SThree plc SThree plc 88 Annual Report and Accounts 2020 Annual Report and Accounts 2020 89

CHAIR’S GOVERNANCE STATEMENT

SThree has always been driven by core business principles, led by a desire to add value as a recruitment partner and play a positive role in corporate social responsibility. Our We continue to shape and develop During the year, key governance and purpose, values and culture demonstrate a commitment to our culture with a focus on diversity oversight activities included: take long-term decisions and to treat all clients, candidates, employees, suppliers and communities with respect as key and inclusion, and have continued stakeholders and partners in our business. Our approach to • Adapted the Board and Committees to the stakeholder engagement during the year is set out in new ways of working in order to remain this report. oversight of the Group’s diversity effective whilst strengthening the and inclusion initiatives.” governance, financial and other controls We held our annual Board strategy session in July 2020, at needed in the face of unusual uncertainty which the Board engaged around development of the due to COVID-19. strategy as we look to build further growth in key regions, with Dear Shareholder STEM recruitment and flexible working at our core, whilst also James Bilefield • Reinvigorated our global approach to accelerating our key strategic programmes. The unprecedented events we have witnessed this Chair Diversity and Inclusion (‘D&I’), creating a new year, including a global pandemic and widespread Global Diversity, Inclusion & Engagement With the pandemic impacting the decision not to pay BLM protests, have heightened the importance of Business Partner role and launching global dividends during 2020, we also took the opportunity to review ensuring that all of our stakeholder interests remain at engagement and D&I programmes, our broader cash collection and preservation measures. the centre of the Board’s deliberations, in line with our underpinning our succession and Following on from addressing the key themes highlighted by Group purpose and Section 172 of the Companies Act. wellbeing plans. our Board evaluation last year, the Board has conducted It is my responsibility as Chair to ensure that the Group has • Built on a review of wider leadership roles, another internal evaluation covering topics such as Board sound corporate governance and that the Board succession and ‘capability gaps’, including composition, our understanding of our stakeholders, strategy, continues to be effective. This is managed by ensuring that the layer below the leadership team, which culture and risk management. Further details are provided in the Group and the Board are acting in the best interests of led to the recruitment of the Chief Operations the Nomination Committee report. shareholders and our various stakeholders and making Officer (‘COO’) and other key supporting We continue to shape and develop our culture with a sure that the Board discharges its responsibilities roles, whilst promoting our regional senior renewed focus on diversity and inclusion and have appropriately. This includes creating the right Board MDs following the departure of our Chief continued oversight of the Group’s initiatives in this important dynamic and ensuring that all important matters, in Sales Officer (‘CSO’). area. Further information on diversity and gender pay can be particular strategic decisions, receive adequate time and found in the Strategy in Action section. attention at Board meetings. • Reviewed and supported a refreshed and focused strategy and held regular reviews of Finally, I would like to take this opportunity to thank all of our I am therefore pleased to introduce our Governance the transformation agenda. stakeholders for their support during this exceptional year. report for the year ended 30 November 2020. The SThree I, along with the Board, am available to respond to any Board aspires to adopt FTSE 250-level governance best • Ensured remuneration arrangements questions on this report or any of our activities both now and practice wherever possible and therefore decided to early generally and appropriately support at the 2021 Annual General Meeting. adopt the changes to the UK Corporate Governance retention and motivation of senior team Code published by the Financial Reporting Council (‘FRC’) members and the wider employee base. in July 2018 (the ‘Code’), even though the changes were • Implemented our new remuneration policy, James Bilefield not applicable last year. A copy of the 2018 Code is approved by shareholders at the 2020 AGM. Chair available from the Financial Reporting Council’s website • Continued to use eNPS as well as dedicated at frc.org.uk Non-Executive Director (‘NED’) involvement in employee engagement throughout the pandemic.

• Made progress on our commitment to reduce our absolute carbon emissions by 20% by 2024, as well as further strengthening our societal workstreams under our ESG strategy. SThree plc SThree plc 90 Annual Report and Accounts 2020 Annual Report and Accounts 2020 91

BOARD AT A GLANCE

Skills matrix Board of Directors • Responsible for the overall management of the business

• Sets strategy, key policies and agrees operational framework James Bilefield Anne Fahy Denise Collis Barrie Brien Mark Dorman Alex Smith • Ensures resources are in place to meet strategic objectives

• Monitors and reviews material/strategic issues, financial Independence performance and risk management Skill areas

Sales

Finance

Audit Committee Remuneration Nomination People Committee Committee Strategy Ensures the integrity of the Consolidated Responsible for the Group’s remuneration Regularly reviews the structure, size Transformation Financial Statements of the Group and strategy and the development/oversight and composition (including the skills, maintenance of internal control and risk of the Company’s remuneration policy. knowledge, experience and diversity) of management systems. the Board and layer below. Data Leads discussions on Group Manages the relationship with the employee remuneration and incentive Provides recommendations with regard Marketing Group’s external auditors and reviews arrangements that apply to the Group as to any changes and reviews and and monitors the external auditors’ a whole. prepares relevant job descriptions for Technology & Digital independence and objectivity and the new appointees, as well as ensuring the effectiveness of the audit process. continuing development of an adequate Governance pipeline into the Executive Team for succession and bench strength purposes.

Board – roles and responsibilities CEO CFO CEO Chair CEO/CFO Senior Independent Non-Executive Company Director (‘SID’) Directors (‘NEDs’) Secretary Senior Leadership Team (‘SLT’) Risk & Compliance Committee (‘R&CC’) ESG (formerly CSR) Committee

Responsible for: Responsible for: Responsible for: Responsible for: Responsible for: – The leadership, CEO: – Supporting the Chair – The Group’s strategy – Advising the Board on Assists the Chief Executive Officer in Assists the Group with its compliance Assists with setting guidance, direction effectiveness and – Developing and proposing – Acting as an intermediary being reviewed, governance matters development and implementation of and risk management priorities whilst and overseeing policies and progress on governance of the Board the strategy of the Group for other Non-Executive monitored and examined – Supporting the Board and strategy, operational plans, policies, also reviewing the Group’s internal ESG and related activities. – Leading the setting of the – Operational and financial Directors – Monitoring operational Committees in the efficient procedures and budgets. controls, policies and health and Board agenda performance of the Group – Leading the appraisal of and financial performance and effective functioning of safety procedures. – Ensuring the Board receive – Operational risk the Chair’s performance – Assessing the governance, meetings accurate, timely and clear management – Acting as an alternative internal controls and risk – Ensuring information flow information – Effective and ongoing point of contact for key management framework between Board/risk – Ensuring effective Board communication with our stakeholders – Providing independent committees and senior contribution key stakeholders advice individuals/NEDs – Communicating the – Facilitating Board induction Board Composition culture, values and programmes and behaviours of the Group organising training as Board diversity Board tenure Board experience Board composition CFO: required Male 0-3 Years HR/Finance Non-Executive – The financial aspects of Female 3-5 Years Engineering and Technology Chair the above 5+ Years Media and Marketing Executive Sales/Operations

16% 17% 17% 33% 33% 17% 50% 50% 67%

66% 17% 17% SThree plc SThree plc 92 Annual Report and Accounts 2020 Annual Report and Accounts 2020 93

BOARD OF DIRECTORS Denise Collis A N R Committee at Connect Group plc, the specialist distribution company, and Chair Non-Executive Director, of the Remuneration Committee and a Senior Independent Director member of the Advisory Council at the British Appointed: July 2016 Heart Foundation. Prior to this, Denise was Group HR Director for 3i Group plc, and most Experience recently Chief People Officer for Bupa. She Denise Collis was appointed to the SThree has extensive international Human Resources Board, Nomination Committee and and executive committee experience, and Executive Directors Non-Executive Directors Remuneration Committee in July 2016, and has also held senior roles at EY, Standard the Audit Committee in April 2018. Denise Chartered plc and HSBC. Denise is a Fellow A N R was further appointed as Chair of the of the Chartered Institute of Personnel Committee membership Remuneration Committee in September and Development. She was appointed as 2016 and Senior Independent Director (‘SID’) SThree’s Employee Engagement NED on A. Audit Committee in October 2018. Denise is a Non-Executive 1 December 2018. N. Nomination Committee Director and Chair of the Remuneration R. Remuneration Committee Chair

Mark Dorman Mark worked at Wolters Kluwer where he was Anne Fahy A N R recapitalisation/restructuring in 2019, a 2% initially Vice President of their Legal Markets shareholding in the Nyrstar group. Anne is Chief Executive Officer Non-Executive Director Group before becoming CEO of Wolters also a Trustee of Save the Children. Prior to Appointed: March 2019 Kluwer Law & Business. Prior to this, Mark Appointed: October 2015 joining SThree, Anne was Chief Financial was Head of Global Product Management Officer of BP’s Aviation Fuels business. During Experience at Gartner Inc. and Head of Strategy for Experience her 27 years at BP, Anne gained extensive Mark Dorman was appointed SThree CEO LexisNexis UK, a unit of Reed Elsevier. A joint Anne Fahy was appointed to the SThree experience of global business, developing in March 2019, joining the business from UK/US national originally from Dundee, Board, the Nomination Committee and as markets, risk management, internal control, McGraw Hill Education, where he was Scotland, Mark graduated from the Royal Chair of the Audit Committee in October compliance and strategy development in President of Higher Education, International Military Academy Sandhurst and served as 2015, and the Remuneration Committee BP’s aviation, petrochemicals, trading and and Professional. Prior to McGraw Hill, an officer in the British Army’s Corps of the in April 2018. Anne is also Non-Executive retail sectors. Anne is a Fellow of the Institute Royal Military Police. Director and Chair of the Audit Committee of Chartered Accountants in Ireland, having at Coats plc, the world’s leading industrial worked at KPMG in Ireland and Australia prior thread company, and at Nyrstar NV, to joining BP in 1988. a company incorporated in Belgium Alex Smith and was Finance Director of First Choice’s which has, following completion of its UK mainstream business. Prior to these Chief Financial Officer positions he was Managing Director of Appointed: May 2008 WH Smith’s Travel Retail business and held Barrie Brien A N R Barrie was extensively involved in the growth of Creston plc from 2004 with its senior financial roles at Travelodge and Non-Executive Director Experience Forte plc. Alex has a degree in Economics buy-and-build strategy and had also been Appointed: September 2017 Alex Smith joined SThree having held a from Durham University and is an Associate Chief Operating and Financial Officer. In number of senior financial and of the Institute of Chartered Accountants in addition to the extensive public company operational roles in the leisure and retail England & Wales. Experience experience, including M&A, fundraisings sectors. He previously held the position of Barrie Brien was appointed to the SThree and investor relations, Barrie has spent 30 Integration Finance Director at TUI Travel plc Board, Audit, Nomination and Remuneration years in global media, digital and marketing Committees in September 2017. Barrie is communication companies, advising Group Chief Executive Officer of STRAT7, a a portfolio of boards and clients across data analytics and strategy consultancy, multiple industries on their growth strategies. and was the former Chief Executive Officer of Creston plc (a media and marketing Audit, Nomination, Risk and Remuneration James Bilefield A N R communications group), stepping down Committees. Other appointments include Chair in 2017 following its sale and de-listing. McKinsey & Company (Senior Advisor), Appointed: October 2017 Advent International (Industry Advisor) Steve has significant company secretarial and Teach First (Trustee). James has spent Steve Hornbuckle experience, having held senior positions Experience over 20 years building successful digital Group Company Secretary within a variety of listed companies, James Bilefield succeeded Clay Brendish as and multichannel businesses around the Appointed: October 2006 including Intertek Group plc, BPB plc, Chair in April 2018, having previously been world. As an executive he managed the Kidde plc, Railtrack Group plc, London & Chair Designate and Senior Independent digital transformation of media group, Experience Manchester Group plc and English China Director, from first joining the SThree Board Condé Nast, across 27 countries, scaled Steve Hornbuckle joined SThree as Clays plc. Steve is a Fellow of the CGI and as Non-Executive Director and member of Skype’s global operations as part of its Group Company Secretary in October sits on its Company Secretaries’ Forum and the Remuneration, Audit and Nomination founding management team and held 2006, creating a new department with was formerly on the Investor Relations Society Committees on 1 October 2017. He joined senior management roles at Yahoo! during responsibility for company secretarial Policy Committee. the Board of Stagecoach Group plc on its major growth phase. Formerly Chief and corporate governance matters, later 1 February 2016, where he currently serves Executive Officer of global advertising broadening to include Investor Relations on the Remuneration and Nomination technology company, OpenX, he also co- matters. Steve also headed the Group’s Committees. James is also Non-Executive founded the UK local information business, Legal department from 2013 to 2019. Director of Moneysupermarket.com Group UpMyStreet, following an investment banking PLC, where he also is a member of their career at JP Morgan Chase. SThree plc SThree plc 94 Annual Report and Accounts 2020 Annual Report and Accounts 2020 95

