takeover or merger offer.

    5.6      Approving any material joint venture and material arrangements with customers or suppliers. 

    5.7      Save for transactions in the ordinary course of the Group’s business, approving any other acquisition or disposal (whether in a single transaction or series of transactions) not subject to the City Code on Takeovers and Mergers by any member of the Group of:

    (a)      any business (or any material part of any business);

    (b)      any shares in any company;

    (c)      any asset.

    5.8      Save for securitisation transactions in the ordinary course of the Group’s business, approving any other securitisation.


  6.    Communications

    6.1      Convening general meetings of the Company and ensuring a satisfactory dialogue with shareholders.

    6.2      Approving notices of general meetings of the Company and all related documents to be sent to shareholders.

    6.3      Approving any prospectuses, circulars to holders of the Company’s securities and recommendations in respect of any matters or notices which may be submitted to holders of the Company’s securities in accordance with statutory requirements or requirements of the Financial Conduct Authority or London Stock Exchange or the Company’s articles of association.

    6.4      Approving press releases concerning matters decided by the board.

    6.5      Receiving reports from the market disclosure committee on compliance with s continuing disclosure obligations.


  7.    Board membership and other appointments

    7.1      Changing the structure, size and composition of the board, following recommendations from the nomination committee.

    7.2      Ensuring adequate succession planning for the board and senior management of the Group so as to maintain an appropriate balance of skills and experience (taking account of  ecommendations from the nomination committee where appropriate).

    7.3      Making appointments to the board, following recommendations from the nomination committee.

    7.4      Selecting and appointing the chief executive officer and the chairman.

    7.5      Appointing the senior independent director, who will provide a sounding board for the chairman and serve as an intermediary for the other directors when necessary.

    7.6      Determining the membership and chairmanship and of board committees and approving any amendments thereto, following recommendations from the nomination committee.

    7.7      Making decisions about the continuation in office of a director at the end of his or her term of office, when a director should be re-elected by shareholders at the annual general meeting and otherwise as appropriate.

    7.8      Making decisions about the continuation in office of a director at any time, including suspending or terminating the service of an executive director as an employee, subject to the law and his or her service contract.

    7.9      Appointing and removing the company secretary.

    7.10    Making recommendations to shareholders about the appointment, reappointment or removal of the Group’s external auditors, following recommendations from the audit committee.

    7.11    Appointing directors of other companies in the Group.

    7.12    Appointing senior managers of the Company or the Group and overseeing the performance management of senior management.


  8.    Corporate governance matters

    8.1      Formally reviewing the performance of the board and its committees, individual directors and the Group’s overall corporate governance framework.

    8.2      Determining whether a director is independent.

    8.3      Considering the balance of interests between shareholders, employees, customers and the community.

    8.4      Receiving and considering the views of the Company’s shareholders.

    8.5      Authorising any conflict of interest where permitted by the Company’s articles of association.


  9.    Remuneration

    9.1      Determining and agreeing with the remuneration committee the policy for the remuneration of the chairman, executive directors, the company secretary and members of the executive committee/other senior executives.

    9.2      Introducing share incentive plans or making major changes to existing plans, to be put to shareholders for approval.

    9.3      Determining the remuneration of non-executive directors of the Company, subject to the articles of association of the Company.


  10.    Delegated authority

    10.1     Establishing and determining the terms of reference of board committees and approving any amendments thereto and receiving reports and recommendations from committees.

    10.2     Approving the limits of the authority to approve expenditure, investments and such other matters as the board may determine, delegated to the chief executive officer, finance director and other directors and senior managers.

    10.3     Approving the division of responsibilities between the chairman and the chief executive officer.

    10.4     Approving the statement of responsibilities of the senior independent director.

    10.5     Granting powers of attorney.


  11.     Other matters

    11.1     Approval and monitoring of the share dealing code.

    11.2     Approval and monitoring of the corporate social responsibility policy and report.

    11.3     Appointment of the Company’s principal financial and professional advisers.

    11.4     Prosecution, defence or settlement of litigation or other dispute resolution material to the interests and reputation of the Group.

