Governance and Remuneration: Nomination Committee Report
Dr Edwin Hertzog
Chairman of the Nomination Committee

Dear Shareholder,

As Chairman of the Nomination Committee (the “Committee”), it is my pleasure to report on the Committee’s activities for the year ended 31 March 2018. The report provides an overview of the key focus areas considered during the year, together with the Committee’s priorities for the 2019 financial year. The Committee is governed by formal terms of reference, available in the governance section of the Company’s website, and summarised in the Corporate Governance Statement.

COMMITTEE COMPOSITION AND MEETING ATTENDANCE

The current composition of the Committee meets the requirements of the UK Corporate Governance Code, with the majority of members being independent non-executive directors. Biographical details of all Committee members are included on the Board of Directors page. The composition and attendance of Committee meetings during the period under review are set out in Figure 1 below. As announced on 29 March 2018, Prof Dr Robert Leu will retire as a director of the Company, and consequently as a member of the Committee, at the conclusion of the Company’s annual general meeting on 25 July 2018 (“2018 AGM”).

The Company Secretary is secretary to the Committee and attends all meetings. The Company Secretary is available to assist the members of the Committee, as required, ensuring that timely and accurate information is distributed accordingly. Other attendees of Committee meetings may, from time to time and upon invitation by the Committee, include the CEO, the Chief Human Resources Officer and the Talent Management General Manager.

FIGURE 1: COMMITTEE COMPOSITION AND MEETING ATTENDANCE

1 The composition of the Committee is shown as at 31 March 2018. The majority of members are independent non-executive directors. The Committee Chairman, Dr Hertzog, is the Chairman of the Board.
2 The attendance reflects the number of scheduled meetings held during the financial year. Two additional ad hoc meetings were held during the financial year to deal with urgent matters; the majority of directors made themselves available at short notice for these meetings. No Committee meetings were held between the Company’s financial year-end and the Last Practicable Date.
3 Mr Durand was unable to attend one Committee meeting owing to a prior commitment; Mr Pieter Uys, alternate director to Mr Durand, attended the meeting in his place.
4 Prof Dr Leu will retire as a director of the Company, and consequently as a member of the Committee, at the conclusion of the Company’s 2018 AGM.

KEY AREAS OF ACTIVITY

Succession planning

During the year, the Committee primarily focused on the detailed planning for identifying a successor for Mr Danie Meintjes, the Group CEO, following the announcement made by the Company on 25 July 2017 regarding his planned retirement. The identification of potential candidates followed a rigorous global selection process against an agreed set of criteria, and included the appointment of Lomond Consulting, a senior management and board-level search firm. Lomond Consulting adheres to the Executive Search Firms’ Voluntary Code of Conduct and is independent of the Company.

The Committee and the Board unanimously supported the selection of Dr Ronnie van der Merwe, the current Group Chief Clinical Officer, to succeed Mr Meintjes as CEO, as announced on 27 November 2017. This decision reflected Dr Van der Merwe’s extensive knowledge of the Company’s international operations and strong track record of driving enhancement, especially in the quality and effectiveness of the Company’s clinical services. As announced on 29 March 2018, Dr Van der Merwe’s appointment as CEO and a director of the Company will take effect from 1 June 2018. Dr Van der Merwe will also become a member of the Clinical Performance and Sustainability Committee and Investment Committee with effect from 1 June 2018.

The Committee undertook a detailed review of the succession plans for other members of the Board and senior management team and for the executive committees of each of the operating divisions, taking into account the Board Diversity Policy mentioned below.

Board and committee composition

Following a review of the Board’s composition and structure, the Committee continued to lead the search for two additional independent non-executive directors to further strengthen its Board and its Committees, to support the pursuit of the Company’s strategy in the UAE and enhance the clinical expertise on the Board. During the financial year, following an extensive and rigorous process, the Board approved the Committee’s recommendations regarding the appointment of two additional independent non-executive directors: Dr Felicity Harvey and Dr Muhadditha Al Hashimi.

The selection process that led to the appointment of Dr Harvey as an independent non-executive director of the Company and a member of the Clinical Performance and Sustainability Committee from 3 October 2017 was conducted with the assistance of Lomond Consulting. Dr Harvey brings an in-depth understanding of the healthcare sector in the UK, as well as over 30 years of clinical expertise and experience. Dr Al Hashimi, appointed as an independent non-executive director of the Company from 1 November 2017, was identified through the Company’s networks in the UAE. Dr Al Hashimi adds her extensive experience and knowledge of the healthcare and higher education sectors in the UAE, and strategic and tactical expertise in operations and fiscal management.

In early 2018, the Committee conducted its annual review of the structure, size, diversity and composition of the Board and its Committees. As part of this process, the Committee considered a skills matrix for the Board and the outcome of the Board evaluation. The areas reviewed were the Board members’ experience, independence, tenure, geographical knowledge and knowledge of the Company as whole. As a result of these reviews, Dr Harvey was appointed as a Chair of the Clinical Performance and Sustainability Committee; and Dr Al Hashimi was appointed as a member of the Clinical Performance and Sustainability Committee, with effect from 1 April 2018.

As announced on 29 March 2018, Prof Dr Leu and Ms Mandela notified the Company that they will retire as directors of the Company at the 2018 AGM. Subsequently, the Committee has commenced a search for an independent non-executive director with knowledge of the Swiss healthcare and political landscape.

