The Board of Savills is committed to maintaining the highest standards of corporate governance. The UK Corporate Governance Code 2014 (the ‘Code’) remains the standard against which we measure ourselves. The Board fully supports the principles set out in the Code and confirms that the Company applies the main Principles and complies with the relevant Provisions of the Code. The Code is published by the Financial Reporting Council and is publicly available at www.frc.org.uk.
Board composition and balance
The Board comprises a Non-Executive Chairman, four Independent Non-Executive Directors and two Executive Directors.
The Executive Director Board members are Jeremy Helsby, Group Chief Executive, Simon Shaw, Group Chief Financial Officer. The independent Non-Executive Directors members are, Tim Freshwater, Charles McVeigh, Liz Hewitt and Rupert Robson. The Board considers that the Non-Executive Directors are independent of management and have no business or other relationship which could interfere materially with the exercise of their judgment.
Tim Freshwater is the Senior Independent Director.
The posts of Chairman and Group Chief Executive are distinct and separate.
The Chairman leads the Board and ensures the effective engagement and contribution of all Executive and Non-Executive Directors. The Group Chief Executive has responsibility for all Group businesses and acts in accordance with the authority delegated by the Board. There are a number of areas where the Board has delegated specific responsibility to management, including responsibility for the operational management of the Group’s businesses as well as reviewing strategic issues and risk matters in advance of these being considered by the Board and/or its Committees.
The Group's corporate governance framework is set out below.
Functioning of the Board
Role of the Board
The primary responsibility of the Board is to provide entrepreneurial leadership and to oversee the overall strategic development of the Group. In addition, the Board sets the Group's values and standards and ensures that the Group's businesses act ethically and that its obligations to its shareholders are understood and met. The Board delegates the management of the day to day operation of the business to the Group Chief Executive, supported by the Group Executive Board , subject to appropriate risk parameters.
Matters reserved to the Board
The Board has adopted a formal schedule of matters specifically reserved to it for decision making. A full schedule of matters reserved for the Board’s decision along with the Terms of Reference of the Board’s principal Committees can be found on the Company’s website at ir.savills.com/en/company-information/corporate-governance.aspx.
The principal matters reserved for the Board are set out below:
|Strategy and objectives
Review and approve the Group’s strategy, objectives, business plans and budgets with a view to
maintaining the Group’s established entrepreneurially driven business culture.
The Board continuously monitors and analyses actual performance against desired outcomes and,
where necessary, agrees adjustments or changes to the strategic plan to ensure the Group achieves
its short, medium and long-term objectives.
Consider, test and approve significant capital investment projects in line with strategy and taking a
measured approach with the aim of maintaining Savills position as a market leader.
Strengthening the Group’s presence in existing markets or establish the Savills brand in new markets
through targeted recruitment or acquisitions, strategic alliances, associations with well-established
high-calibre local businesses with a market and client service focus consistent with those of the
Group and with an offering which complements existing capabilities in whichever market.
Where necessary, reviewing and approving disposal initiatives.
Review business growth and profit and cash management performance, and in each case, assess
against the Group’s strategy, objectives, business plans and budgets to ensure that the financial
resources generated by the Group’s businesses work to create additional value, costs are controlled
and that resources can be made available at the appropriate time to exploit business opportunities.
Review changes to the Group’s capital structure and the issue of any securities in the context of
achieving efficiencies or reducing the cost of capital to the Group.
Approve annual and half year results and trading updates, and accounting policies so as to ensure
that communication with the Group’s Shareholders is fair, balanced and understandable; and, subject
to Shareholder approval, the appointment and the remuneration of the External Auditors.
Approve the dividend policy and interim and supplemental dividends and recommend final dividends which are appropriate to the Group’s financial position and reflect the performance and prospects of the Group and give the Group the ability to continue to attract inward investment.
Establish, monitor and regulate the levels of risk which the Group is willing to accept in return for
economic success and implementing systems of internal control, governance and approval authorities
to safeguard Shareholder investments.
Regularly analyse the impact of the Group’s adopted risk appetite against expected outcomes to
ensure that the level of risk adopted by the Board is appropriate such that it can be effectively
managed by the Group’s businesses and neither constrains growth nor has a materially negative
impact on the Group’s reputation or finances.
In response to actual outcomes and/or changes in the internal and external environments, regulate
acceptable risk levels to reflect the evolution of strategy.
Oversee the performance of the Board and its principal Committees and that of individual Directors to
ensure that they continue to be effective in support of Group strategy, policy and practice.
Plan to refresh or replace retiring or outgoing Directors so as to ensure that the different skills,
experience and knowledge of the Directors is such that the Group remains capable of adapting to the
changing environment as a consequence of it being directed by a set of competent, well-rounded
individuals who have the ability to formulate sensible and practical ideas capable of being translated
into strategies which deliver results.
In line with the Board’s commitment to operate the Group’s businesses on an ethically, morally and
legally sound basis from the top down, overseeing the development and approval of the Group’s
governance structure and policies such as the Group’s Code of Conduct, standards of ethics and
policies in relation to business practice, health, safety, environment, social and community
responsibilities to ensure that the Group companies continue to do the ‘right thing’ and remain
compliant with regulatory and legal requirements in each of the jurisdictions in which they operate.
