Investor Relations.The success of our business model begins and ends with investment performance.
The Board’s core purpose is to create and deliver the success of the Company for the benefit of shareholders. This requires us to determine business strategy and our appetite for risk, monitor management’s performance in delivering that strategy and ensure that the risk management measures and internal controls they have put in place are appropriate and effective. We must uphold and oversee the embedding of the Company’s values and ensure that the business has the financial structure, resources and talent it needs to support long term growth. Finally, we must remain aware of the Company’s obligations to its shareholders and other stakeholders and respond to their needs with transparent reporting and active engagement.
Schedule of matters reserved for Board decision (December 2018)
In accordance with the UK Corporate Governance Code, the Board has adopted a formal schedule of matters reserved for its decision. This document details the issues that must be considered and decided on by the Board and which form the basis of the Board’s core agenda. A link to the full document is provided here and a summary is set out below:
Summary of matters reserved
The Board delegates all decision making on and management of the business to the Chief Executive Officer with the exception of the matters set out below which are reserved for Board decision:
Business purpose, strategy and oversight
Determining business purpose, values and strategy.
Monitoring the Company’s culture and its alignment with the Company’s purpose and values.
Overseeing business and executive management performance against agreed objectives.
Approving major acquisitions and disposals.
Approving new business proposals which materially extend beyond the Company’s current business mandate.
Ensuring effective engagement with the Company’s shareholders and other stakeholders.
Risk appetite, capital structure, borrowing
Determining the Company’s risk appetite.
Agreeing the Group's capital structure, borrowing limits and facilities, annual Budget and Three Year Plan.
Approving Treasury policies including credit exposures and interest rate and foreign exchange hedging.
Approving the Value at Risk limit for seeding new investments.
Risk management and internal controls
Undertaking a robust assessment of the emerging and principal risks facing the Company and reporting to shareholders in the Annual Report on:
how the prospects of the Company have been assessed and over what period; and
whether the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities over this period.
Monitoring and reviewing the effectiveness of the Company’s risk management framework and internal controls and reporting on that review in the Annual Report.
Approving the Company’s capital adequacy submission to the Financial Conduct Authority (the “ICAAP”).
Financial reporting and dividends
Determining the dividend policy and recommending and declaring dividends.
Approving, on the recommendation of the Audit & Risk Committee, major accounting policies.
Approving financial statements, results announcements and trading statements.
Approving shareholder circulars and notices of meeting.
Appointing the Company’s auditors.
Determining the terms of reference and membership of Board Committees.
Approving, on the recommendation of the Remuneration Committee, the Company’s broad policy on remuneration, the Directors’ Remuneration policy and the Directors’ Remuneration report; and
Approving the compensation for the non-executive directors and the Chairman, subject to such compensation falling within the limits set by the Directors’ Remuneration policy and to the proviso that no director should participate in the approval of his or her compensation; and
Approving new share incentive plans prior to their submission to shareholders for approval (if required).
Approving the Company’s corporate responsibility and charitable giving strategy and Ethics Policy.
Directors' induction programme
Providing a comprehensive induction programme for new directors is essential in order to assist them to become effective in their role as quickly as possible. Man creates a detailed induction programme for each director which is tailored to their individual needs. The programme is built around a series of meetings with Executive Committee members and the heads of key business units covering all aspects of the business. An outline of the main programme with an indication of the topics covered is given below. This is supplemented by additional technical briefings for Audit and Risk and Remuneration Committee members where required.
The Company’s articles of association (the ‘Articles’) set out the basis of the Company’s constitution and the rules by which it is run. They are a key element of corporate governance. Amendments to the Articles may only be made by a special resolution of shareholders which requires a majority of at least 75% to vote in favour.
The Articles cover the following main areas:
Shares including details of the different classes of shares and rights attaching thereto, transfers and share certificates.
Directors including rules on their appointment and retirement, directors' powers, remuneration and conflicts of interest.
Shareholder meetings including rules on providing notice, proxy appointment and voting.
Borrowing powers, dividends, accounting records and shareholder communications.
