UK Corporate Governance, reference to s.172 CA 2006 and interaction with stakeholders, designated non-exec for colleagues, culture

Dunelm Group plc – Annual report – 29 June 2019

Industry: retail

Corporate Governance Report (extract 1)
s172 Companies Act 2006
As a Board we have always taken decisions for the long term, and collectively and individually our aim is always to uphold the highest standards of conduct. Similarly, we understand that our business can only grow and prosper over the long term if we understand and respect the views and needs of our customers, colleagues and the communities in which we operate, as well as our suppliers, the environment and the shareholders to whom we are accountable. This is reflected in our business principles, and our Sustainability report sets out more detail on how we manage our relationships with them.

The Company Secretary sets out the text of s172 Companies Act 2006 on every Board agenda by way of a reminder. We ensure that its requirements are met and the interests of our stakeholder groups are considered through a combination of the following:
• Standing agenda points and papers presented at each Board meeting: for example, the Chief Executive Officer presents a Customer report, a Health and Safety report and an update on People matters at each meeting
• A rolling agenda of matters to be considered by the Board through the year, which includes a two-day strategy review, which considers the purpose and strategy to be followed by the Group, supported by a budget for the following year and a medium term (five-year) financial plan; agenda items for the following year are set based on the decisions and next steps agreed at these meetings
• Regularly scheduled Board presentations and reports: for example, investor feedback twice a year from our brokers and corporate PR advisors; an update on People matters and a “Colleague Dashboard” twice a year; an annual presentation on health and safety, annual updates on ethical trading, modern slavery and climate change/sustainability • Formal consideration of any of these factors which are relevant to any major decisions taken by the Board through the year
• Review of many of these topics through the risk management process and other standard Audit and Risk Committee and Remuneration Committee agenda items, as described later in this report
• Engagement with our stakeholders, as described to the right

How the Board engages with our stakeholders
One of our business principles is to ‘keep listening and looking’, no matter how big and successful we get. As a Board we must always be open to feedback from our customers, our colleagues, and anyone affected by our activities. Over a Board dinner in October, we took time to consider how we engage with our stakeholders, and as a result we included some additional items on our rolling agenda this year:
• One of our largest and long-standing suppliers met with us in January, and gave their views on the benefits and challenges of being a Dunelm supplier. As a result we have identified a number of ways in which we can work together more successfully
• Engagement with our colleagues, as described to the right
• We invited the Chief Executive of a large Academy Trust to meet with us in July, to help us understand the challenges faced by young people, our potential customers and colleagues, many of whom are growing up in a disadvantaged household
Summary of how the Board engages with our stakeholders

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Engaging with our colleagues
We have asked Marion Sears to be our ‘Designated Non-Executive Director’ to engage with our colleagues. Marion attended the National Voice Forum meetings in September and April, and fed back to the Board afterwards. In addition, in November, National Voice Forum members were invited to the AGM, and met with the Board afterwards. The Chairman and other Board members answered a number of questions posed by the Forum, and also asked Forum members to suggest ways that we can improve our business for the benefit of our customers. We will repeat this meeting in November 2019. In April we used the National Voice Forum to engage with colleagues on remuneration, describing our policies and approach, and asked for feedback. Further detail is in the Implementation Report section of the Remuneration Report.

We also asked our graduate intake to meet the Board in July, to help us to understand how millennials make their decisions on where and how to buy homewares, and where they want to work. We found this to be a useful and refreshing way of learning how our younger customers and potential colleagues see us, and will invite our graduates to the Board regularly.

We have an open culture and Non-Executive Directors are free to make direct contact with senior management and store teams. Throughout the year all Directors have visited stores and other Company locations, both informally and together with members of the senior management team. The Chairman attends the annual seminar, attended by store managers and key support colleagues. We have an ‘always on’ colleague feedback system, and management review this and respond. We also have a twice yearly engagement survey, the results of which are fed back to managers, the Executive Board, and the People Director covers this as part of her regular presentations to the Board. During the year we have also developed a ‘colleague scorecard’ bringing together key colleague measures, including engagement, retention and gender pay. This is reviewed by the Board at least twice a year.

Investor relations and understanding shareholder views
The Chief Executive Officer and the Chief Financial Officer report back to the Board after the investor roadshows. The Group’s brokers and financial PR advisers also provide a written feedback report after the full and half year results announcements and investor roadshows to inform the Board about investor views, and in addition Non-Executive Directors attend a selection of investor presentations.

In January 2018, we held one of our regular Corporate Governance meetings, attended by the Chairman, Will Adderley, the Non-Executive Directors and Company Secretary, to which our major institutional shareholders were invited. This gives the corporate governance representatives of our shareholders an opportunity to discuss with us a range of governance topics. Matters discussed included Board composition, the work of the Audit and Risk Committee, remuneration, risk, cyber security, human rights and the environment. We are planning to hold another meeting in January 2020.

Our corporate website contains useful shareholder information, copies of presentations and policies in relation to governance and sustainability. Please see https://corporate.dunelm.com.

All Directors will be available at the Annual General Meeting to meet with shareholders and answer their questions.

Corporate Governance Report (extract 2)
How the Board oversees culture
Overview – Dunelm has an open and straightforward culture, with a focus on doing the right thing, and taking decisions for the long term. This reflects the values instilled by the Adderley family, who founded our business 40 years ago and are still our major shareholders. The Board has always been careful to ensure that we protect and retain this culture as the business grows and becomes more complex.

Purpose and business principles – The Board has defined the Group’s ‘purpose’, namely “to help everyone create a home they love”. This is supported by three customer promises, and underpinned by our business principles, which define how we will act towards others. Members of the Board and the leadership team are expected to act as role models for our business principles, and all colleagues are appraised against them. Further details of this are set out in the Strategic Report.

Code of business conduct – Alongside our business principles we have a Code of Business Conduct, available on our website https://corporate.dunelm.com, which sets out the specific standards of conduct that our Board and colleagues are expected to meet. We have a separate anti-bribery and anti-corruption policy, and senior colleagues and colleagues who have the ability to influence purchasing decisions receive training on induction and annual refresher training.

Colleagues – We aim to inspire, engage and develop all of our colleagues to reach their full potential, without any form or discrimination. The Board engages directly with our colleagues in a number of ways as set out below. By hearing, respecting and responding to our colleagues, we inspire them to deliver the best experience to our customers and deliver our strategy.

Suppliers – We also expect our suppliers to adhere to our standards of conduct; all suppliers are asked to sign our anti-bribery and anti-corruption policy (or commit to an equivalent policy), and to sign our Code of Conduct which commits them to appropriate ethical and human rights standards (including
anti-slavery).

‘People and culture’ is one of our ‘principal risks’, which are considered formally by the Executive Board and the Board twice a year.

Monitoring – Board members monitor adherence to the culture in a number of other ways, including by visiting Group locations and interacting with colleagues as part of their Board duties. The Board also regularly reviews a number of ‘culture’ indicators, such as colleague and customer satisfaction scores, accident statistics, internal audit reports, whistleblowing data, and regulatory enforcement. We review a set of culture KPIs by the Board annually, most recently in August 2019.

Principal Risks and Uncertainties (extract)

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