Chair's introduction
Corporate Governance
Andrew Duff
Chair
Dear shareholder
On behalf of the Board, I am pleased to introduce our Governance Report for the year ended 30 September 2021. This report sets out our approach to effective corporate governance and outlines key areas of focus of the Board and its activities undertaken during the year as we continue to drive long-term value creation for all our stakeholders.
Board succession and diversity
There have been changes to the Board composition during the year as part of the Board's ongoing succession planning processes. After serving as Chair for nine years, Sage announced in March 2021 that Sir Donald Brydon would retire from the Board at the end of September 2021. Our Nomination Committee, led by our Senior Independent Director, Drummond Hall, with support from the whole Board and the Company Secretary, oversaw the succession and appointment process which led to my appointment as Non-executive Director and Chair designate in May 2021. Further information on the Chair selection process can be found on pages 104 and 105.
I was delighted to be appointed Chair designate of Sage and have worked closely with Sir Donald Brydon, Steve Hare and the rest of the Board over the last few months to ensure a smooth transition and effective handover. A comprehensive induction programme has provided me with an opportunity to meet members of the Executive Committee, senior management and a number of other Sage colleagues and to gain rapid insight and understanding of Sage, its business and culture. You can read more about my induction programme on pages 78 and 79.
In March 2021, following a formal and thorough recruitment process, the Board appointed Derek Harding as a Non- executive Director, with Derek also joining the Audit and Risk Committee upon appointment. We have been delighted to welcome Derek onto the Sage Board and his financial acumen, commercial expertise and experience of leading business transformation has enhanced the strength and depth of existing Board capabilities.
The Board and the Nomination Committee continue to drive the agenda of diversity, equity and inclusion across the Group. At Sage, it is our ambition for our workforce to reflect the diversity of our customers and partners in the communities where we operate. We strongly believe that a diverse and inclusive workforce brings a broader range of perspectives, accelerates growth and innovation, helps to understand the needs of our wide range of stakeholders and helps us to find and retain the best talent. During the year, a formal Diversity, Equity and Inclusion Policy was adopted by the Board which sets out the approach to diversity, equity and inclusion for the Board itself. We recognise and are fully supportive of the recommendations of the Hampton- Alexander and Parker Reviews and as a collective Board will continue to ensure that diversity in its broadest form is fully considered in the context of future Board composition.
Company purpose and culture
The Board is cognisant that it has the ultimate responsibility for ensuring an appropriate company culture to act as a backdrop to the way in which Sage behaves towards all its stakeholders. Our culture provides the foundation to drive our purpose and delivery of our strategy. As a Board, we continue to spend time focused on ensuring that our culture enables us to build the organisational capability required to deliver on our promises to our stakeholders, customers, colleagues, society and shareholders.
With the launch of our Sustainability and Society strategy in June, Sage has set out its commitment to tackle societal and economic inequality and to play its part in tackling the climate change crisis. As a Board we believe Sage can play a pivotal role in supporting a new generation of diverse and sustainable businesses and we are excited by the opportunity to help the millions of small and medium businesses we serve worldwide as we execute against this strategy. We live our purpose of knocking down barriers every day by helping small and medium businesses with our technology and our support. However, our purpose extends beyond our customers. It speaks to a wider economic significance of a thriving small and medium business sector; shapes the wider role that we play in helping our communities and the planet, and underlines the importance we place on acting with the highest levels of integrity within a strong governance framework.
More information on our purpose and culture can be found on pages 3 and 38 to 41. Information on our Sustainability and Society strategy can be found on pages 29 to 31.
Annual Report and Accounts 2021 | The Sage Group plc. | 67 |
Chair's introduction continued
Engagement with our stakeholders
The success of our strategy is reliant on the support and commitment of all our stakeholders. Balancing stakeholders' needs and views is a key part of Board decision making.
The Board recognises the importance of two-way communications with our colleagues. The role of our Board Associate has been in place since 2017 and continues to be a successful way of ensuring that the Board appropriately considers the interests of colleagues in its deliberations and, in doing so, makes better decisions. The creation of the Associates' Council last year has provided the Board with further insight from a colleague perspective on the consequences of strategic decisions in the long term as well as giving a clearer sense of the day-to-day colleague experience and how it can be enhanced.
Whilst for much of the year it has not been possible to meet physically with colleagues and other stakeholders, the Board has recently resumed face-to-face Board meetings and activities, and all Board members are looking forward to meeting and connecting more personally with stakeholders in a Covid-19 safe environment in the coming months.