The Board and Committee meetings are structured to allow open
discussion. To enable the Board to discharge its duties, each
Director receives appropriate and timely information, including
detailed papers in advance of Board meetings. When unable to be
present in person, Directors may attend by audio or video
conference. When Directors are unable to attend a Board or
Committee meeting, their views on the key items of business to be
considered at that meeting are relayed in advance to the Chairman
of that meeting in order that these can be presented at the meeting
and influence the debate.
At its meetings during the year, the Board discharged the duties
above and received updates on the Group’s financial performance,
key management changes, material new projects, financial plans,
and legal and regulatory updates.
The Chairman, together with the Group Legal Director & Company
Secretary, ensures that the Directors receive management
information, including financial, operating and strategic reports, in
advance of Board meetings.
The Board receives presentations from the Heads of the Principal
Businesses on matters of significance, and periodically meetings
are held in regional centres to give the Board greater insight into
the business in that region. The Group Legal Director & Company
Secretary provides the Board with updates and reports covering
legal developments and regulatory changes.
The Group Legal Director & Company Secretary, whose appointment is a matter reserved for the Board, is responsible for advising and supporting the Chairman and the Board on company law and corporate governance matters and for ensuring that Board procedures are followed, as well as ensuring that there is a smooth flow of information to enable effective decision making. The Group Legal Director & Company Secretary is responsible for ensuring that the Directors receive regular updates on developments in legal and regulatory matters. All the Directors have access to the advice and services of the Group Legal Director & Company Secretary and through him have access, if required, to independent professional advice in respect of their duties at the Company’s expense.
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The Board has delegated certain authorities to committees. The principal committees of the Board are as follows:
The Nomination Committee comprises Nicholas Ferguson, Liz Hewitt, Rupert Robson and Tim Freshwater. The Committee Chairman is Group Chairman, Nicholas Ferguson (save in circumstances where the Chairman’s succession is considered). Any other Director, Group Legal Director & Company Secretary or an external adviser may be invited by the Committee to attend the meetings from time to time, as appropriate. The Committee meets at least twice a year. The primary objective of the Committee is to review the size and composition of the Board and its key Committees and to plan for its progressive refreshing, with regard to balance and structure. The Committee has standing items that it considers regularly under its Terms of Reference, for example the Committee considers and approves the Directors’ potential Conflicts of Interest and reviews its own Terms of Reference (which are reviewed at least annually or as required, eg to reflect changes to the UK Corporate Governance Code or as a result of changes in regulations or best practice).
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The Audit Committee is chaired by Liz Hewitt; she is supported by two independent Non-Executive Directors Tim Freshwater and Rupert Robson. Members of the Committee are appointed by the Board following recommendations by the Nomination Committee. All members of the Committee receive an appropriate induction which includes an overview of the business, its financial dynamics and risks. Committee members are expected to have an understanding of the principles of, and recent developments in, financial reporting and their application as well as the roles of the internal and external audit functions.
Committee meetings are attended by Committee members and, by invitation, the Non-Executive Chairman, Group Chief Executive, Group Chief Financial Officer, Group Financial Controller, Group Director of Risk & Assurance and Group Legal Director & Company Secretary.
The Chairman of the Committee meets informally and is in regular contact with the Group Chief Financial Officer, Group Director of Risk & Assurance and Group Legal Director & Company Secretary and senior members of the external audit team. This group generally meets ahead of each full Committee meeting to prepare and identify key areas for consideration by the Committee. At least once a year, the Committee meets separately with the external auditors and with management without the other being present. The Chairman of the Committee also attends the AGM to respond to shareholder questions that might be raised on its activities.
The Committee’s role is to assist the Board in discharging its duties and responsibilities for financial reporting, internal control and in making recommendations to the Board on the appointment of the independent External Auditor. The Committee is responsible for the scope and results of the audit work, its cost effectiveness and the independence and objectivity of the external auditors. The Committee is authorised to investigate any matter within its Terms of Reference and has access to the services of the Group Legal Director & Company Secretary and, where necessary, the authority to obtain external legal or other independent professional advice in the fulfilment of its duties. The Committee has responsibility for reviewing the Group’s whistle-blowing arrangements and ensuring that appropriate arrangements are in place for employees to be able to raise, in confidence, matters of alleged impropriety, and for ensuring that appropriate follow-up actions are taken.
The external auditors are PricewaterhouseCoopers LLP. The external auditors are responsible for the annual audit and have also provided certain non-audit services to the Company, principally advice on taxation matters.
The Committee has assessed the FRC’s Revised Ethical Standard for Auditors June 2016 which will implement new restrictions on the supply of non-audit services that the External Auditor can provide, including the cap on the amount of non-audit fees that can be billed and a list of prohibited services. The restrictions are effective for the Group from 1 January 2017 and the Group’s policy on using the External Auditor for non-audit engagements has been reviewed and subsequently amended to reflect these additional restrictions. The External Auditor will no longer provide taxation services. As part of the Group’s monitoring system, all non-audit instructions with the External Auditor must be approved by either the Group Chief Financial Officer or the Group Financial Controller and management must seek approval from the Committee for all non-audit contracts in excess of £0.1m. The Group’s policy also requires that non-audit fees must not exceed 70% of the average External Audit fees billed over the previous three years. The provision of Internal Audit services is delivered by the Group’s Internal Audit team with support from external advisers EY.