OUR BOARD

Board and Committee varied range of skills, vital to the success of the Group. The Division of responsibilities Directors are entitled to obtain independent professional composition and attendance composition and performance of the Board and each advice, at the Company’s expense, on the performance The Board has agreed Terms of Reference for its other formal Committee is periodically evaluated to ensure the of their duties as Directors. All Committees are serviced As illustrated, the Board has established various Committees, Committees in order to facilitate more efficient working appropriate balance of skills, expected time commitment, by the Group Company Secretary’s team and are each with clearly defined Terms of Reference, procedures practices and these include an Executive-led Senior knowledge and experience and the Directors can thereby appropriately resourced. and powers. All Terms of Reference (available at www.sthree. Leadership Team (‘SLT’), the Investment Committee, a ensure that the balance reflects the changing needs of the com) are reviewed regularly and are aligned closely with the Minority Interest ‘Tracker Shares’ Steering Committee, a Directors have access to the advice and services of the Group’s business and is refreshed if necessary. Most UK Corporate Governance Code and take into account CGI Routine Business Committee, Risk & Compliance Committee, Group Company Secretary, who is responsible to the Board importantly of all, Board members feel a strong cultural best practice guidelines. and an ESG Committee, all of which provide a clear for ensuring that its procedures are complied with and to affinity with the Group, engaging fully as a committed team framework of delegated authorities. Key Terms of Reference assist in arranging any additional information as required. In addition to the scheduled Board meetings held during the and in a wide variety of activities with our employees around (available at www.sthree.com) are reviewed periodically and The appointment and removal of the Group Company year, the Board met for separate strategy, budget and risk the globe, whether it be an office visit, or presentation by Board Committees are aligned, as appropriate, with the UK Secretary is a matter reserved for the Board as a whole and sessions, as well as for the AGM. The number of scheduled management. The Nomination Committee report gives Corporate Governance Code and take into account CGI the last appointment was made in October 2006. Board/Committee meetings held and attendance at each is further information on activity in this regard, including best practice guidelines. set out in the table below. The Board also met bi-weekly changes in Board composition, succession planning and Section 172 duties, including link to purpose, values during the initial stages of COVID-19. diversity and inclusion activity. The Board is responsible to shareholders for the proper and culture management of the Group and has identified key financial Should Directors be unable to attend meetings due to Excluding the Chair, the other NEDs have been determined and operational areas that require regular reporting and Directors must act in the way they consider, in good faith, unavoidable commitments, full Board packs are distributed by the Board throughout the year as being independent in which enable the performance of senior management to be would be most likely to promote the success of the Company and separate dialogue held with the Chair on all matters of character and judgement with no relationships or reviewed and monitored. These are set out in a schedule of for the benefit of its members as a whole, and in doing so relevance. Further details of each of the Board Committees circumstances which are likely to affect, or could appear to matters reserved for the Board, which is reviewed on a have regard (amongst other matters) to the: are contained in the Remuneration, Audit and Nomination affect, each Director’s judgement. regular basis. Committee sections of this Annual Report. • likely consequences of any decision in the long term; The Board has a Non-Executive Chair, who is not classed as The schedule outlines all matters requiring specific consent of • interests of employees; Director Board meetings attended Total independent because of his position but who met the the Board, which include, inter alia, the approval of Group • need to foster business relationships with suppliers, Mark Dorman 8 independence criteria set out in the Code on appointment. strategy, operating plans and annual budget, the Annual customers and others; Alex Smith 8 At least half the Board comprise of NEDs determined by the Report, the Interim Report and trading updates, major • impact of operations on the community and James Bilefield 8 Board to be independent, as set out in the Code. divestments and capital expenditure, meaningful the environment; Denise Collis 8 acquisitions and disposals, the recommendation of • desirability of maintaining a reputation for high standards Anne Fahy 8 The role of the Board dividends and the approval of treasury, tax and risk of business conduct, and Barrie Brien 8 The Board provides strategic and entrepreneurial leadership management policies. • need to act fairly as between members. and overall control of the Group, setting a framework of Composition of the Board As a purpose driven organisation, this also drives our prudent and effective controls to enable risks to be properly The schedule therefore facilitates structured delegation, subject to certain financial limits and provides a practical approach to values and culture, to help deliver on our The Board comprises a balance of Executive Directors and assessed and managed. Its primary role is to create value for framework for executive management/reporting, which seeks strategy. Board and Committee meeting attendees are NEDs who bring a wide range of skills, experience and stakeholders, to agree and approve the Group’s long-term to achieve the objectives of maintaining effective financial reminded of these duties at the start of each meeting, knowledge to its deliberations. The NEDs fulfil a vital role in strategic objectives and to develop robust corporate and operational controls, whilst allowing appropriate flexibility including considering the long-term impact of decisions, corporate accountability and have a particular responsibility governance and risk management practices, whilst ensuring to manage the business. The current schedule of matters whilst aiming to uphold the highest standards of governance. to ensure that the strategies proposed by the Executive that the necessary financial and other resources are in place reserved for the Board is available on the Company’s website Directors are fully discussed and critically examined, not only to enable those objectives to be met. In undertaking this, the Engagement with shareholders/constructive at www.sthree.com. in the best long-term interests of shareholders, but to also take Board also reviews management performance and sets the use of AGM account of the interests of customers, employees and other Company’s culture, values and standards, with all Directors Information and support As a listed plc, engagement with shareholders is given a high stakeholders. The NEDs are all experienced and influential acting in what they consider the best interests of the priority, as part of a comprehensive investor relations individuals and through their mix of skills and business Company, consistent with their statutory duties. Board and Committee meeting papers are circulated well in programme. The Company produces Annual and Interim experience, they contribute significantly to the effective advance of the relevant meeting and where a Director is Certain powers are delegated to the Remuneration Reports for shareholders and the Company’s website functioning of the Board and its Committees. This ensures unable to attend he/she is provided with a copy of the Committee, Audit Committee and Nomination Committee, contains up-to-date information on the Group’s activities, that matters are fully debated and that no one individual or papers and has the opportunity to comment on the matters with details of the roles and responsibilities of these investor presentations and published financial results. small group dominates the decision-making process. under discussion. Committees being set out under the relevant sections. Shareholders can also subscribe for email alerts of important Directors have a wide range of experience of various industry The Group Company Secretary helps to ensure information announcements made. There are regular meetings with sectors relevant to the Group’s business and each member flows between the Board/Committees and senior institutional shareholders and analysts following key trading brings independent judgement to bear in the interests of the individuals/NEDs, and appropriately advises the Board updates, whilst ensuring that price sensitive information is Company on issues of strategy, performance, resources and on governance matters. released at the same time to all, in accordance with best standards of conduct. The Board is of sufficient size to match practice market rules. business needs and members have an appropriate and SThree plc SThree plc 96 Annual Report and Accounts 2020 Annual Report and Accounts 2020 97