    11.5     Approving policies on the making of political donations (subject to the Approving shareholders in general meeting) and charitable donations.

    11.6     Material interaction with regulators, including during any investigations.

    11.7     Approving the Group’s levels of insurance, including directors’ and officers’ liability insurance.

    11.8     Approving directors’ indemnities.

    11.9     Approving the introduction, or any material changes to the rules, or changes in the trustees, of any pension plan or scheme.

    11.10   Approving any other matters which are reserved for decision by the board in accordance with the requirements of applicable law, regulation or pursuant to accepted best practice or under the articles of association of the Company.

    11.11   Any decision or matter likely to have a material impact on the Company or the Group from any perspective, including financial, operational, strategic, regulatory or reputational.

    11.12   Review of this schedule of matters reserved for the board (at least annually).
Division of Responsibilities

ConvaTec Group PLC

DIVISION OF RESPONSIBILITIES BETWEEN CHAIRMAN AND CHIEF EXECUTIVE OFFICER

ROLE OF SENIOR INDEPENDENT DIRECTOR

(agreed by the board on 12 October 2016)

 

  1.       BACKGROUND

    1.1      This document sets out:

    (a)      the division of responsibilities between the roles of the Chairman and Chief Executive Officer in accordance with main principle A.2 and provision A.2.1 of the UK Corporate Governance Code; and

    (b)      the responsibilities of the Senior Independent Director. 

    1.2      Only the board may change any of these provisions.

    1.3      In this document ‘Group’ means the Company and its subsidiary undertakings.


  2.       ROLE OF CHAIRMAN

    2.1      To conduct the affairs of the group in accordance with the highest standard of integrity, probity and applicable principles and rules of the UKLA and the Company’s articles of association and the resolutions of the board from time to time and to also have regard to the UK Corporate Governance Code.

    2.2      The Chairman reports to the board and is responsible for the leadership and overall effectiveness of the board and setting the board’s agenda. The Chairman is not
    responsible for the day-to-day management of the Group.


  3.       THE CHAIRMAN’S RESPONSIBILITIES

    3.1      To run the board effectively by ensuring meetings are held with appropriate frequency and that the board agenda is forward-looking and reflects the important issues facing the Group, with an emphasis on strategic rather than routine issues.

    3.2      To ensure the frequency and depth of evaluation of the performance of the board and its committees is in compliance with best practice and appropriate action, if required, is taken on the results of any such evaluation and confirm that an individual’s performance continues to be effective and to demonstrate commitment to the role when they are proposed for re-election.

    3.3      To ensure appropriate delegation of authority from the board to executive management.

    3.4      To chair the nomination committee to lead the process for board appointments and identify and recommend candidates for the approval of the board to fill board vacancies and as additional board members to enhance the effectiveness, skills, knowledge, leadership and experience of the board (but the Chairman shall not act in relation to the appointment of a successor chairman).

    3.5      To ensure that clear and timely board and board committee succession plans are in place.

    3.6      To promote a culture of openness and debate, in particular by facilitating the effective contribution of non-executive directors, and ensuring constructive relations between executive and non-executive directors.

    3.7      To ensure the board receives accurate, clear and timely information to support sound decision-making and enable individual directors to fulfil their duties as directors.

    3.8      To manage the board in a way which allows enough time for discussion of issues, especially those that are complex or contentious.

    3.9      To ensure, with the support of the company secretary, compliance with boardapproved procedures, such as the schedule of matters reserved to the board and the terms of reference of each board committee, and to ensure that they are reviewed by the board at least annually.

    3.10     To oversee the company secretary’s responsibilities for ensuring good information flows within the board and its committees and between senior management and non-executive directors, as well as facilitating induction and assisting with personal development as required.

    3.11     To hold meetings with the non-executive directors without executive directors or senior management present.

    3.12     To ensure, with the support of the company secretary, that new directors are provided with a full, formal and tailored induction programme on joining the board.

