John Lewis Partnership plc annual report and accounts 2013
Governance Report
Governance Report
The Partnership was founded by John Spedan Lewis in 1929 and exists because of his extraordinary vision and ideals. He transferred ownership of the Company into a trust to be held for the benefit of its members. The business became known as the John Lewis Partnership and the members, its employees, became known as Partners. The Deferred Ordinary Shares in the capital of the Company are held by the trustee, John Lewis Partnership Trust Limited (the “Trustee” or “Trust Company”) which is the ultimate holding company of the Partnership and has as its main purpose the protection of the Constitution and democracy of the Partnership. The directors of the Trustee are known as the Trustees of the Constitution.
The Partnership is governed by its written Constitution (the Constitution), its Articles of Association and the Companies Act. It also complies with the Listing Rules and Disclosure and Transparency Rules applicable to a Standard Listed company on the London Stock Exchange (LSE). As the Company has no equity share capital listed on the LSE it is eligible for exemption from the Financial Services Authority’s requirements relating to corporate governance disclosures. However, as the Partnership Board seeks to maintain its reputation and standing in its dealing with external stakeholders, the Partnership Board aims to apply the highest standards of corporate governance in accordance with the Partnership’s Constitution and voluntarily seeks to apply the UK Corporate Governance Code (the Code). This report seeks to set out the Partnership’s governance procedures in compliance with its Constitution and the Code.
Compliance with the Code
Throughout the year ended 26 January 2013, the Company has voluntarily applied and has been in compliance with the provisions set out in the Code, published by the Financial Reporting Council and available at
www.frc.org, except where the Partnership’s co-ownership model establishes its own accountability and governance mechanisms which the Partnership Board believes to be appropriate and offer the necessary level of protection as set out below.
The Partnership’s Constitution
John Spedan Lewis’ vision was set out in a written Constitution, which provided a framework to define the Partnership’s principles and the way in which it should operate. The Constitution has been revised and refreshed over the years, but retains a direct connection with the fundamental principles of the Constitution established in 1929. The Constitution has mechanisms in place that the Partnership Board considers provide an appropriate level of accountability, transparency and probity and requires the Chairman, on behalf of the Partnership Board to report regularly and provide continuing information to Partners on its stewardship.
The Partnership’s ultimate purpose is set out as Principle 1 of the Constitution as:
“The Partnership’s ultimate purpose is the happiness of all its members, through their worthwhile and satisfying employment in a successful business. Because the Partnership is owned in trust for its members, they share the responsibilities of ownership as well as its rewards – profit, knowledge and power.”
The purpose enshrines the democratic principle of co-ownership within the Partnership and differentiates the Partnership from other corporate bodies.
The Constitution established three governing authorities to share the responsibilities of ownership: the Partnership Council, the Partnership Board and the Chairman. It also created special roles, such as elected directors to the Partnership Board and the role of Partners’ Counsellor, whose roles are explained in greater detail below.
The governing authorities’ power to direct the Partnership’s affairs depends on the consent of the Partners, whose opinion is expressed through formal representative bodies. These representative bodies include the Partnership Council, local forums and through the work of the Partners’ Counsellor and the Registry.
The Constitution is available to all Partners on the Company’s intranet and on
www.johnlewispartnership.co.uk. The shared aims of the three governing authorities are to safeguard the Partnership’s future, enhance its prosperity and ensure its integrity.
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