OUR BOARD continued

There is also dialogue on specific issues, which have included All Board members are encouraged to attend the AGM and Key stakeholders Why stakeholders How stakeholders and other Examples of decision-making remuneration policy, governance and tracker shares, as well the Chairs of the Audit, Nomination and Remuneration are identified as key matters are considered/impact influence/key impacts as the recruitment of the SID/Chair and audit tender. In Committees are available to answer questions. Clients/customers Critical to understand Feedback from regional MDs In deciding to withdraw from between trading updates, there is continued dialogue with The Notice of AGM is posted at least 20 working days prior to or suppliers client/customer needs, at Board meetings, surveys/ Australia to focus on our top five the investor community by meeting key investor the date of the meeting and the Company’s website contains behaviours and evolving NPS scores or social media; core regions, the Board had to representatives, holding investor roadshows and participating copies of all Notices issued. demands, to retain also financial performance. weigh up various competing key in conferences. Investor sentiment is regularly relayed to the and attract business, stakeholder impacts. Ultimately, Board, whilst meetings between management and debt Engagement with employees provide opportunities Tenders, long-term the long-term desire for strategic providers, principally the Company’s banks, also take for growth and deliver partnerships for suppliers. and shareholder focus was place periodically. Denise Collis was appointed on 1 December 2018 as the relevant services or prioritised whilst attempting to designated NED responsible for employee engagement, to against requirements. Impacts the range of minimise any short-term The Chair, SID and other NEDs are available to discuss gather views from employees and ensure that these are services offered, efficiency adverse client/candidate or governance, strategy or other issues, or should there be brought into the Boardroom. In carrying out this role, Denise Suppliers are vital to ensure and quality, as well as people impacts. matters of concern that have not been, or cannot be, has met with a diverse range of employees, at all levels of efficient and best service. reputation, ethical trading, addressed through the Executive Directors. During the year, seniority, whilst also engaging with Group and local HR Engaging with our supply long-term relationships and The decision to right-size and chain means that we can financial performance. refocus the business as a result both the Chair and SID were available to shareholders, with teams. See separate Employee Engagement section. the Chair and Group Company Secretary holding separate ensure security of systems of the COVID-19 pandemic also to deliver efficiently. required prioritisation of new investor meetings, the results of which were fed back to Stakeholder influence in decision-making the Board. customer trends and demands in To ensure the continuing success of the Group in setting the short term, whilst retaining the Views of analysts, brokers and institutional investors are strategy, making decisions and addressing principal risks, key skills, capacity and management sought on a non-attributed basis via periodic sentiment stakeholders are considered as part of the business model capability to fulfil our long- surveys and these, as well as regular analyst and broker and value chain. term ambitions. publications, are circulated to all Directors to ensure that they develop a full understanding of the views of shareholders. The Board annual programme, reviewed each year, is Project Helix and other Any issues or concerns are raised and discussed at the designed to ensure the voice of each stakeholder group is transformation projects all reflect this renewed focus. Board, and Directors routinely receive regular reports on heard, either directly, (e.g. by inviting customers to a Board meeting) or indirectly, (e.g. through independent surveys or share price, trading activity and sector updates. Candidates Vital to understand Feedback from regional MDs NPS or other surveys are reviewed management reports). or candidate candidate profiles, at Board meetings, surveys/ by the Board with any follow- The Board views the AGM as an opportunity to communicate communities behaviours, priorities and NPS scores or social media. up actions closely monitored. with private and institutional investors alike and welcomes The Board oversees and challenges the executive on challenges to ensure Ensuring sustainable and Candidate videos are also active participation. Whilst COVID-19 restrictions prevented stakeholder engagement and its influence on strategy by including appropriate direct or independent assessments, optimal job match for both personable relationships, utilised to promote SThree and/ shareholders attending the AGM in person in April 2020, candidates and clients. building reputation and or client communities and use (e.g. investor or client/customer survey feedback), but also questions were invited in advance, with these and any financial performance. direct feedback. answers to be published on the website, if helpful. Alternative ensuring appropriate stakeholder management processes options, such as holding a virtual AGM, may be considered are in place, (e.g. by facilitating escalation procedures and This was reflected in how we in the future. complaints/grievance mechanisms, (e.g. whistleblowing), reached out to candidates which are also appropriately reviewed or audited, assigned to clients during The Company proposes a separate resolution on each as needed. COVID-19, as well as other substantially separate issue and the proxy appointment forms support mechanisms. for each resolution provide shareholders with the option to The issues, factors and stakeholders that the Board considers direct their proxy to vote either for or against any resolution or relevant to complying with Section 172 are set out in the Employees Our greatest asset, eNPS engagement Lockdown restrictions meant to withhold their vote. Section 172 statement and also summarised in the following or people interactions with surveys, retention statistics, having to adapt quickly to support table. This includes activities, key focus areas, principal employees significantly recognition and reward, global remote working. This meant The Company’s registrars ensure that all valid proxy decisions made versus consideration of stakeholders, as well impact customer Learning & Development approving the fast tracking of appointments received for the AGM are properly recorded as any difficulties (such as where trade-offs have been made, experience of our Board updates. Employee our capex/IT spend including and counted and a schedule of proxy votes cast is made e.g. between stakeholders or short versus long-term benefit), brands. Employees are Engagement NED activity. laptops and digitalisation of fundamental to the internal processes, as well as available to shareholders attending the meeting. There is also KPIs and future consequences or planned actions. full disclosure of the voting outcome via the London Stock achievement of our Improving Company culture, investing in appropriate L&D customer experience values, reputation, wellbeing, and support mechanisms to our Exchange and on the Company’s website as soon as ambitions and are the career opportunities, employees, whilst managing the practicable after the AGM. cornerstone of our services training and development, short-term cash impact, plus the proposition, looking after recognition and reward, wellbeing and THRIVE initiatives our clients, candidates retention and diversity and also launched to support our and processes. inclusion targets. employees in the new working environment. SThree plc SThree plc 98 Annual Report and Accounts 2020 Annual Report and Accounts 2020 99

OUR BOARD EMPLOYEE ENGAGEMENT continued

Key stakeholders Why stakeholders How stakeholders and other Examples of decision-making are identified as key matters are considered/impact influence/key impacts Last year we reported to shareholders on

Investors As a listed plc, primary Roadshows, conferences, The impact of COVID-19, my appointment as the designated NED responsibility to investors Capital Markets Days, AGM/ particularly in its early stages, to communicate other meetings, trading required swift action to protect responsible for employee engagement, strategy effectively, updates, shareholder our long-term going concern provide fair, balanced/ consultations, website, and liquidity position. A range of the various activities undertaken during understandable Annual/Interim Reports. measures were taken, including information, to instil trust Capital allocation/dividend not paying dividends during 2019 and the key issues raised by our and confidence and policy, performance versus 2020, as well as right-sizing the allow informed investment peers, broker or independent business and Director salary employees. This year, we have accelerated decisions to be made; sentiment surveys. cuts/forgoing bonus. Whilst also delivering share price/ noting the adverse impact of not our efforts and I am pleased to report that dividend growth. paying a dividend to our income focused shareholders, this action we have made good progress. was appropriate having also weighed up the overall impact of cost-saving measures taken, particularly on employees and others. As the year has progressed, the decision was taken to repay all UK Government assistance monies, with the Unfortunately, due to COVID-19, it has Following completion of the programme In addition, we have asked a selection dividend position to be actively not been possible to continue our in 2018, participants set up a self- of employees that I have engaged with monitored as we enter 2021. programme of office visits. However, the managed learning group, and I had this year to form a rolling sub-group that roll-out of laptops to all employees and the pleasure of attending two of their I can meet with regularly to effectively Community Giving something ESG Committee and reports the use of video conferencing has events, assuming an ongoing act as a litmus test for changing back, supporting to Board/shareholders. enabled me to connect more easily mentoring role. I have also had regular employee sentiment. STEM, long-term ESG investment and frequently with our people. I have catch-up sessions with the Chief People business sustainability. programme, volunteering, Finally, I would like to thank my Board run three focus groups drawn from a Officer as well as working closely with charitable giving. colleagues for their unstinting support mix of office locations, roles, seniority, the Global Diversity, Inclusion & for my employee engagement role, Environment Climate change is having ESG Committee and reports The Chair and CEO sit on the sales/non-sales mix, ethnic background Engagement Business Partner. and their commitment to turn the usual a growing impact in to Board/shareholders. ESG Committee to hear, first and gender, in mainland Europe, the At the Board meeting in November, we good intentions into tangible actions. shaping clients’, as well Enhancing environmental hand, about important initiatives USA and the UK, in addition to had a dedicated session on employee The progress we are making is only as our own activities with reporting in line with new and help shape our strategy. participating in a focus group market and regulatory regulations and setting Increasingly, the importance of engagement, where I presented my possible due to the tone set at the top dedicated to diversity issues. Through developments in this area targets to improve. ESG is being recognised by all of report along with a list of potential of the organisation and it is a pleasure these interactions, I had the opportunity presenting emerging risks our stakeholders so it is a relatively actions, many of which will now be to undertake this role in an to re-engage with participants from the and opportunities. ESG investment programme, straightforward decision for the implemented in 2021. organisation that is absolutely IdentiFy programme, a diversity initiative including recycling. Board to invest time, effort and committed to a culture where diverse aimed at identifying and developing Looking forward to 2021, we have resource to meet stakeholder talents are enabled to flourish. pressure but also as it is the right talented women across SThree. decided to hold two dedicated Board thing to do. sessions on engagement. I will continue to meet with a wide range of employees, both virtually and, hopefully, through a resumption of office visits. SThree plc SThree plc 100 Annual Report and Accounts 2020 Annual Report and Accounts 2020 101

EMPLOYEE ENGAGEMENT continued

Key opportunities arising Action taken during 2020 from employee feedback or planned for 2021

Better segmentation of audiences for communication Output from 2020 eNPS is to develop a clear people purposes and greater visibility of the Senior Leadership Team. communication strategy which will be co-owned by the More structure around celebrating success and morale CPO and Communications Director – with focus on people boosting activity. engagement, recognition and ‘celebrating success’.

More openness around planned improvements to IT and COO joined SThree in April 2020 with accountability for operational infrastructure. Technology & Operations. Clear strategy being developed and implemented with regular updates to the Board, Senior Leadership Team and more broadly organisationally where relevant. Case study

Continued focus on Diversity and Inclusion, with visible Acceleration of D&I strategy with focus on target setting and declarations of intent. data collation. Examples of accelerated activity include IdentiFy leadership training and awareness, a Senior Leadership Reverse Mentoring Programme, and bi-annual conversation groups with our people on diversity topics that are important Highlights: Participants reported that: to them. • Commenced in 2017, with 25 • Their confidence had high-potential women significantly improved • 12 months’ duration, with mix • The breadth of career of key learning events and opportunity had increased Improved L&D, particularly targeted at manager effectiveness Launch of Leadership Development Programme in coaching/mentoring • Their desire to pass on their and leadership development. partnership with Bridge in September 2020. Two initial cohorts • 18 participants still with personal learning had resulted now live, with further cohorts planned for 2021 in addition to SThree (72%) in them coaching others Denise Collis the Leadership Programme focused on culture, behaviours • 15 promotions, with one person • Their ability to effect change Non-Executive Director, and development of leadership narrative. promoted three times had increased, e.g. Senior Independent Director • 4 lateral moves developing a support blueprint • 11 maternity returners after for maternity returners participating A new IdentiFy programme will be • 7 leavers launched in 2021, with the original Further guidelines on remote working and upskilling of Remote and flexible working are pillars within the ‘reimagining participants invited to become managers, with more practical support for home working. work’ programme and this includes support focused involved with the new cohort. on technology availability, learning and development interventions, management training and will lead into broader H&S assessments (as an example). Keep listening. Keep having these focus groups and avenues for people to give their feedback and experiences and make sure that comes full circle so we feel like we are contributing to the positive Further work on levelling up the sales and non-sales Key strategic pillar in people plan to enable SThree to move changes that are being made”. groups around career paths, progression and market from UK-centric business to global operating company Angela King, competitive reward. is the review of global structures and frameworks US focus group. encompassing the grading structure, aligned reward framework and underpinned by clear career pathways and development planning. SThree plc SThree plc 102 Annual Report and Accounts 2020 Annual Report and Accounts 2020 103