The risk appetite statements are set by the Board and cover all significant risk categories. They apply to both the investment management functions and Man Group itself. The statements express the Board’s appetite for risk, promote a risk aware culture and set out objectives and boundaries for Man Group’s business.
Terms of reference of the Audit and Risk Committee (the “Committee”) of the Board of Directors of Man Group plc (the “Company”) which were originally constituted by a resolution of the Directors passed on 23 August 1994. These revised terms of reference were approved by the Board on 5 November 2018.
The Committee supports the Board by performing defined roles in relation to the interim and annual financial statements; the Company’s relationship with its external auditor; the effectiveness of risk management and internal controls; and oversight of the Compliance and Internal Audit functions. Specific responsibilities are set out for each of these roles. The existence of the Committee does not relieve the directors of any of their responsibilities.
The members of the Committee shall be appointed by the Board. All members of the Committee shall be independent non-executive directors of the Company and the Committee as a whole shall have competence relevant to the sector in which the Company operates. The Committee shall consist of no fewer than three members, one of whom shall have significant, recent and relevant financial experience. The quorum shall be two independent non-executive directors but, in the absence of a quorum for a particular Committee meeting, the Committee may appoint such other independent non-executive director(s) (to be nominated by the Chair of the Committee) as are required, to act as alternate(s) for those members of the Committee who are unable to attend that meeting.
The Board shall, from time to time, review the composition of the Committee in order that, where appropriate, membership of the Committee rotates amongst the Company's independent non-executive directors.
The Chair of the Committee shall be appointed by the Board from amongst the independent non-executive directors.
The Chief Executive Officer, Chief Financial Officer (who also undertakes the role of Chief Risk Officer), Chief Administrative Officer, Head of Internal Audit, and a representative of the external auditor will usually attend meetings on the invitation of the Committee. Other members of the senior management team will be invited to attend meetings as appropriate.
All non-executive directors and the Chairman of the Board have the right to attend Committee meetings if they so wish.
Other relevant parties may attend meetings of the Committee if invited by the Committee.
There should be at least one meeting each year, or part thereof, where the external auditor attend without management present and similarly one such meeting with Internal Audit.
The Secretary of the Committee shall be designated by the Chair of the Committee and shall attend meetings.
In some circumstances it may be necessary for members to attend meetings by telephone or video conference, which shall be permitted.
Frequency of meetings
Meetings shall be held not less than four times a year and, where appropriate, should coincide with key dates in the Company's financial reporting cycle.
The external auditor or Head of Internal Audit may request an additional meeting of the Committee if they consider that one is necessary.
The Committee shall be authorised by the Board to:
investigate any activity within its terms of reference;
seek any information that it requires from any employee of the Group; and
obtain, at the Company's expense, outside legal or independent professional advice and such advisors may, if invited, attend meetings as necessary.
The Committee shall have access to sufficient resources in order to carry out its duties.
Responsibilities: Interim and Annual Financial Statements
The Committee shall monitor the integrity of financial information through review and challenge, where necessary, of the actions and judgements of management, in relation to the interim and annual financial statements before submission to the Board paying particular attention to:
critical accounting policies and practices, and any changes in them;
decisions requiring a significant element of judgement;
the methods used to account for significant or unusual transactions where different approaches are possible;
off balance sheet items;
the extent to which the financial statements are affected by any unusual transactions in the relevant period and the manner in which they are disclosed;
the adequacy and completeness of disclosures;
significant adjustments resulting from the audit, including the requirement to be advised of unadjusted differences;
the assumptions or qualifications in support of the "going concern" statement (including any material uncertainties as to the Company’s ability to continue as a going concern over a period of at least twelve months from the date of approval of the financial statements) and the longer term viability statement (including an assessment of the prospects of the Company and the Group looking forward over an appropriate and justified period);
compliance with applicable accounting and financial reporting standards;
compliance with applicable UKLA, stock exchange and other regulatory requirements; and
any other matter referred to it by the Board or the Remuneration Committee.