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The Committee comprises the Independent Non-Executive Directors and the Non-Executive Chairman.
The principal role of the Remuneration Committee is to support the Group to achieve its strategic objectives by designing a remuneration policy consistent with the Group’s business model such that we have the ability to attract, recruit, retain and motivate the high calibre individuals needed to deliver the Group’s strategy. The Committee is responsible for the broad policy governing senior staff pay and remuneration. It sets the actual levels of all elements of the remuneration of the Executive Directors and reviews that of GEB members. The Policy remains under periodic review to ensure that it remains consistent with the Company’s scale and scope of operations, supports business strategy and growth plans and helps drive the creation of shareholder value. The Committee also oversees the operation of Savills employee share schemes.
In determining Executive Director remuneration, the Committee has access to detailed external information and research on market trends and peer practice provided by its independent external adviser.
The Committee is advised by FIT Remuneration Consultants and the Group Legal Director & Company Secretary. The Committee does not deal with the fees paid to the Non-Executive Directors, which are decided by the Executive Directors and the Chairman (except when the Chairman’s fee is being discussed).
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Group executive board ('GEB')
The GEB comprises the Group Chief Executive, the Group Chief Financial Officer, the Heads of the Principal Businesses and the Group Legal Director & Company Secretary. Under the leadership of the Group Chief Executive, the GEB is responsible for overseeing the development and implementation of strategy, the operational performance of the Group and other specific matters delegated to it by the Board.
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The Board undertakes a rigorous and formal evaluation of its performance and that of its Committees and its Directors annually. In accordance with the Code requirements, the Board believes that an external independent evaluation of Board effectiveness and performance and that of its principal Committees at least every three years brings further insight into its performance. As well as looking to continually improve the Board’s processes, the evaluation process is used to reflect on areas that the Board would like to see more focus on.
This year the annual evaluation was externally facilitated by Alice Perkins of JCA and covered the performance of the Board as a whole as well as that of its Committees. This year’s review took the form of confidential one to one meetings with each Director and the Group Legal Director & Company Secretary conducted by Alice Perkins of JCA and covering areas including board effectiveness; the mix of skills and experience on the Board: the development of the Company’s strategy; the effectiveness of Board procedures and processes; the connectivity between the Board and the Group’s businesses; the performance of Board Committees; relations with Shareholders and other stakeholders; and the individual performance of Board members. The facilitator consolidated the responses and the output was initially reviewed by the Chairman and then by the Board.
The key outcomes from the evaluation related to:
- ensuring that the Board had the mix of skills and experience required for the next stages of the Group’s development, in particular ensuring that Board membership was appropriately diverse, in the widest sense; and
- increasing focus on reviewing the progress and development of the Group’s Principal Businesses and ensuring greater awareness of key individuals in each business below Executive Committee level.
As a result of the evaluation, the Board considers the performance of each Director to be effective and concluded that both the Board and its Committees continue to provide effective leadership and exert the required levels of governance and control. The Shareholders should therefore support their re-election to the Board at the AGM in May. The Board will continue to review its procedures, effectiveness and development.
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Dialogue with Shareholders
The Group recognises the importance of an ongoing relationship with its Shareholders and fully supports the principles encouraging dialogue between companies and their Shareholders in the Code. The Group Chief Executive and Group Chief Financial Officer have primary responsibility for investor relations and lead a regular programme of meetings and presentations with analysts and investors. This includes presentations following the publication of the Company’s full and half year results. This programme maintains a continuous two-way dialogue between the Company and Shareholders, and helps to ensure that the Board is aware of Shareholders’ views on a timely basis. The Board also normally receives feedback twice each year from its corporate brokers on investors’ and the market’s perceptions of the Company. The Chairman and the Senior Independent Director are also available to meet Shareholders if so required. The Company has enjoyed and is appreciative of the significant Shareholder support that it has had in recent years in relation to the Group’s remuneration policy and continues to welcome Shareholder views with regard to the Group’s Remuneration Policy. Details of the Company’s response to any Shareholder views raised would be included in the relevant year’s Remuneration Report.
The AGM provides the Board with a valuable opportunity to communicate with private Shareholders and is generally attended by all of the Directors. Shareholders are given the opportunity to ask questions before and during the meeting and to meet Directors following the conclusion of the formal part of the meeting. In accordance with the Code, the level and manner of voting of proxies lodged on each resolution at the AGM is declared at the meeting and published on the Company’s website. The notice of the AGM is sent out at least 20 working days before the meeting and at least 14 working days notice is given before other general meetings in accordance with the UK Corporate Governance Code.
The Company has taken advantage of the provisions within the Companies Act 2006 (‘CA 2006’) which allow communications with Shareholders to be made electronically where Shareholders have not requested hard copy documentation.
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