NOMINATION COMMITTEE

This year, COVID-19 and high-profile news events have Succession planning and diversity The Committee considers future All Directors are subject to annual succession planning for Board or other re-election, although NEDs are typically During 2020, the Committee’s work was highlighted the importance of diversity and inclusion. Senior Executive roles, reviewing expected to serve for an initial term of focused on further strengthening the leadership, experience and skill needs three years, which, in normal Whilst we have made progress, like many organisations Senior Leadership Team around the and bearing in mind the existing circumstances and subject to CEO, whilst ensuring the continuing around the world we know that we have further work balance to ensure appropriateness. satisfactory performance/re-election at development of, and adequate to do to create a more representative Board and each AGM, is automatically extended pipeline into, the Executive Team, with Appointment processes, including annually. NEDs will normally serve no management team.” the appointment of a new COO with a the use of external search longer than nine years, subject to review strong IT background, in addition to the consultants as part of the AGM re-election process Chief People Officer (‘CPO’) role filled in and their agreement. The Company’s 2019. We also promoted our senior Appointments to the Board are the Articles of Association also contain regional Managing Directors (‘MDs’), responsibility of the full Board, upon the I am pleased to present to you the Summary of Terms of Reference recommendation of the Nomination provisions regarding the removal, Nomination Committee report. The following the departure of our Chief The Committee’s Terms of Reference Committee and after appropriate appointment, election/re-election report provides underlying detail on Sales Officer (‘CSO’), as well as are, broadly, to regularly review the external search/consultation, bearing in of Directors. the Committee and its activities refreshing the leadership of some of our structure, size and composition mind the Board’s existing balance of during the year, in compliance with key non-sales functions based in Commitment (including the skills, knowledge, skills, knowledge and experience, the the UK Corporate Governance Code Glasgow, including technology and experience and diversity) of the Board, specific role/capability needs identified, For Board vacancies, the Nomination (‘the Code’). marketing. Initiatives are ongoing make recommendations with regard to throughout the Group to ensure that and with due regard to diversity, Committee approves a detailed job This year, COVID-19 and high-profile any changes and to review and there is an appropriate management including gender. Succession plans are specification, which sets out the news events have highlighted the prepare relevant job descriptions for pipeline at all levels, having this year regularly reviewed by the Committee in indicative time commitment expected. importance of diversity and inclusion. new appointees, as well as ensuring the launched new internal talent and order to ensure an orderly progression/ Potential Director candidates are Whilst we have made progress, like continuing development of, and succession processes supported by refreshment of senior management/ required to disclose any significant many organisations around the world adequate pipeline into, the Executive both individual and collective Board members and maintain an outside commitments prior to Committee we know that we have further work to Team for succession and bench development interventions. appropriate balance of skills, appointment and must undertake that meetings attended do to create a more representative strength purposes. experience and diversity both within the they have sufficient time to meet these, Denise Collis continues to act as the Board and management team. Company and on the Board. in addition to Company business. Summary of core Committee designated NED responsible for The Committee engages external During the year we created our first activities carried out during employee engagement and to Upon joining, each NED receives a search consultants with respect to both senior Diversity and Inclusion (‘D&I’) the year: understand and represent the views of formal appointment letter which role within the Group, which is already employees at Board level. Denise has Executive and Non-Executive identifies their responsibilities and 2 • Reviewed and approved the Board appointments and considers applicants helping to shape and embed better attended a number of focus groups expected minimum time commitment, James Bilefield (Chair) 2/2 and senior management practices. Whilst gender metrics, with a wide range of employees during from all backgrounds, with appointees which is typically two to three days a Barrie Brien 2/2 succession plans including pay gap, are routinely the year, both face-to-face and virtually selected and chosen entirely on merit, month. These letters are available Denise Collis 2/2 • Reviewed the composition and reported, we are also looking to widen due to COVID-19 restrictions. These as was the case for the most recent for inspection at the Company’s Anne Fahy 2/2 effectiveness of the Board/ our data collection of ethnicity and focus groups have discussed subjects appointments, including the CEO in registered office, or by contacting Committees, with diversity other relevant criteria, where permitted, such as executive remuneration, March 2019. [email protected]. Full biographies are a key criteria available on pages 92-93 to assist in tracking our progress in these diversity and inclusion, and health Under the direction of the Nomination • Reviewed the Committee’s Terms of areas. This will help to further drive our and wellbeing. The Committee complies with Committee, each formal selection development and succession planning Reference (every two years) the requirement to have a The Committee also periodically reviews process is conducted consisting of a majority of independent processes and impact our culture. series of interview stages, involving Non-Executive Directors Board composition to ensure that the Directors and other Senior Executives, (‘NEDs’). Code provisions regarding diversity, over-boarding, Chair tenure and against the background of a specific Remuneration Committee Chair role/capability definition and objective experience are all complied with. criteria. Details of the composition, work and responsibilities of this Committee are set out under the relevant section later in this report. SThree plc SThree plc 104 Annual Report and Accounts 2020 Annual Report and Accounts 2020 105

NOMINATION COMMITTEE AUDIT COMMITTEE CONTINUED

Development Board evaluation The impact of COVID-19 has meant that strong At scheduled Board and Committee internal controls, risk management, liquidity, meetings, Directors receive detailed As recommended by the Code, Board and Committee evaluations were undertaken during the period under review, which took the form of electronic questionnaires reports from management on the viability and cyber/fraud protection are more circulated to all Board members and attendees. Overall, the Board scored highly across performance of the Group or specific a range of important dimensions. The key focus areas resulting from this exercise are important than ever, and the Committee has areas of focus and responsibility. NEDs summarised below and were discussed at the Board meeting in November 2020 with focused its activities accordingly.” may visit the Group’s sales offices or implementation to occur throughout 2021. other locations in order to join staff members and other stakeholders from Focus areas Suggested actions different geographic areas to discuss Board’s current composition Discuss how to improve diversity across current initiatives. Directors are aware of various dimensions their responsibilities and are briefed on As Chair of the Audit Committee, • To review the Group’s internal financial Understanding of customers Build into regional presentations relevant regulatory, legal, governance I am pleased to present, on behalf controls, internal control and risk or accounting matters periodically, as Understanding of candidates Build into regional presentations of the Board, its Audit Committee management systems and reporting, required. Directors also attend external Understanding of community at large Build into ESG presentations report, prepared in accordance with including supporting the Board in seminars on areas of relevance to their the UK Corporate Governance Code overseeing risk management activity, role in order to facilitate their Relationships between NEDs/ Increase physical meetings and Board (the ‘Code’). advising on risk appetite and management dinners in 2021/mentoring professional development, whilst NEDs assessing material breaches of The impact of COVID-19 has meant also use external insights from their own Use of summaries Make summaries mandatory for all risk controls. that strong internal controls, risk development networks to support the Board papers • To monitor and review the management, liquidity, viability and management team. These measures effectiveness of the Group’s Internal Ongoing training Board focus on D&I training cyber/fraud protection are more help to ensure that the Board continues Audit function. Understanding of digital/technological Progress via project updates and important than ever, and the to develop its knowledge of the Group’s • To agree the external auditors’ developments in terms of opportunities/ at Board strategy session Committee has focused its business and get to know senior engagement terms, scope, fees and threats Committee activities accordingly. management, as well as promoting non-audit services, to monitor and meetings attended awareness of responsibilities. Executive Top strategic issues Review at Board/strategy session Having reviewed the content of the review the external auditors’ Directors are encouraged to accept Board oversight of talent management/ Nomination Committee to address; Annual Report, the Committee effectiveness and associated external appointments in order to development processes L&D updates re HIPO programme considers that, taken as a whole, it is fair, independence and recommend broaden their experience, although balanced and understandable and re-appointment to the Board and currently no such positions are held. Board’s performance, top priorities Review at Board/strategy session for the coming year 4 provides the information necessary for shareholders. Induction arrangements are tailored for shareholders to assess the Company’s • To review arrangements by which the Remuneration Committee continuing to New Head of Reward to address Anne Fahy (Chair) 4/4 new appointments to ensure that these and the Group’s performance, business Group’s employees may raise move towards being a ‘well-oiled Barrie Brien 4/4 are appropriate to each role, model and strategy. concerns about possible improprieties machine’ in the development of agenda/ Denise Collis 4/4 papers in financial reporting or other such dependent on previous experience. James Bilefield 4/4 Directors and other Senior Executives The Committee’s principal matters and ensuring appropriate responsibilities follow-up. are invited to attend analyst briefings Full biographies are and Capital Markets Days available on pages 92-93 • To monitor the integrity of the • To monitor and review the activities presentations, and major shareholders Consolidated Financial Statements of and priorities of the Group’s Risk & are invited to meet relevant new NEDs. the Group and any announcements Compliance function and the Risk & relating to financial performance. Compliance Committee. As part of the annual Board evaluation • To review significant financial • To assess procedures for detecting process, the Chair assesses any training reporting issues and judgements. fraud or preventing bribery. and development needs in respect of • As requested by the Board, to advise • Where requested by the Board, to individual Directors, including on whether, taken as a whole, the advise on proposed strategic environmental, social and governance Annual Report is fair, balanced and transactions, including conducting (‘ESG’) matters. understandable and provides the due diligence appraisals and information necessary for focusing on risk aspects. James Bilefield stakeholders to assess the Group’s The Committee carries out an annual Nomination Committee Chair performance, business model assessment of its effectiveness in order 22 January 2021 and strategy. to consider whether any improvements are needed. SThree plc SThree plc 106 Annual Report and Accounts 2020 Annual Report and Accounts 2020 107

AUDIT COMMITTEE CONTINUED

Activities of the Risk & Compliance By overseeing these activities, the Significant focus is placed on key The Committee also considered, Committee membership, including The Committee works closely with the Committee (‘R&CC’) were further Committee is able to support the Board accounting judgements and estimates, amongst other matters, project recent and relevant financial, audit Chief Financial Officer, Group Company embedded during the year, through an to enable it to further embed the Code which underpin the financial implementation/tracking and post- or sector experience Secretary, Head of Compliance & Risk, activity programme agreed in advance provisions on risk, control and viability, statements, namely: implementation reviews, technical Anne Fahy is a Chartered Accountant IA team and external auditors to ensure with the Committee. This helped in the whilst strengthening the internal control accounting matters and their that any potential material misstatement – Revenue recognition; and has held senior executive financial level of preparedness for COVID-19, environment by ensuring the appropriate disclosure, treasury risks are identified and targeted in terms – Impairment of investments carrying positions at BP, whilst Barrie Brien is also through risk workshops, resulting in independence, effectiveness and matters/viability and scenario of the overall audit strategy and that value (Company only); and a Chartered Accountant. Denise Collis improved risk understanding and risk quality of both internal and external modelling, as well as fraud and audit resources and the efforts of the – COVID-19 related disclosures, and James Bilefield are degree register ownership. Early creation of a audit processes, as well as of the whistleblowing, whilst also supporting engagement team are correctly including impact on going concern educated and have held senior COVID-19 decision-making group of Committee itself. the Board in its discussions on crisis allocated. This helps to ensure the and viability statements. management positions, which include cross-functional leaders, chaired by the management, systems implementation effective planning and performance of Likewise, with the greater potential for financial responsibility, and the Head of Compliance & Risk, also helped All of these were fully considered in the and other key risk areas. The Committee the external and internal audit teams, fraud with COVID-19, Internal Audit (‘IA’) Committee, taken as a whole, is to mitigate much of the COVID-19 light of the latest FRC guidance and aspires to best practice governance focused on risk, and has resulted in a continues to play an important role in considered to have appropriate impact, allowing operations to continue COVID-19 impact. and reporting, with commentary from continued improvement in processes the Group’s governance, providing sector experience. seamlessly through remote working, the 2020 Interim Report used by the FRC and controls over recent years. regular updates to the Committee, with Summary of core Committee whilst ensuring employee and client Reporting Lab in its examples of best Risk management, internal tracking of remedial action in the case activities carried out during A key focus area for the Committee this health and wellbeing were paramount. practice disclosures. controls, key focus areas of any control failures. At the start of the year: year, with COVID-19, was reviewing and and viability Further expansion of the R&CC each year, an annual IA plan is As in prior years, it also took the challenging the scenarios underpinning • Approved annual Committee structures into the regions, also led by presented for the Committee to agree, opportunity to review and update its The Committee supports the Board in its the going concern/viability statements, programme/cycle of work. the Head of Compliance & Risk, has after appropriate review and challenge. Terms of Reference in line with best overall responsibility for risk to enable Board sign-off, also being • Reviewed and recommended to the meant faster resolution of issues at local This plan, with agreement of the practice guidance and evaluated its management activities and impacted by continuing macro- Board the full and half-year financial level, whilst ensuring high standards of Committee, was flexed and adapted to performance, which it does annually, implementing policies to ensure that all economic uncertainty globally. Through results for publication. internal controls are maintained. respond to the new challenges posed although this year the evaluation was risks are evaluated, measured and kept more rigorous and comprehensive • Considered the external audit plan by COVID -19. conducted internally. From this review, under review by way of appropriate KPIs, stress testing the Committee was able to Work has also continued on updating a and reviewed the audit results. the Committee has concluded that it is as part of the Group’s ERM framework. recommend to the Board an number of key policies, whilst adapting IA have also played a key part in • Approved the IA plan and reviewed functioning effectively. appropriate statement of viability. the externally led evaluation of the helping the business to drive further all reports/findings. Presentations from senior management Group’s health and safety procedures, improvements, through creation of a • Reviewed the performance, Committee composition across the business are provided to the In response to heightened cyber and to build in any necessary impact of working group comprising the CFO, independence and effectiveness of Board to further develop information, fraud risks, deep dives were conducted COVID-19 on working practices. COO, IA Head, Head of Compliance & the external auditors. The Committee consists of Anne Fahy understanding and debate on risks. at the Board risk workshop, plus the IA Risk and the Director of Operations, (Chair), Barrie Brien, Denise Collis and plan was flexed to react to any Cash and liquidity scenario modelling • Reviewed any non-audit services This activity includes monitoring of the based in Glasgow. This group focused James Bilefield. The Group Chief COVID-19 risks, for example as part of processes were strengthened at an provided by the external auditors. effectiveness of the Group’s risk specifically on developing an agile IA Executive Officer, Chief Financial Officer, the review of banking processes, with early stage, with more frequent and • Reviewed the risk management and management and internal control plan and recommendations to deliver Chief Operating Officer, Group much clearer processes on phishing broader going concern impact controls framework and effectiveness, systems in order to safeguard clear improvements against key Company Secretary, external auditors, and changing bank details now in assessments being undertaken to together with the Group’s shareholders’ investments and the emerging or other risks, in order to Head of Compliance & Risk, Internal place, all of which was covered within ensure the ongoing viability of the principal risks. Group’s assets and, at least annually, strengthen risk mitigation. Continued Audit and Finance function heads also regular Committee reports. Group in the most demanding ‘severe, • Carried out a review of the carrying out a robust assessment of risks use of our robust IA action tracking attend meetings by invitation. but plausible’ circumstances. In parallel, Committee’s effectiveness. and the effectiveness of associated system again resulted in transparency, we also took actions to strengthen the • Considered the Code requirements controls on behalf of the Board. accountability, quality and timeliness of balance sheet, such as greater focus concerning fair, balanced and action close outs. No significant failings or weaknesses on working capital management, understandable reporting. were identified by the Committee from applying for the BOE COVID-19 • Considered the Company’s going this review. Corporate Finance Facility (not drawn concern and long-term viability. down), as well as supporting the Board • Recommended the Audit Committee in its deliberations around deferral of tax report for approval by the Board. payments and not paying dividends • Held discussions with the external during 2020. auditors and Head of IA without management present. SThree plc SThree plc 108 Annual Report and Accounts 2020 Annual Report and Accounts 2020 109