Further details on how we have engaged with our stakeholders can be found on pages 88 to 95.
Board effectiveness
It is extremely important that the Board, its Committees and individual Directors rigorously review their performance and embrace the opportunity to develop, where necessary. This year an internal effectiveness review was undertaken with support from the Company Secretary. Progress on last year's areas of focus as well as the outcome of this year's effectiveness review can be found on pages 80 to 82. We expect to carry out an external effectiveness review in 2022 in line with the Code.
Directors' Remuneration Policy
Our proposed Directors' Remuneration Policy, which is intended to apply for the coming three years, will be put to our shareholders for their approval at the Annual General Meeting on 3 February 2022. The proposed policy has been designed to continue the close alignment between executive reward and the delivery of our business strategy, purpose and culture, with stakeholders' interests at the heart of the matter. Details of the proposed policy, the outcome of the shareholder consultation process and the implementation of the current policy during the year, can be found in the Directors' Remuneration Report on pages 120 to 157.
Looking forward
We will continue as a Board to maintain the highest standards of corporate governance across the Group, focus on delivery of our strategy and continue to promote and enhance the inclusive culture that management and their teams have worked so hard to establish.
I encourage all our stakeholders to take every opportunity presented to engage with the Company and, subject to any Covid-19 restrictions in place at the time, I would welcome you to attend, and in any case vote at, the forthcoming Annual General Meeting.
In closing, I would like to take the opportunity to thank Sir Donald Brydon for his exemplary leadership as Sage progressed in its transition to becoming a great SaaS business. I look forward to building on his legacy and working with the Board and Sage leadership team to continue building a sustainable business delivering on the interests of all our stakeholders whilst contributing to the communities and the wider society in which we operate.
Andrew Duff
Chair
68 Annual Report and Accounts 2021 | The Sage Group plc.
The UK Corporate Governance Code 2018 -
Compliance Statement
Sage applied the principles of the UK Corporate Governance Code 2018 (the "Code") and complied with all its provisions throughout FY21, with the exception of provision 38 (alignment of executive directors' pension contributions with those of the wider workforce). We are pleased to confirm that, since 1 October 2021, when the CEO's pension contribution was reduced from 15% to 10% of base salary, Sage has complied with all provisions of the Code. Further information on the Directors' Remuneration Policy 2022 and pension contributions of Executive Directors are in the Directors' Remuneration Report on pages 120 to 157.
In FY21 the Board has continued with its chosen approach to workforce engagement, through the Board Associate programme, and further enhanced by the Associates' Council, to deliver success in enabling efficient and effective engagement with our colleagues. This arrangement has been chosen by the Board as an alternative to the workforce engagement methods referred to in the Code, as is permitted by the Code. Further details on the Board Associate's role can be found on page 95.
We believe good corporate governance provides confidence in the delivery of our strategic performance to our stakeholders and is essential for the long-term sustainable success of our business. The table below shows the principles set out in the Code and where key content can be found in this report showing how we have applied those principles.
The Code is publicly available on the website of the
UK Financial Reporting Council at www.frc.org.uk.
Board leadership and company purpose
Pages | |
Purpose and culture | 3, 38 to 41, 61 and 99 |
Shareholder engagement | 89 |
Colleague engagement | 90 |
Other stakeholder engagement | 92 to 94 |
Conflicts of interest | 83 |
Division of responsibilities
Pages | |
The role of the Board | 74 |
The role of the Committees | 74 and 75 |
Board composition | 75 |
Committee composition | 84 |
Independence of Non-executive Directors | 83 |
Time commitment | 83 |
Composition, succession and evaluation
Pages | |
Board composition and succession | 104 and 105 |
Diversity and Inclusion | 106 to 109 |
Annual re-election of Directors | 83 |
Induction, Director training and development | 78 and 79 |
programme | |
Board effectiveness and evaluation | 80 to 82 |
Audit, risk and internal control
Pages | |
Significant reporting and accounting matters | 112 to 115 |
Fair, balanced and understandable | 116 |
Viability statement and going concern | 113 |
Risk management and internal controls | 116 |
Internal audit | 117 |
External auditor | 118 and 119 |
Principal and emerging risks | 57, 111 and 116 |
Remuneration
Pages | |||
Remuneration principles | 121 | ||
Remuneration Policy | 130 to 139 | ||
Pension and benefits | 149 and 150 | ||
Directors' shareholdings and share interests | 153 | ||
External advisors | 157 | Annual Report and Accounts 2021 | The Sage Group plc. | 69 |
Board of Directors
The operation of the Board is supported by the collective leadership of the Directors and complemented by the diverse skills and experience they individually possess. The open and transparent Board dynamic contributes to honest conversations to ensure effective decision making in full consideration of the impact on all stakeholders and long-term value creation.