The Committee shall consider the following matters of relevance to the remuneration of Man staff:
items in the financial statements where there is a current or future risk of the outcome being significantly different from the reported position;
the timing or likelihood of future revenues;
the impact of planned bonus payments on Man’s capital and liquidity position, or its growth prospects.
The Committee shall, where requested by the Board, review the content of the annual/interim report and accounts and advise the Board on whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy.
The Committee shall review all statements to be included in the annual report concerning internal controls and risk management prior to endorsement by the Board. This shall include all other material information presented with the financial statements, such as the strategic report, the Directors’ statement regarding their robust assessment of the principal risks facing the Company and the corporate governance statement (insofar as it relates to the audit and risk management).
Responsibilities: External Audit
The Committee shall:
have primary responsibility for making a recommendation on the appointment, reappointment and removal of the external auditor. If the Board does not accept the Committee's recommendation, it should include in the annual report, and in any papers recommending appointment or re-appointment, a statement from the Committee explaining the recommendation and should set out reasons why the Board has taken a different position;
ensure that the tendering, selection and rotation of the external audit services contract is carried out at such intervals and in a manner as may be determined by applicable law, regulation and best practice;
discuss with the external auditor and with management the accounting principles, policies and practices adopted in the preparation of the financial statements and to be assured that they comply with statutory requirements and generally accepted accounting standards;
review the findings of the audit with the external auditor which shall include but not be limited to, a discussion of any major issues which arose during the audit, any accounting and audit judgements, levels of errors identified during the audit and the responses of management to external audit findings and recommendations;
assess the independence of the external auditor, with specific focus on the rotation of key partners at / representatives of the external auditor at appropriate intervals;
approve the letter of appointment and annual engagement letter of the external auditor and the audit fee and pre-approve fees in accordance with the Committee's policy on non-audit services provided by the external auditor and to avoid any threat to the external auditor's independence or objectivity;
monitor and review, on an annual basis, the external auditor's qualifications, independence, objectivity and effectiveness, taking into consideration relevant law, regulations and professional requirements and ethical standards for auditors and, if the Committee considers it appropriate, obtain a report on the external auditor's own internal quality control procedures;
assess, at the end of the audit cycle, the effectiveness of the audit process;
review the external auditor's management letter and any other material written or email communication from the external auditor and the management's response to these;
approve and monitor the policy relating to the hiring of personnel from the external auditor;
consider any significant items of discussion between external audit and senior management and external audit and the Chair since the last Committee meeting;
review annually the policy on the engagement of the external auditor to supply non-audit services and report to the Board on the nature and extent of non-audit services supplied by the external auditor, identifying any matters in respect of which action or improvement is needed and making recommendations as to the steps to be taken;
discuss with the external auditor, before the audit commences, the nature and scope of the audit, the auditor’s quality control procedures and steps taken by the auditor to respond to changes in regulatory and other requirements; and
meet the external auditor at least once a year, without management being present, to discuss their remit and any issues arising from the audit.
Responsibilities: Risk Management, ICAAP, Internal Control and Compliance
The Committee shall monitor the effectiveness of systems for risk management, capital adequacy, internal control and compliance, including a periodic review of:
the Group’s policies and process for the identification, assessment and management of risk;
the Group’s Risk Governance & Appetite Framework including reports on the Group's risk profile and related internal controls;
the Group’s Internal Capital Adequacy Assessment Process (“ICAAP”) including regulatory and economic capital, downside forecasts, and the wind down cost;
all significant issues reported to it by the Chair of the Risk and Finance Committee;
the Group's regulatory reporting activities and Compliance functions, supported by appropriate reports as may be requested by the Committee which should include an annual presentation by the Head of Compliance & Regulatory;
the Money Laundering Reporting Officer’s annual report including the adequacy and effectiveness of the Company’s anti-money laundering systems and controls;
the Group's arrangements for its staff to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters, where there have been material changes to such arrangements. These arrangements should allow proportionate and independent investigation of such matters and appropriate follow up action; and
management's follow-up of risk management and compliance failures and consideration of whether any are relevant to the remuneration of individuals, or groups of staff.