AUDIT COMMITTEE CONTINUED

External auditors The external auditors are required to Framework used by the Committee Policy on non-audit work Fees paid to external auditors for • the impairment testing of the rotate audit partners responsible for the to assess effectiveness of the non-audit work Company’s investments in Responsibilities in relation to The Committee sets clear guidelines on Group audit every five years and the external audit process subsidiaries, with a particular external auditors non-audit work, which is only permitted Audit fees for the year were £741,000 current lead audit partner, Kenneth emphasis on reviewing and The Committee has adopted a broad where it does not impair independence (£711,000 base fee, plus £30,000 During the year, the Committee carried Wilson, was appointed in 2019, following challenging the key assumptions framework to review the effectiveness of or objectivity and where the Committee additional audit costs related to the SAP out each of the following: appropriate transition. This also reflected used in the calculations of the Group’s external audit process and believes that it is in the Group’s best migration to the cloud). Prior year fees the focus of the audit team’s activities recoverable amounts. These • recommended the re-appointment of audit quality which includes: interests to make use of built-up were £415,000 (£390,000 base fee, plus moving to Glasgow. assumptions as well as the sensitivity PwC as external auditors, for assessment of the audit partner and knowledge or experience. Such work £25,000 additional audit costs related to analysis are described in note 12 to subsequent ratification of their team with particular focus on the lead has included services required due to the transition of the support function to Performance and tendering the Consolidated Financial remuneration and terms of audit engagement partner; planning legislation and assurance work or other Glasgow). The increase in audit fees Statements and draw appropriate engagement by shareholders; During the year, the Committee and scope of the audit, including a specialist services. The Committee reflects the general firming of the audit attention to the judgements and • reviewed and monitored the external reviewed performance and fees and dedicated audit planning afternoon, continuously monitors the quality and market/FRC requirements. The estimates involved. auditors’ independence and met with the external auditors, PwC, with identification of particular areas of volume of this work, fees incurred, as Committee reviews all non-audit work • the impact of COVID-19, in addition to objectivity and the effectiveness of regularly, without management present. audit risk; the planned approach and well as independent safeguards against policy to ensure it is appropriate ensuring that the overall disclosure of the audit process, taking into Prior to their most recent re- execution of the audit; management of established, in order to consider and the fees justified. Non-audit fees the impact of COVID-19 health crisis in consideration relevant UK professional appointment, following a robust tender an effective audit process; whether to use other firms and have decreased compared to the the Annual Report and Accounts was and regulatory requirements; process, PwC originally replaced BDO communications by the auditors with continues to use such firms to provide prior year, being £12,000 in 2020 appropriate and in line with FRC • reviewed the policy on the as auditors in 1999 and became the Committee; how the auditors general tax advice or for other projects. (2019: £13,000). guidance, the Committee also engagement of the external auditors auditors of the public company in 2005. support the work of the Committee; how Following further changes to the EU Areas of key significance undertook to review the and supply of non-audit services. This The Committee considered that factors the audit contributes insights and adds Ethical Standards, the Committee in the preparation of the appropriateness of adopting the policy sets out a ‘whitelist’ of such as regular audit partner rotation, value; a review of independence and reviewed its policy on non-audit work financial statements going concern basis of accounting in permitted non-audit services, lists adoption of enhanced audit objectivity of the audit firm; and the and has updated it. As such, the policy preparing the financial statements examples of prohibited services, sets techniques, as well as fee structure, quality of the formal audit report Prior to publication of this Annual Report aligns with regulations to prohibit a and to recommend to the Board the out typical audit-related services, their have all contributed to PwC’s to shareholders. and Accounts, the Committee reviewed number of non-audit services, whilst approval of the viability statement. award and approval, explains the satisfactory performance and the accounting policies and significant Feedback is provided to both the also meeting APB Ethical Standards and The Committee reviewed and cap on non-audit services which can independence. The Committee judgements and estimates external auditors and management by FRC guidance, to clearly set out: challenged the assumptions be billed, and sets out reporting and therefore considers that the underpinning the financial statements the Committee and its attendees, underlying the forecast models independence provisions. existing relationship has worked • which types of non-audit work are as disclosed within note 1. Particular based on the above, with any actions underpinning the going concern and well and remains satisfied with allowed/prohibited; attention was paid to the following reviewed by the Committee. viability statements including the Appointment, objectivity PwC’s effectiveness. • the types of work for which external significant issues in relation to the appropriateness and relevance of the and independence The effectiveness of management in the auditors can be engaged without financial statements: Whilst there are no contractual severe but plausible stress tests to external audit process is assessed Audit Committee referral, provided • revenue recognition, including the Following the conclusion of the last obligations restricting the Group’s ensure adequate liquidity and principally in relation to the timely such services fall below £25,000 and constraint of variable consideration. formal audit tender in early 2017, choice of external auditors, per se, EU covenant compliance throughout the identification and resolution of areas of are not specifically prohibited; and At each reporting date, a portion of both the Committee and the external rules now prevent certain ‘prohibited’ relevant periods. The assessment accounting judgement, the quality and • for which types of work Audit the Group revenue is based on the auditors have safeguards in place services from being carried out in included a review of the timeliness of papers, analysing those Committee Chair referral is needed, estimated value of provided service to ensure that objectivity and addition to auditing activities. Any such management’s work in conducting a judgements, management’s approach i.e. which are above £25,000. for which no timesheets have been independence are maintained. activities must first cease, before a firm robust assessment of the risks facing to the support of independent audit received. The key estimation The Committee also considers can be considered for audit tender. the Group, their potential impact, and the booking of any audit uncertainty arises from determining independence taking into consideration Accordingly, the external auditors how they were being managed, adjustments arising, as well as the timely the historical shrinkage rate which is relevant UK professional and regulatory ceased such services in 2016 in order to together with a discussion as provision of documents for review by the used to constrain the variable part of requirements. Non-audit services relate be considered for the tender completed to the appropriate period for auditors and the Committee. revenue. The estimation method to the half-year agreed- upon in early 2017. These restrictions remain the assessment. applied, and the use of the shrinkage procedures and PwC Viewpoint in place. (regulatory updates) subscription, whilst rate were considered appropriate by For each of the above areas the net revenues generated to the Group the Committee and in line with Committee considered the key facts through recruitment services provided to IFRS requirements. and judgements outlined PwC as a client are not material. by management. SThree plc SThree plc 110 Annual Report and Accounts 2020 Annual Report and Accounts 2020 111