Andrew Duff | N | Sangeeta Anand | A | Dr John Bates | N R |
Chair | Independent Non-executive Director | Independent Non-executive Director | |||
Chair of the Nomination Committee | Member of the Audit and Risk Committee | Member of the Nomination Committee and the | |||
Appointed | Appointed | Remuneration Committee | |||
Independent Non-executive Director on 1 May 2021 | 1 May 2020 | Appointed | |||
and as Non-executive Chair on 1 October 2021 | Skills | 31 May 2019 | |||
Skills | Skills | ||||
Silicon Valley-based senior technology leader with | |||||
Wealth of experience as a non-executive director and | extensive experience in leading P&L and growth across | Visionary technologist and highly accomplished business | |||
chair, with a strong track record of transforming | a range of public, PE-owned and startup companies | leader in the field of technology innovation including | |||
high-profile international businesses | Deep operating experience in transforming complex | Artificial Intelligence and Machine Learning functionality | |||
Effective leader with strategic insights and | product portfolios and go-to-market to capture the | to improve customer experience | |||
international experience | cloud opportunity | Pioneer focusing on areas such as event-driven | |||
Strong focus on purpose, culture and customer- | Technology and business experience includes | architectures, smart environments, business activity | |||
centricity, and delivering value for all stakeholders | cybersecurity, cloud, enterprise software, SaaS and | monitoring and evolution of platforms for digital business | |||
Key previous experience | application services | Key previous experience | |||
Non-executive chair of Elementis plc | Key previous experience | Co-founder, president and chief technology officer | |||
Non-executive chair of Severn Trent plc | Chief marketing officer, Alkira Inc (disruptive SaaS | of Apama (now part of Software AG) | |||
Non-executive director of Wolseley plc | networking startup) | Head of industry solutions and chief marketing officer | |||
Senior Vice President, F5 Networks Inc (Listed on | of Software AG | ||||
Chief executive officer of npower | |||||
NASDAQ) | Chief executive officer of Terracotta, Inc. (a subsidiary | ||||
Key external commitments | |||||
General Manager and Corporate Vice President, | of Software AG) | ||||
Non-executive director of UK Government Investments | SafeNet (part of Thales Group) | Executive vice president of corporate strategy and | |||
Ltd (UKGI) | |||||
Vice President, Cisco Systems | chief technology officer at Progress Software | ||||
Key external commitments | Chief executive officer at Plat.One (now part of SAP) | ||||
Chief executive officer of the Eggplant Group, part | |||||
None | |||||
of Keysight Technologies Inc |
Key external commitments
Executive chairman of SER Group Holding GmbH
Jonathan Bewes | A Annette Court | A R |
Drummond Hall | A N R |
Independent Non-executive Director
Chair of the Audit and Risk Committee
Appointed
1 April 2019
Skills
Has prior experience of serving as chair on an audit committee
A wealth of accounting and financial experience
Strong investment banking experience gained over a 25-year career in the sector
Advisor to boards of UK and overseas companies on a wide range of financial and strategic issues, including financing, corporate strategy and governance
Key previous experience
Investment banking experience with Robert Fleming, UBS and Bank of America Merrill Lynch
Chartered accountant with KPMG
Key external commitments
Senior independent director and chair of the audit committee of Next plc
Vice chairman, corporate and institutional banking at Standard Chartered Bank plc
Independent Non-executive Director
Chair of the Remuneration Committee and member of the Audit and Risk Committee
Appointed
1 April 2019
Skills
Has prior experience of serving as chair of a remuneration committee
Experience in executive and non-executive director roles at the highest levels including as chair of a FTSE 100 company
Strong technology background with a record of using e-commerce to drive commercial success
Expertise in mentoring leaders to achieve greater clarity of purpose and provide a practical approach to problem-solving
Key previous experience
Senior independent director of Jardine Lloyd Thompson Group
Chief executive officer of Europe General Insurance for Zurich Financial Services
Chief executive officer of the Direct Line Group
Director of the board of the Association of British Insurers and Foxtons Group plc
Key external commitments
Chair of Admiral Group plc
Senior Independent Director
Member of the Remuneration Committee, the Audit and Risk Committee and the Nomination Committee
Appointed
1 January 2014
Skills
Experienced non-executive director and board chair
Wealth of experience gained across a number of customer-focusedblue-chip businesses in the UK, Europe and the US
Strong knowledge of marketing and customer service and bringing deep insight to how Sage may expand markets and delight customers
Key previous experience
Senior independent director of WH Smith plc Senior independent director of FirstGroup plc Chair of Mitchells & Butlers plc