Lastly, the Committee considered the appointment of Mr Meintjes as a non-executive director after his retirement as CEO and executive director of the Company. After careful consideration, taking into account the wealth of knowledge and experience he has gained in different capacities over 30 years of service to the Group, the Committee concluded his appointment would be in the long-term interests of the Group, its shareholders and other stakeholders and recommended his continued involvement in the Company as an executive director until 31 July 2018 and as a non-executive director from 1 August 2018. The Board considered and agreed with the Committee’s recommendation and agreed to recommend Mr Meintjes’ re-election at the AGM.

Diversity

During the year, the Committee reviewed the Board Diversity Policy, which applies to the Board, the Company’s Executive Committee and their direct reports, as well as the divisional executive management committees of the Company’s operating divisions. The Committee also received feedback from the operating divisions on progress regarding their diversity and inclusion goals and plans for continued improvement in the 2019 financial year.

Diversity policy

The Board believes that diversity is not limited to gender, and that a diverse Board membership will include and benefit from the differences in each director’s skills; geographical, educational and professional backgrounds; industry experience; age; race; gender; and other characteristics. These factors will be considered in determining the optimum composition of the Board and, when possible, will be balanced appropriately. When recruiting new directors, consideration will also be given to ensuring that the size of the Board does not grow unnecessarily, and that all appointments are made on justifiable merit. The Committee will continue to take cognisance of relevant prescribed guidelines, and the performance of peer companies in fulfilling their role regarding diversity.

The Board supports the principles of boardroom diversity in general, and takes boardroom skills diversity seriously. It actively considers these matters regularly at Board and Committee meetings. The Board believes that maintaining an appropriate balance of skills, knowledge, experience and backgrounds is imperative for the long-term success of the Group, and allows the Board to perform its role effectively.

The Board’s Diversity Policy contains four objectives to support the Board’s commitment to diversity. These objectives and progress towards their achievement are set out below:

Progress against objectives

Assessment of independence of non-executive directors

The Committee and the Board are satisfied that the commitments of the Chairman and other non-executive directors, as shown in their biographies on the Board of Directors page, do not conflict with their duties and commitments as directors of the Company. Any conflicts identified are considered and, as appropriate, authorised by the Board. The Company annually reviews the directors’ conflicts of interests.

Corporate Governance Code developments

The Committee reviewed and considered the Financial Reporting Council’s proposed changes to the UK Corporate Governance Code in preparation for their potential implementation, insofar as they related to:

  • establishing the preferred method for gathering the views of the workforce;
  • reporting on how the Company has engaged with its workforce, suppliers and other stakeholders and how the interests of their stakeholders have influenced the Board’s decision-making, pursuant to section 172 of the Companies Act 2006;
  • the proposed changes to the independence criteria for directors, their tenure and the requirement for the Chairman of the Company to be independent at all times;
  • the continued emphasis on the promotion of diversity through the design of appointment and succession planning practices; and
  • the expansion of the Committee’s remit to include the oversight of the development of a diverse pipeline for succession planning for the Board and senior management positions and related reporting obligations for the Committee.

The Committee also took note of the recommendations of the Parker Report on ethnic diversity and the Hampton Alexander Report on gender diversity and adjusted its terms of reference and Board Diversity Policy accordingly.

The Committee undertakes an annual review of its terms of reference.

Committee evaluation

An external evaluation of the Committee’s performance was conducted during the year by Lintstock, a specialist consultancy which undertakes no other business for the Company. The results of evaluation were considered by the Committee and the Board. No significant issues were identified that require improvement, thus the Committee and the Board concluded that the Committee operated effectively during the year.

Evaluation of the composition, structure and functioning of the Board

With internal evaluations carried out in the previous two years, an external evaluation of the Board and its committees was conducted this year in keeping with the guidance provided under the UK Corporate Governance Code, facilitated by Lintstock. The evaluation focused on the Board composition, including:

  • diversity;
  • the Board’s role in setting strategy;
  • an understanding of the risks facing the Group;
  • the effectiveness of the Group’s key performance indicators;
  • succession planning; and
  • the effectiveness of the Board and its committees.

The Board regards the evaluation process as an important way to monitor the progress made over the years. Further detail on the Board effectiveness evaluation is included in the Corporate Governance Statement.

When considering the election or re-election of directors, the Committee pays due regard to the outcome of the Board evaluation process, and considers other factors such as the individual director’s knowledge, skills and experience, the independent judgement they bring to Board deliberations, and their other commitments.

Dr Harvey and Dr Al Hashimi will stand for election at the Company’s 2018 AGM, being the first annual general meeting since their appointment as directors by the Board. In accordance with the recommendation for FTSE350 companies set out in the UK Corporate Governance Code, all other existing directors (other than Prof Dr Leu and Ms Mandela) will stand for annual re-election at the meeting. The biographical details of the directors can be found on the Board of Directors page.

The terms and conditions of appointment of the non-executive directors, which include their expected time commitment, are available for inspection at the Company’s registered office.

PRIORITIES FOR THE COMMITTEE IN 2018/19

For the coming financial year, the Committee will, among other matters, focus on the following:

  • the continued development of succession plans and the talent pipeline;
  • the continuous review of the composition of the Board and its committees in respect of skills, diversity, tenure and commitments;
  • the development of the Company’s diversity strategy; and
  • the monitoring the new UK corporate governance developments.

Signed on behalf of the Nomination Committee.

Dr Edwin Hertzog
Chairman of the Nomination Committee

23 May 2018