    3.13     To ensure, with the support of the company secretary, that the development and ongoing training needs of individual directors and the board as a whole are reviewed at least annually and agreed.

    3.14     To ensure effective communication by the Group with its shareholders, including discussing governance, remuneration and strategy with major shareholders, and by chairing shareholder meetings.

    3.15     To ensure that shareholders’ views are communicated to the board as a whole so that all directors develop an understanding of their views.

    3.16     To arrange for all directors to attend the AGM and for the chairmen of the audit, remuneration and nomination committees to be available to answer questions at the AGM.

    3.17     With the assistance of the company secretary, to promote high standards of corporate governance, in compliance with the UK Corporate Governance Code.

    3.18     To ensure the effective implementation of the board’s decisions and strategy for the company.
     
    3.19     To be available for consultation with the Chief Executive on relevant issues raised by the Chief Executive and to support and advise him while respecting executive responsibility.

    3.20     To lead, with the Chief Executive, the Group’s relationships with governments, authorities, regulators and stakeholders.

    3.21     To secure the necessary authority from the board or Chief Executive when entering into any commitment on behalf of the Company that does not fall within the Chairman’s authority.


  4.        ROLE OF CHIEF EXECUTIVE OFFICER

    4.1      The Chief Executive Officer reports to the Chairman and to the board directly and is responsible for all executive management matters of the Group. All members of executive management report directly to the Chief Executive Officer.


  5.        THE CHIEF EXECUTIVE OFFICER’S RESPONSIBILITIES

    5.1       To manage the Group on a day-to-day basis within the authority delegated by the board.

    5.2      To conduct the affairs of the Group in accordance with the highest standard of integrity, probity and applicable principles and rules of the UKLA and the Company’s articles of association and the resolutions of the board in effect from time to time and to also have regard to the UK Corporate Governance Code.

    5.3      To develop and propose Group strategy, annual plans and commercial objectives to the board, having regard to the Company’s responsibilities to its shareholders and the Group’s responsibilities to its customers, employees and other stakeholders.

    5.4      To lead the executive team in the day-to-day management of the Group to pursue the Group’s commercial objectives and execute Group strategy, as approved by the board.

    5.5      To identify and execute strategic opportunities for the Group, whilst optimising as far as possible the use of the Group’s resources.

    5.6      To set an example and to communicate to the Group’s employees the expectations of the board in relation to the Group’s culture, value and behaviour.

    5.7      To manage the Group’s risk profile, including the health and safety performance of the business, in line with the extent of risk identified as acceptable by the board and to ensure that appropriate internal controls are in place.

    5.8      To keep the Chairman informed of all important matters.

    5.9      To review regularly the Group’s operational performance and strategic direction.

    5.10    To ensure, with the executive team, that board decisions are implemented effectively and that significant decisions made by the executive committee are communicated to the board.

    5.11    To ensure the executive team gives appropriate priority to providing accurate, clear and timely reports to the board.

    5.12    To maintain a dialogue with the Chairman and the board on important and strategic issues facing the Group.

    5.13    To ensure the Chairman is alerted to potential complex, contentious or sensitive issues affecting the Group.

    5.14    To make recommendations on remuneration policies, executive remuneration and terms of employment for senior employees.

    5.15    To advise and make recommendations in respect of board nominations and succession planning.

    5.16    To ensure, with the support of the company secretary, that the executive team complies with the terms on which matters are delegated by the board, and the terms of reference of board committees, and to ensure matters outside the authority of the executive team are escalated to the board.

    5.17    To ensure that the development needs of the executive directors and senior management are identified and met.

    5.18    To ensure that the Company and Group develop strategies and make plans for the succession and replacement of key personnel.

    5.19    To support the Chairman in order to ensure that appropriate governance standards are applied throughout the Group.