AUDIT COMMITTEE CONTINUED

These matters were also discussed with No significant weaknesses were Risk & Compliance Committee Anti-bribery and corruption and Committee evaluation the external auditors and further identified from the risk management or (‘R&CC’) business ethics Following an external evaluation in 2019, information can be found in the internal control reviews undertaken by The R&CC was created in 2018, with The Group maintains a zero-tolerance the Committee conducted an internal Independent Auditors’ Report. IA during the reporting period and agreed Terms of Reference, and a approach against corruption. It has an evaluation process this year which throughout the financial year. The IA The Committee is satisfied that there are regular reporting slot at each Audit established anti-bribery and corruption included feedback from management team, working with the Group’s relevant accounting policies in place in Committee and Risk & Compliance policy, which includes guidance on the attendees, as well as Committee compliance function, has continued to relation to these significant issues and Committee meetings all now well giving and receiving of gifts and members. From this review, the enhance the risk management management have correctly applied underway, with appropriate support/ hospitality. This policy applies Committee has concluded that it framework and work with managers these policies. governance underpinning. Feedback throughout the Group and was continues to function effectively. across the globe to further develop and from Committee members is that this updated in 2019, in line with the policy embed the risk framework and Internal Audit (‘IA’) has been a very positive step forward, review reported to the Committee. A methodology at a local level, whilst also resulting in a number of demonstrable Gifts and Hospitality Register is Anne Fahy IA plays an integral role in the Group’s ensuring that the IA plan is closely improvements. There is also a dynamic maintained to ensure transparency. Audit Committee Chair governance and risk management aligned to risk. Senior management are input into the IA plan, with emerging 22 January 2021 processes and provides independent invited to present to the Committee, The Group also has a Code of Conduct risks identified and addressed more assurance to the Committee on from time to time, to report back on which sets out the standards of seamlessly than before. Much of the compliance with its policies and progress against agreed IA actions and behaviour by which all employees are focus of the R&CC during the year was procedures. The function carries out other risks in their area of responsibility. bound. This is based on the Group’s on managing and mitigating risks a wide variety of audits including Members also attended a Board risk commitment to acting professionally, arising from COVID-19. operational as well as ad hoc and workshop, where the Group’s key risks fairly and with integrity. project-based reviews and were discussed, including the Fraud and cyber risks fraud investigation. pandemic, Brexit, IT/cyber risks and Whistleblowing hotline The Committee reviews the procedures The Committee oversees and monitors emerging risks. The Group has in place a dedicated for the prevention and detection of the work of IA, which carries out independent whistleblowing hotline, The Committee ensures that the Group’s fraud in the Group and has also closely risk-based reviews of key controls and which is well publicised across the IA function remains at an appropriate monitored improvements to cyber processes throughout the Group on a Group, including via the intranet, with size and skill mix for the business, and security protection in the light of rolling cycle, including resources, scope any notification initially reported to the firmly believes that this function remains increasing risks in this area, having and alignment with principal risks and Group Company Secretary and Head effective and continues to add particular regard to data breaches that effectiveness of the function. of IA, before being reviewed by the significant value. In support of this view, the Group may face and the processes Committee. Under this arrangement, The Head of IA has direct access to the an external evaluation of the IA function and controls in place to tackle any employees are able to report any Committee and meets regularly with was conducted during 2019 which security threats. An external review took matters of concern, where this does not both the Committee and its Chair concluded that the IA function was place led by the COO, and a conflict with local laws or customs (see without management present to highly effective, and an internal management action plan has been ‘Company information and corporate consider the IA work programme, evaluation was undertaken in 2020. agreed to ensure ongoing protection in advisors’ section for details). Policy which is approved in advance by these areas. aligns with best practice, with a review the Committee. Suspected cases of fraud must be of a hotline provider and refreshed For 2020, whilst the programme was reported to senior management and communication of the whistleblowing again focused on addressing both are investigated by IA, with the outcome arrangements undertaken last year. financial and overall risk management of any investigation reported to During the year, no incidents were objectives across the Group, with the Committee. reported. All issues raised are fully reviews carried out, findings reported to investigated and appropriate the Committee, recommendations action taken. tracked and their close out monitored, the creation of the earlier mentioned working group enabled specific focus on developing an agile IA plan in response to COVID-19. SThree plc SThree plc 112 Annual Report and Accounts 2020 Annual Report and Accounts 2020 113

DIRECTORS’ REMUNERATION REPORT

The Committee has sought to make appropriate remuneration decisions in light of the impact • The CEO, CFO, and other senior executives, agreed to a The 2018-2020 LTIP award, based on our performance over that COVID-19 has had on business performance, taking swift action to reduce Board salaries, temporary 20% base salary and pension reduction from the three financial years to the end of 2020, was significantly fees and bonus awards during the year to reflect these unprecedented market conditions. 1 April to 1 August 2020. impacted by the pandemic. For the half of the award based Looking forward, our approach to incentivisation is aligned to our focus on restoring our track • The CEO and CFO agreed to forego any 2020 bonus. on the EPS performance condition, an adjusted EPS for 2020 record of profit growth and enhancing shareholder value. • All NEDs (including the Chair) agreed to a temporary of between 30.0p and 41.0p was required in order for the total fee reduction of 20%, with effect from 1 April to award to vest. Whilst the award had been on track to deliver 1 August 2020. an outcome within the range prior to the pandemic, actual adjusted EPS performance for 2020 was 12.5p, resulting in 0% Dear Shareholder Support for employees in response to the COVID-19 vesting of the EPS part of the award. For the 30% of the award pandemic based on our Total Shareholder Return (‘TSR’) performance, On behalf of the Board, I am pleased to present this Directors’ Looking back on the year, it is important to recognise our our TSR was required to be between median and upper remuneration report for the period ended 30 November 2020. employees for their energy and commitment in responding to quartile performance against a peer group. Actual TSR was At the 2020 AGM shareholders approved, by a significant the impact of COVID-19. The vast majority were required to at the 63rd percentile resulting in 19.3% pay-out of this part of majority, a new remuneration policy, which is intended to transition swiftly and effectively to remote working, whilst the award. apply for three years from that date. The new policy was the simultaneously supporting our clients, candidates and culmination of a thorough engagement process with major The final 20% of the award was subject to two long-term contractors as they, in turn, grappled with the disruption and investors, where we welcomed a variety of views and strategic measures, split equally, relating to the revenue of subsequent new ways of working. Supporting our employees opinions. Despite some variations in perspective, there was new product lines being between £11 million and £17 million has been an absolute priority which has been enacted widespread support, as evidenced by over 95% voting in by 2020 as well as an operating profit conversion ratio target through a new global wellbeing strategy called THRIVE, favour. This reinforces our view that our pay policy continues of between 17.3% and 21.1% for 2020. The outturn in relation centred around the four themes of, body and mind, financial to reflect our business strategy, with remuneration payments to the new product line revenue target was £10.3 million, stability, personal growth and self-purpose. From a financial that are strongly linked to performance. resulting in 0% pay-out, whilst the OP conversion ratio target perspective sales employees incentive schemes were achievement was 9.5% resulting in 0% pay-out of this part Fixed elements of the remuneration packages are set so that continued, together with the payment of the 2020 annual of the award. they reflect the calibre and experience of the individuals and bonus and the annual salary review for non-sales employees. the complexity of their roles. The annual bonus measures are For the 2017-2019 LTIP award, which covered performance based on specific areas that require immediate focus, Pension provision over the three financial years to 2019, the calculation for the Denise Collis, whereas our Long Term Incentive Plan (‘LTIP’) looks to drive part of the LTIP award relating to net fees compared to our We are aware that the landscape has evolved rapidly on Chair of the Remuneration Committee sustainable improvements at a more macro level over the peers was delayed as most have a 31 December year end executive pension provision. 22 January 2021 longer term. Culturally, the setting of both financial and meaning that we could not calculate the result until April broader non-financial measures serves to focus scheme The pension contribution rate for the CEO is 5% of salary and, 2020. Consequently, vesting of this part of the award, was participants on a more holistic view of business success as previously communicated to shareholders, for the CFO it is 74.8%, versus the estimated 75% disclosed in last year’s and hence serves to drive performance on a broad, frozen at the monetary equivalent to 15% of his 2019 salary (so Annual Report. Committee sustainable front. that future salary increases do not increase the pension meetings attended The Committee has considered whether the formula-driven level). The Committee has determined that the pension rates The Annual report on remuneration describes the pay-outs under the incentive plans and resultant total will remain at the current levels until 1 December 2022, at implementation of the policy in 2020 and how we intend to remuneration for Directors is appropriate, looking at the which time they will align to the percentage pension rate operate the policy in 2021 and, together with this Statement, broader context within which the performance has been applying to the majority of our UK employees, which at the will be subject to an advisory shareholder vote at the delivered. Taking the aforementioned measures to reduce current time is 4%. 4 2021 AGM. Board salaries and fees, plus the removal of the bonus opportunity, into account, the Committee has determined Denise Collis (Chair) 4/4 Remuneration payable for performance in 2020. Adjustments to the operation of the policy in light of that there has been a robust link between remuneration and James Bilefield 4/4 the impact on the business of the COVID-19 pandemic Despite the challenges presented by COVID-19, the Group performance. We have not adjusted any performance Barrie Brien 4/4 delivered a creditable performance in its key markets, measures for any incentive plans, and have not deemed it 2020 has been a year of unique challenges as a result of the Anne Fahy 4/4 particularly when compared with sector peers. Nonetheless, appropriate to use further discretion to adjust the level of impact on the business of the COVID-19 health crisis. As a at the outset of the pandemic and as part of a remuneration payable. Committee, we have focused on our responsibility to ensure comprehensive cost saving exercise, the Committee took Full biographies are the right outcome on executive pay matters in light of the Full details of the LTIP measures, performance outcomes and available on pages 92-93 swift action to reduce senior executives’ salaries and pension experience of all stakeholders, particularly our employees, resultant payments are set out in the Annual report contributions and NED fees. In addition, the CEO and CFO many of whom were furloughed during the year, and our on remuneration. also agreed to forego their annual bonus, reflecting the shareholders, given the decision not to pay the final 2019 and significant financial uncertainty. the interim 2020 dividend. We responded quickly in taking immediate action, as set out in an announcement to the market on 6 April 2020, as soon as the pandemic started to impact our business. Specifically: SThree plc SThree plc 114 Annual Report and Accounts 2020 Annual Report and Accounts 2020 115

DIRECTORS’ REMUNERATION REPORT REMUNERATION AT A GLANCE CONTINUED

Policy implementation for 2021 Shareholder and employee engagement How have we performed?

The Committee decided not to increase the salaries for the The Committee values the opinions of its shareholders and Bonus – maximum potential 120% of base salary Achievement CEO and CFO for 2021. other stakeholders and took their views into account in Threshold Maximum Actual % designing the remuneration policy for 2020-2022 and in The mix of measures for the annual bonus scheme was Group adjusted operating profit (AOP) growth % Flat 12.0% -51% 0% assessing current policy application. updated last year, with the financial element increased from Free cash flow conversion ratio % (FCFCR) 68.2% 72.0% 178% 100% 65% to 80%, and shared strategic and personal objectives We have also built upon the rolling programme of Group revenue growth % 5.0% 8.5% -10% 0% reduced to 10% each. This increased focus on financial engagement with employees around reward, through a performance was appropriate as we sought to maximise variety of mechanisms, utilising virtual meetings technology. Group net fees growth % 5.0% 8.0% -9% 0% returns from the significant investments in our people I have personally engaged with employees across a number As announced on 6 April 2020 the Executive Directors agreed to forego the 2020 annual bonus opportunity, so the actual and operations. This focus continues to be relevant for of our offices in the UK and overseas, and we recently held a bonus payable was zero. 2021 as we target a significant recovery in our financial very interactive and productive session with a diverse group, * The Committee has reviewed this outturn and has noted that the FCFCR% included several factors which increased the percentage, such as the deferral of the Sales performance and appropriate measures have been set drawn from across the business, to explain our corporate Tax and unwinding of the contractor book. Stripping out the factors that were not linked to management’s strong interventions during the year would have led to an for the shared strategic and personal elements, with governance and remuneration processes and how our pay underlying FCFCR of 90% instead of 178%. commensurate stretching targets. policy cascades throughout the Company. In addition, a 2018-2020 LTIP award – grant 150% of base salary major initiative was launched in 2020 to develop a strategic The LTIP will continue to be based on SThree’s performance reward blueprint, which should deliver a more consistent Achievement over three years and subject to a two-year holding period Metric Threshold Maximum Actual % approach towards career pathways and reward progression post-vesting. For 2021, we intend that the grant level will be throughout the business. The outputs from this work will be EPS (adjusted) (for 50% of the award) 30p 41p 12.5p 0% unchanged at 150% of base salary, but will further review considered by the Committee and implemented in 2021. TSR (for 30% of the award) Median Upper 63rd 19.3% this decision in the light of the share price at the time of grant. quartile percentile It is again proposed that the weighting of performance Conclusion measures should be 50% EPS, 30% TSR and 20% strategic New product net fees between £11 million and £17 million (for 10% of the based on a strategic measure which, for 2021 will again be The Committee appreciates the support received from award) £11m £17m £10.3m 0% the operating profit conversion ratio. The Board will be shareholders to date on its executive remuneration and OP conversion between 17.3% and 21.1% (split equally) (for 10% of the meeting soon to refresh the Group’s long-term business plan governance approach and looks forward to this continued award) 17.3% 21.1% 9.5% 0% support for the resolution to approve the Annual report on in order to build forward momentum towards the aspirations Total award (% of maximum) 19.3% set out in our Capital Markets Day (CMD). Accordingly, as the remuneration at the AGM in April 2021. EPS and operating profit conversion ratio targets are linked to Denise Collis Summary of total reward our business strategy and long-term business planning, the Chair of the Remuneration Committee Reward component CEO1 CFO Committee is not yet in a position to set and disclose the 22 January 2021 targets in this Report. These will be set later this year and there 2020 Base pay £’000 £451.8 £334.9 will be full disclosure of the target ranges for each measure in Total remuneration £’000 £500.2 £490.3 the RNS announcement for the award to the Executive Directors and again in the Directors remuneration report for 2019 Base pay £’000 £335.5 £350.1 next year. The Committee retains discretion to ensure that Total remuneration £’000 £629.1 £1,120.1 annual bonus payments and vested LTIP awards can be 1. 2019 CEO figures relate to Mark Dorman, who served for part of the year. scaled back if the formula-driven outturn does not reflect the broader overall performance of the business. How we will apply the remuneration policy in 2021

