Annual Report and Accounts 2016


John Lewis Partnership plc


77


Code Provision B.7.1 states that all Directors of FTSE 350 companies should be subject to annual election by shareholders and all other Directors should be subject to election by shareholders at their first annual general meeting, followed by re-election at intervals of no more than three years.


The composition of our Audit


and Risk Committee is different Full Audit and Risk Committee report


Page 82 >


During the year, the Partnership Board’s Audit and Risk Committee comprised at least two Non-Executive Directors, at least two Elected Directors and the Partners’ Counsellor. This composition enables assurance and critical analysis of the business systems, operations and financial probity to be conducted with appropriate objective and independent scrutiny, while also mindful of Partners’ interests.


Since the year-end, membership of the Committee has been further enhanced by the appointment on 2 March 2016 of two new external independent members with recent and relevant financial experience (see page 87).


This composition differs from Code Provision C.3.1, which states that the Board should establish an Audit Committee of at least three Independent Non-Executive Directors. This provision supports the Code principle that the Committee should be independent of executive management.


Our Nominations


Committee is different Full Chairman’s Nominations Committee report Page 90 >


Under the Constitution, the Chairman is responsible for the appointment of the Executive Directors and co-ordinates their responsibilities. He therefore chairs the Chairman’s Nominations Committee. The Committee also comprises two Non-Executive Directors and two Elected Directors. This provides a broad mix of members, including those mindful of Partners’ interests as co-owners of the business.


In accordance with the Constitution, the Chairman is the Chairman of the Partnership Board, by virtue of his appointment as Chairman of the Trust Company. He nominates his successor in accordance with the Articles of Association of the Trust Company.


The Chairman’s Nominations Committee oversees the process of nominating and appointing the Chairman. The Committee will, following consultation with the Chairman, inform the Board concerning the plans and the process for the Chairman’s succession.


The Chairman’s Nominations Committee oversees the process for Partnership Board appointments and makes recommendations to the Partnership Board. The Chairman’s Nominations Committee takes no part in the appointment of the Elected Directors, which is overseen by the Partnership Council.


These arrangements differ from Code Provision B.2.1, which states that a Company’s Nominations Committee be chaired by an independent Non-Executive Director, comprise a majority of independent Non- Executive Directors and lead the process for board appointments. This provision supports the Code principle that the process for nominating people to the Board is subject to independent review and not dominated by the executive.


Our Remuneration


Committee is different Full Remuneration Committee report


Page 94 >


The Remuneration Committee comprises two, rather than three, independent Non-Executive Directors and two Elected Directors. This provides a broad mix of members who are independent of executive management and mindful of Partners’ interests.


This differs from Code Provision D.2.1, which states that the board should establish a remuneration committee of at least three independent Non-Executive Directors. This provision supports the Code principle that the committee should be independent of executive management.


The Remuneration Committee does not have delegated responsibility for setting the Chairman’s remuneration, but instead recommends to the Partnership Board the remuneration package for the Chairman.


Under the terms of Rule 63 of the Constitution, the highest paid Partner’s pay is subject to a cap by reference to a formula related to the pay of other Partners (see page 96).


Code Provision D.2.2 states that the remuneration committee should have delegated responsibility for setting remuneration for all Executive Directors and the chairman, including pension rights and any compensation payments. This provision supports the Code principle that remuneration should be set in a formal and transparent manner.


The Partnership Board does not determine the remuneration for Non-Executive Directors. Instead, this is the responsibility of the Elected Directors who are members of the Remuneration Committee and who receive a recommendation from the Director of Personnel, while also considering the Chairman’s views and relevant market data provided by the independent external remuneration consultant.


Code Provision D.2.3 states that the board should determine the remuneration of the Non-Executive Directors. Where permitted by the Articles of Association, the board may, however, delegate this responsibility to a committee that might include the chief executive. The provision supports the Code principle that care should be taken to recognise and avoid conflicts of interest.


It’s Your Voice


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