    5.20    To lead communications with shareholders and other stakeholders, ensuring that appropriate, timely and accurate information is disclosed to the market, with issues escalated promptly to the Market Disclosure Committee where appropriate.

    5.21    To develop Group policies for board approval and implement them, including the share dealing code and communications policy.

    5.22    To provide, with the Chairman, coherent leadership of the Company and the Group, including representing the Group to customers, suppliers, shareholders, financial institutions, employees, the media, the community and the public, and keeping the Chairman informed on all important matters.

  6.       SENIOR INDEPENDENT DIRECTOR’S RESPONSIBILITIES TO SHAREHOLDERS

    6.1      To be available to shareholders if they have concerns which contact through the normal channels of Chairman, Chief Executive Officer or executive directors has failed to resolve or for which such contact is inappropriate.

    6.2      To attend sufficient meetings with and listen to the views of major shareholders to help to develop a balanced understanding of the issues and concerns of major shareholders.


  7.       SENIOR INDEPENDENT DIRECTOR’S RESPONSIBILITIES TO THE CHAIRMAN AND OTHER DIRECTORS

    7.1      To chair the nomination committee when it is considering succession to the role of chairman of the board.

    7.2      To provide a sounding board for the Chairman and serve as an intermediary for the other directors when necessary.

    7.3      To meet other non-executive directors without the Chairman present at least once a year to appraise the Chairman’s performance, taking into account the views of executive directors, and on such other occasions as are deemed appropriate.

    7.4      To provide feedback to the board on the independent non-executive directors’ collective views on the following:

    (a)      the perceived quality of the relationship between the Chairman and the Chief Executive Officer;

    (b)      the degree of openness between the Chief Executive Officer and the board;

    (c)      the visibility of checks and balances within the executive directors’ team; and

    (d)      whether all questions asked by the non-executive directors have been adequately addressed.
Statement regarding outgoing Chief Executive Officer

15 October 2018

Section 430(2B) Companies Act 2006 Statement

The following information is provided in accordance with section 430(2B) of the Companies Act 2006.

On 12 October 2018, Mr Moraviec informed the Board of the Company that he wished to retire as Chief Executive Officer of ConvaTec Group Plc and formally resigned as a Director of the Company with effect from 14 October 2018. His employment shall end on 12 April 2019 (“Departure Date”). Remuneration arrangements with respect to his departure have been determined in line with Mr Moraviec’s service agreement and with the Company’s Remuneration Policy for Directors approved by shareholders at the AGM in May 2017. Further details will be included in the ConvaTec 2018 Annual Report and Accounts, to be published in the Spring of 2019.

Salary, pension and benefits

Mr Moraviec’s notice period of six months commenced on 12 October 2018 and no payment in lieu of notice shall be made. He shall continue to be paid up to the Departure Date his salary of £670,000 along with his payment in lieu of pension and other benefits in accordance with the terms of his service agreement. No payment for loss of office shall be made to Mr Moraviec.

Incentives

The shares held by Mr Moraviec received in connection with the IPO of the Company in 2016 are released from the terms of “lock-up” arrangements on 31 October 2018 in accordance with the terms of such arrangements.

Long-term incentive awards which were outstanding at the Departure Date shall be treated as follows:

  • The second tranche of Mr Moraviec’s 2016 “Transition Awards” granted under the LTIP shall vest in line with the original vesting date, whereas the third tranche shall be forfeited and lapse;
  • Mr Moraviec’s 2017 and 2018 performance share awards granted under the LTIP shall be forfeited and lapse;
  • Mr Moraviec’s 2018 share awards granted under the Deferred Bonus Plan shall be forfeited and lapse;
  • The Transition Awards shall continue to be subject to malus and clawback provisions;
  • The first and second tranche of the Transition Awards shall remain subject to a two-year holding period following the end of each vesting period.

Mr Moraviec shall be eligible for an annual bonus for 2018. This bonus shall be determined based on performance achieved, assessed when the 2018 full year results are known. Any amount of bonus shall be paid in cash only.

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