Key reward component Key features Base salary and core benefits CEO and CFO salary remains unchanged. Pension contribution: 5% of salary for CEO and £51,237 for CFO (being 14.3% of salary) Annual bonus Maximum of 120% of salary, with one third of any bonus – 80% Group financial targets award paid in shares and held for two years – 20% Personal target LTIP award Maximum award of shares worth 150% of annual salary, – 50% EPS performance tested, vesting after three years with a – 30% TSR further two-year holding period – 20% Strategic targets (improving long-term operating margin) Shareholding requirements Requirement to build up and hold shares equivalent to 200% of salary whilst employed. Post-service requirement to hold the lower of 200% of salary or actual shareholding for two years after cessation of employment SThree plc SThree plc 116 Annual Report and Accounts 2020 Annual Report and Accounts 2020 117

REMUNERATION POLICY

Policy report Purpose and Element link to strategy Operation Maximum Performance metrics This section of the Directors’ remuneration report sets out the Group’s remuneration policy for Directors. This was approved by shareholders at the AGM on 20 April 2020 and will apply for three years from this date. Annual bonus Incentivises high Deferral into shares for Maximum bonus Achievement of agreed levels of personal and one third of any bonus payment is 120% of strategic and financial/ The remuneration policy is designed to support the strategic business objectives of the Group so as to attract, retain and team performance, earned, which must be annual salary. operational annual motivate Directors and senior managers of a high calibre, in order to deliver sustainable increases in long-term focused on the key held for two years. business targets, business strategies and weighted in line with shareholder value. financial/operational Dividends or dividend business priorities. A measures which will equivalent payments majority of the promote the long-term accrue on deferred performance conditions Purpose and success of the business. shares, payable normally will be based on financial Element link to strategy Operation Maximum Performance metrics in shares. metrics. Sliding scales are used for each metric Executive Bonus may be subject to wherever practicable Directors clawback or malus being with 20% payable for Base salary Sufficient to attract, retain Reviewed annually with Increases will normally be Not applicable applied, if appropriate, in achieving threshold and motivate high any increases taking the equivalent to the the event of financial performance. Normally calibre individuals. effect from 1 December. average salary increase misstatement, error, 50% of the maximum for employees, other misconduct, reputational bonus is payable for than in exceptional damage or corporate target performance for circumstances. failure, which has led to any financial metric. an over-payment. Benefits Market competitive Including car allowance, Cost of insured benefits Not applicable Within the maximum limit, benefits package. private medical will vary in line with the Committee may insurance, permanent premiums. Other benefits adjust bonus outcomes, health insurance, life will be at a level based on the application assurance and housing considered appropriate of the bonus formula set allowance (if relocated). in the circumstances. at the start of the relevant year, if for instance it Other benefits may be considers the quantum introduced to ensure to be inconsistent with benefits overall are the Group’s overall competitive and performance during appropriate the year. for the circumstances. Long Term Incentivises and rewards LTIP awards may be The maximum award is Targets are reviewed Pension To provide a competitive Individuals may either A Group contribution to a Not applicable Incentive Plan Executives for the delivery granted each year in the 150% of salary p.a. in annually ahead of each pension provision. participate in a pension pension scheme or cash of longer-term strategic form of a conditional normal circumstances grant to ensure they are plan into which the in lieu, of 5% of salary for objectives and to reward award of shares, a nil but may be 175% of aligned to the business Group contributes or the CEO and a capped substantial relative and cost option or Restricted salary in exceptional strategy and receive a salary amount £51,237 absolute increases in Stock Units (‘RSUs’). LTIP circumstances. performance outlook. supplement in lieu (equivalent to 14% of shareholder value. awards normally vest A majority of the of pension. salary) for the CFO, both after three years. performance conditions to be aligned with the Dividend equivalent are based on Group workforce by the end of payments accrue on financial performance 2022. For new joiners or vested LTIP awards, and shareholder internal promotions to payable normally in value-based outcomes. Executive Director, a shares. Vested LTIP No more than 25% of an pension contribution in awards must be held for award may vest for the line with the rate applied a further two years before threshold level to the majority of the the shares may be sold of performance. workforce (currently 4%). (other than to pay tax). Within the maximum limit, LTIP awards may be the Committee may subject to clawback or adjust vesting outcomes, malus being applied, if if it considers the appropriate, in the event quantum to be of financial misstatement, inconsistent with the error, misconduct, Group’s overall reputational damage performance during the or corporate failure, performance period or which has led to an for other factors, at over-payment. its discretion. SThree plc SThree plc 118 Annual Report and Accounts 2020 Annual Report and Accounts 2020 119

REMUNERATION POLICY CONTINUED

Purpose and Illustration of potential 2021 Executive Directors’ remuneration Element link to strategy Operation Maximum Performance metrics The charts below show the remuneration potentially payable to Executive Directors under different performance scenarios. All-employee Support and encourage HMRC approved SAYE In line with HMRC limits or Not applicable share plans share ownership by and SIP participation is lower limits specified by employees available to all UK the Group from time £2,197k at all levels. employees, including to time. Executive Directors, on £1,834k similar terms. £1,675k Share Alignment of Executive Executive Directors are Not applicable Not applicable 39% £1,406k £1,181k ownership Directors’ interests with expected to build and 38% requirements those of investors. maintain a shareholding 31% £922k 32% equivalent in value to no 29% £528k 24% 31% less than 200% of base £437k 24% salary. Until this threshold 45% is achieved Executive 100% 29% 100% 47% 31% Directors are normally elo arget aimum elo arget aimum required to retain no less threshold threshold

than 50% of the net of tax Chief Executive Officer Chief Financial Officer value from vested LTIP, deferred bonus or other ied ay nnual onus ith share prie groth share awards (after the expiry of any relevant Note: holding period). Assumptions for the charts above: Fixed pay comprises base salary as at 1 December 2020, pension contribution of 5% salary for the CEO and £51,237 for the CFO, and the value of benefits received in 2020. The After ceasing on-target level of bonus is 50% of the maximum opportunity. The on-target level of the LTIP is taken to be 50% of the value of a single year’s award.

employment Executive The maximum level of bonus and LTIP is the maximum bonus and full vesting of the LTIP award. No share price appreciation has been assumed for deferred bonus or LTIP Directors must normally awards and the value of all-employee share plans has been excluded. The ‘maximum’ column includes an additional 50% value of the LTIP to illustrate 50% share price growth. retain a level of shareholding for two Role of the Committee in overseeing broader employee pay and differences in remuneration policy for years equivalent to the Executive Directors compared to other employees lower of 200% of salary, and the level of The Committee actively considers the pay structures across the wider Group when setting policy for Executive Directors to shareholding on ceasing ensure that a consistent approach to reward is adopted that is in line with our values. There is a particular focus in relation to employment with the any base salary review. Group. Self-purchased shares are excluded from Overall, compared to most employees, the remuneration policy for Executive Directors is weighted more to long-term share- this requirement. based incentives and stringent deferral and shareholding requirements. This is to ensure that the relatively higher pay levels As part of this policy, any payments due under the terms of the previous policy are capable of being made. are justifiable internally and externally to shareholders as a clear link between the long-term value created for shareholders and the remuneration received by Executives. Operation of incentive plans Consideration of employment conditions elsewhere in the Group The Committee’s policy is to review performance measures for the incentive schemes annually, so that they continually align with strategic objectives. The Committee considers that linking annual bonus and the vesting of LTIP awards to a combination When setting the Executive Directors’ remuneration policy, the Committee takes into account the pay and conditions of of different measures, capturing share price, financial results and non-financial performance, will ensure that incentive plans employees more generally and, at least once a year, is given full details of the remuneration policy across the Group, with any provide a reward for rounded performance, while maintaining the alignment of Executive and shareholder interests. changes highlighted. As mentioned earlier, the Committee Chair also has responsibility to engage on employee pay.

The Committee may exercise discretion in assessing achievement against each stated target where it considers that it would During the year Denise Collis, Remuneration Committee Chair, met virtually with employees from across the organisation to be fair and reasonable to do so. The Committee may also exercise broader discretion in relation to the terms of all incentive explain how executive pay aligns to that of the workforce. Virtual meetings were also held with regional management, plans, for instance (but not limited to) adjustments required for corporate restructuring and change of control. employees and HR representatives in lieu of the Board’s usual rolling programme of office visits. In addition, a major initiative was launched in 2020 to develop a strategic reward blueprint, which should deliver a more consistent approach towards In designing incentive structures and approving incentive payments, the Committee pays due consideration to risk career pathways and reward progression throughout the business. The outputs from this work will be considered by the management and environmental, social and governance (‘ESG’) issues. Committee and implemented in 2021.