The Committee shall, on behalf of the Board, ensure that a robust assessment of the principal risks facing the Company has been undertaken (including those risks that would threaten its business model, future performance, solvency or liquidity) and advise on the management and mitigation of these risks.
The Committee shall report to the Board on how, taking into account the Company’s position and principal risks, the Company’s prospects have been assessed, over what period and why the period is regarded as appropriate. The Committee shall also advise on whether there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the said period, drawing attention to any qualifications and assumptions as necessary.
In relation to the Board’s obligations under the UK Corporate Governance Code, the Committee shall monitor and, at least annually, carry out a review of the effectiveness of the Group’s risk management and internal controls systems and report its conclusions and recommendations to the Board. The review shall cover all material controls, including financial, operational and compliance controls, risk management systems and internal controls over financial reporting.
The Committee shall:
consider whether any current or future risks may be relevant to the remuneration of Man staff; and
consider other relevant risk or internal control topics, as and when required by the Board or requested by the Remuneration Committee;
Responsibilities: Internal Audit
The Committee shall:
review annually the remit and effectiveness of Internal Audit function including the Internal Audit Plan and Internal Audit Charter and assess whether the Internal Audit function is adequately resourced and has appropriate standing within the Group. This review is to be supported by a report from external/independent consultants at least every three years;
review promptly all significant internal audit recommendations and findings;
consider management's response to and progress in addressing Internal Audit recommendations and findings;
consider whether any individual control finding or the control environment within a particular business area is a matter relevant to the remuneration of individuals, or groups of staff;
be consulted on and give input into the remuneration of and the appointment or dismissal of the outsourced Internal Audit provider;
oversee the co-ordination of internal and external audit activities; and
meet the Head of Internal Audit at least once a year, without management being present, to discuss their remit and any issues arising from the internal audits carried out.
The Secretary of the Committee shall circulate the minutes of meetings of the Committee to the Chair of the Committee and all members of the Board as appropriate.
Following each meeting, the Chair of the Committee shall report formally to the Board on its proceedings.
The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
The Chair of the Committee shall make reports formally to the Remuneration Committee ahead of the financial period end:
on the robustness of the risk control framework in place for the financial period;
to notify any risk items in the financial statements that may have an impact on the bonus compensation pool principles and calculation; and
to notify any risk or control matter relevant to the remuneration of individuals, or groups of staff.
The Chair of the Committee or, as a minimum, another member of the Committee, shall attend the Board meeting at which the accounts are approved.
The Committee shall prepare a report on its activities to be included in the Company’s annual report (the “Committee Report”). The Committee Report shall include:
details of the membership of the Committee, number of meetings held and attendance over the course of the year;
the significant issues that the Committee considered in relation to the financial statements and how these issues were addressed,
an explanation of how the Committee has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external auditor, information on the length of tenure of the current audit firm, the current audit partner’s tenure, when a tender was last conducted and advance notice of any retendering plans;
if the external auditors provide non-audit services, the Committee’s policy for approval of non-audit services and an explanation of how auditor objectivity and independence are safeguarded; and
an explanation of how the Committee has assessed the effectiveness of the Internal Audit process.
The Committee shall conduct an annual review of its effectiveness and recommend any necessary changes to the Board. An explanation of the how the Committee’s performance evaluation has been conducted shall be included in the Committee Report.
The Committee shall review, on an annual basis, these terms of reference and may recommend to the Board any changes it considers necessary.
The Chair of the Committee shall attend the Company's Annual General Meeting and shall answer any questions, through the Chairman of the Board, on the Committee's activities and its responsibilities.
The Committee shall be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members.
Our approach is intended to be equitable and robust against variable business conditions and timespans. As performance measurement and remuneration design continue to evolve we will keep these principles under continuous review to ensure that we are aligned with best practice and regulation. We remain open to continuing dialogue with our shareholders.
Our current (2018) Directors’ Remuneration Policy was approved by shareholders at our Annual General Meeting held on 11 May 2018 and became effective as of that date. The new Policy can be accessed below.
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