Chief executive officer of Dairy Crest Group plc
Majority of career was spent with Procter & Gamble, Mars and PepsiCo
Key external commitments
None
70 Annual Report and Accounts 2021 | The Sage Group plc.
Derek Harding | A | Steve Hare |
Independent Non-executive Director | Chief Executive Officer | |
Member of the Audit and Risk Committee | Appointed | |
Appointed | 3 January 2014 as Chief Financial Officer ("CFO") | |
2 March 2021 | 31 August 2018 as Chief Operating Officer, and as | |
Skills | Chief Executive Officer ("CEO") on 2 November 2018 | |
Skills | ||
Significant financial experience including leading | ||
business transformations and sharp financial acumen | Significant financial, operational and transformation | |
Broad experience across a range of commercially | experience which includes driving change programmes | |
focused financial and operational roles including | in several of his previous roles | |
strategy, investor relations, mergers and acquisitions | Broad knowledge of Sage, having joined the Board in | |
Key previous experience | January 2014 as CFO | |
Chief financial officer at Senior plc | Key previous experience | |
Group finance director at Shop Direct | Extensive understanding of the drivers and priorities | |
Finance director of Wolseley UK | needed to complete Sage's evolution to a SaaS | |
company and to create a high-performance culture | ||
Key external commitments | Operating partner and co-head of the Portfolio Support |
Chief financial officer at Spectris plc | |
Group at the private equity firm Apax Partners | |
Chief financial officer for Invensys plc, Spectris plc and | |
Marconi plc | |
Key external commitments | |
None |
Changes to the Board during FY21 and the year to date:
- Derek Harding was appointed as an independent Non-executive Director on 2 March 2021
- Andrew Duff was appointed as an independent Non-executive Director on 1 May 2021 and as Non-executive Chair on 1 October 2021
- Sir Donald Brydon stepped down from the Board on 30 September 2021
Further information on the appointments and Board succession planning activities can be found on pages 104 and 105.
Further information on the composition of the Board can be found on page 75.
Jonathan Howell
Chief Financial Officer
Appointed
15 May 2013 as a Non-executive Director and as CFO on 10 December 2018
Skills
Highly experienced group finance director as well as experience as a chairman and non-executive director
Significant financial and accounting experience gained across several sectors which allow him to provide substantial insight into the Group's financial reporting and risk management processes
Excellent working knowledge of Sage, having joined as an independent Non-executive Director and acting as the Chair of the Audit and Risk Committee for six years
Key previous experience
Group finance director of Close Brothers Group plc Group finance director of London Stock Exchange Group plc
Non-executive director of EMAP plc Chair of FTSE International
Key external commitments
Independent non-executive director of Experian plc
Irana Wasti
Independent Non-executive Director
Date appointed to the Board
1 May 2020
Key strengths and experience
Experienced leader driving international growth
by enabling everyday entrepreneurs to start, grow and run their businesses online
Experience in product development, creating brand identity, go-to-market strategy, customers' experiences, sales and support across diverse cultural regions
Key previous experience
President of GoDaddy EMEA and previously held the role of SVP and general manager for GoDaddy's Productivity business
Worked for Intuit and oversaw launch of QuickBooks POS with Mobile Payments integration
Product and development roles at Google and IBM
Key external commitments
Chief product officer of Typeform
Key
- Audit and Risk Committee See pages 110 to 119
- Nomination Committee See pages 102 to 109
- Remuneration Committee See page 120 to 157
New appointment
Full biographies can be found on our website at sage.com.
Annual Report and Accounts 2021 | The Sage Group plc. | 71 |
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Sage Group plc published this content on 02 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 December 2021 09:10:07 UTC.