Consideration of shareholders’ views in determining the remuneration policy

The Committee actively consults with shareholders on executive remuneration policy changes. Feedback is taken on board and any proposals are adjusted, as appropriate, given the objective of ensuring that shareholders are supportive of the policy and its implementation. In addition, the Group follows shareholder sentiment on executive pay and takes it into account in considering the application of policy in the years between the development of a new policy. The last exercise was undertaken in 2019, with shareholder feedback incorporated into the policy approved at the AGM in April 2020. SThree plc SThree plc 120 Annual Report and Accounts 2020 Annual Report and Accounts 2020 121

REMUNERATION POLICY CONTINUED

Remuneration policy for recruitment and promotion The policy for the remuneration of NEDs is summarised below:

Base salary levels will be set in line with the policy taking account of individual circumstances. Purpose and Element link to strategy Operation Maximum Performance metrics Benefits and pension will be in line with the policy. Additionally, there is flexibility to make payments to cover relocation and Fees Attracts, retains and Fees are determined There is no maximum Obligation to perform other related expenses. motivates high-calibre by the Board as a individual fee limit. The satisfactorily and Annual bonus will be in line with the policy and there is flexibility to set different performance conditions measurable over a NEDs to provide whole and set by overall fee comprises a attend and experience, capability reference to those fees basic fee plus payment contribute to meetings, part-year for executives in the first year of appointment. and governance in the paid in similar for additional assessed via Board For internal promotions, outstanding incentive payments may vest on their original terms. For external recruits there may be a interest of shareholders. companies, related to responsibilities such as effectiveness reviews. allocated chairing Committees need to buy out unvested incentive awards at a previous employer. The Committee confirms that any such buy-out responsibilities and and for interim arrangements would only be used if necessary, would take a similar form to that surrendered (e.g. cash or shares and subject to additional duties. NEDs timeframe), would take account of performance conditions and quantum, and would be no greater than that which the the aggregate do not participate individual has forfeited on appointment. Directors’ fee limits in the Group’s contained in the incentive schemes. Policy on Directors’ service contracts and payments for loss of office Group’s Articles of Association. Out of The Executive Directors have rolling service contracts subject to a maximum of 12-months’ notice by the Group or Executive. pocket expenses At the Group’s discretion, on termination a payment may be made in lieu of notice equivalent to 12-months’ salary, which including travel may be reimbursed by the may be paid in monthly instalments and offset against future earnings. For new hires the policy is to provide a 12-month Group in accordance notice period. with the Group’s expenses policy (and Depending on the circumstances the Committee may consider payments in respect of statutory entitlements, outplacement may settle any tax support and legal fees. Mitigation would be applied to reduce any payments associated with loss of office. incurred in relation to ‘Good leavers’ (e.g. redundancy or retirement) may generally retain any earned bonus (pro-rata If active employment these). NEDs are not entitled to ceases part way through the year) or share-based awards, with LTIP awards scaled back on a pro-rata basis for the portion of compensation and no the vesting period elapsed on cessation of active employment, subject to still achieving any relevant performance criteria. fee is payable in Awards would vest at the normal time and any deferral or holding periods would continue to apply for the normal duration. respect of the Only in exceptional circumstances would awards vest or shares be released early, such as serious ill-health. unexpired portion of the term ‘Bad leavers’, such as a resignation, will lose any entitlement to participate in the current bonus scheme and any LTIP awards of appointment. will normally lapse on cessation of employment. Deferred bonus shares are beneficially owned, but must be held for a minimum of two years. Sourcing shares for share plans and Minority Interests (tracker shares) Shares used to settle vested share awards or tracker shares may include new issue shares, treasury, Employee Benefit Trust External appointments (‘EBT’) shares or market purchased shares. The use of new issue or treasury shares is constrained by dilution limits which are Executive Directors are encouraged to undertake one external appointment, where they are able to combine this with their reviewed by the Board annually. In order to comply with investor guidelines, the Board has agreed that certain LTIP awards will existing role. This helps to broaden experience and capability, which can benefit the Group. Currently, no external be satisfied using market purchased shares via the EBT, if appropriate. appointments are held by any Executive Directors.

Terms of appointment and remuneration policy for Non-Executive Directors (‘NEDs’)

NEDs are appointed for an initial three-year term, subject to satisfactory performance and re-election at each AGM, with an expectation that they would serve for at least six years, to provide a mix of independence, balance and continuity of experience. In practice NEDs may be requested to serve up to nine years, subject to rigorous review.

The appointment may be terminated by either the Group or the NED giving three-months’ notice. Upon termination or resignation, NEDs are not entitled to compensation and no fee is payable in respect of the unexpired portion of the term of appointment. SThree plc SThree plc 122 Annual Report and Accounts 2020 Annual Report and Accounts 2020 123

ANNUAL REPORT ON REMUNERATION

Section 1 – Total reward for 2020 1.2 Annual bonus for 2020 1.1 Directors’ remuneration for 2020 No annual bonus awards were made to the CEO and CFO for 2020. Performance of the CEO and CFO against their personal 1.2 Annual bonus for 2020 objectives for 2020 is detailed below: 1.3 LTIP awards vested by reference to performance over the three years to 2020 Overall achievement 1.1 Directors’ remuneration for 2020 (audited) Director Personal objective Assessment of performance by Committee (out of maximum 100%) Long Term Total Mark Dorman Senior Leadership Team: • Robust succession planning and development of 80% Salary and Total fixed Annual Incentive variable fees Benefits1 Pension pay bonus Plan2 pay Other Total Evolve organisation to align next generation of Senior Executive Team delivered Director £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 with delivery of strategic notwithstanding response to COVID-19. objectives, assess capability • Reshaping of the Senior Leadership Team (SLT) Mark Dorman 451.8 19.5 22.6 493.9 – – – 6.31 500.2 against future business needs, implemented with the introduction of new Senior Alex Smith 334.9 27.3 47.8 410.8 – 80.3 80.3 – 490.3 taking action as appropriate, Managing Director roles and elevation of non-UK and implement an sales leadership to the SLT. Anne Fahy 54.1 – – 54.1 – – – 54.1 improved succession • New COO onboarded remotely, enabling progress Denise Collis 65.8 – – 65.8 – – – 65.8 planning methodology to be made on the Operational and IT strategy, in line with overall strategic priorities, and the effective James Bilefield 140.0 – – 140.0 – – – 140.0 implementation of Business Continuity Plans Barrie Brien 44.8 – – 44.8 – – – 44.8 supporting the transition to remote working in response to COVID-19. Aggregate emoluments 1,091.4 46.8 70.4 1,209.4 – 80.3 80.3 – 1,295.2 Business development • M&A assessment activity undertaken and strategy 70% Undertake assessment of M&A for all key markets developed although subsequently

Long Term Total strategy and build capability de-prioritised in the wake of new operational Salary and Total fixed Annual Incentive variable to enable delivery of priorities related to COVID-19. 2019 fees Benefits1 Pension pay bonus Plan2,3 pay Other Total agreed strategy • Corporate Development structure established and Director £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 resources for both acquisitions and disposals put Gary Elden* 151.0 8.0 22.7 181.7 114.9 535.5 650.4 832.1 Deliver against set goals in place. relating to Innovation & • Good progress against key workstream goals 1 Mark Dorman* 335.5 14.7 17.8 368.0 224.4 _ 224.4 36.7 629.1 Sales Development relating to market intelligence, digital presence and Alex Smith 350.1 27.0 51.2 428.3 232.0 459.9 691.9 1,120.2 automation of the sales process. Justin Hughes* 149.7 9.8 21.9 181.4 108.9 343.4 452.3 47.9 1 681.6 Implement global operations • Tools and processes introduced to optimise sales 70% 3 Year Plan to drive new Target activity driving the Contract Order Book. Anne Fahy 58.0 – – 58.0 – – 58.0 Operating Model and deliver • Core management processes improved for Denise Collis 70.5 – – 70.5 – – 70.5 on Year 1 targets employed contractors in Germany and the US. • Upgraded discipline achieved around the product James Bilefield 150.0 – – 150.0 – – 150.0 and service portfolio driving both better operational Barrie Brien 48.0 – – 48.0 – – 48.0 efficiency/leverage and pricing discipline to improve profit conversion. Aggregate emoluments 1,312.8 59.5 113.6 1,485.9 680.2 1,338.8 2,018.9 84.6 3,589.5 Portfolio Management • All markets reviewed and entire portfolio 75% Achieve clear execution on benchmarked against key metrics. * Pro-rated due to appointment or departure in year portfolio management plans • Plans approved to exit, accelerate growth, or remain Notes: including expansion plan neutral aligned to strategic plans. 1. Benefits comprise car allowance, medical cover and life/income protection insurance, as well as payments to cover housing or other related costs when transferred for USA • Exit from Australia achieved, with regard overseas. The pension contribution equates to 5% of salary for Mark Dorman. As agreed on his appointment, Mark Dorman is entitled to up to £60k in relocation/other costs in relation to his relocation from the US. In 2020 £6.3k (2019, £36.7k) was incurred, which related to legal and professional fees. Justin Hughes’ relocation costs of to all stakeholders. £47.9k are in relation to his return to the UK. • Expansion plan for US rolled forward to 2021. 2. 2020 LTIP awards relate to those granted in early 2018 and vesting in early 2021, based on performance assessed over 2018 to 2020, also including the value of any related dividends accrued during the vesting period on vested awards. The value has been calculated using a share price of 263.98p, being the average share price over the last quarter of the year. As the market price at grant was 357p, no value has arisen from the share price increasing. 3. 2019 LTIP awards relate to those granted in early 2017 vested in two tranches in February and June 2020, based on performance assessed over 2017 to 2019, also including the value of any related dividends accrued during the vesting period on vested awards. The benefit included in the table last year was calculated based on the average of the share price over the closing three months of the FY19 financial year, at £3.49. The actual share price on the date of vesting on 5 February was 361p and on 4 June was 260p and these updated share prices have been used to update the LTIP values and the totals in the table above. Of these values, £72.6k, £48.7k and £36.4k is attributable to share price growth for Gary Elden, Alex Smith and Justin Hughes.

Updated disclosure in relation to 2019 annual bonus and LTIP payments 4. In last year’s Annual report on remuneration, the 2019 bonus figures in the table of Directors’ emoluments, which counted towards the Single Total Figure of remuneration, were incorrect for Mark Dorman, Gary Elden and Justin Hughes. This was due to inconsistency in the disclosure for the pro rating for joiners’ and leavers’ bonuses. This table contains the corrected 2019 bonus figures, which were the bonus amounts that were actually paid, as follows:

2019 DRR amount for annual bonus4 Actual payment and 2019 amount to be restated in 2020 DRR for annual bonus5 Name £’000 £’000 Mark Dorman 238.2 224.4 Gary Elden 96.4 114.9 Justin Hughes 93.8 108.9

5. Similarly, the 2019 Long Term Incentive Plan figures in the table of Directors’ emoluments, and counting towards the Single Total Figure of remuneration, did not include the element of the LTIP that related to the relative Gross Profit performance condition (up to 11.1% of the total award). This was because the performance condition was calculated significantly later than the publication of this report as it was reliant on obtaining performance data for peer companies. Subsequently the vesting level was confirmed as 8.302% out of the 11.1%. The 2019 figure for the value of the vested LTIP awards has now been restated to include the part of the award based on the relative net fees performance condition and is based on the actual share price on vesting, in accordance with the regulations. SThree plc SThree plc 124 Annual Report and Accounts 2020 Annual Report and Accounts 2020 125

ANNUAL REPORT ON REMUNERATION CONTINUED

Overall achievement Number of shares granted vs vested vs lapsed based on assessment versus targets for 2018-2020 LTIP award Director Personal objective Assessment of performance by Committee (out of maximum 100%) granted in 2018

Alex Smith Global finance organisation • Target global finance operating model agreed 50% Value of Undertake an organisational • People change/implementation plan in place shares assessment of the global • Senior Global Finance Team recruitment underway Value of share attributable to Dividend finance function and develop • Global grading/job levelling approach identified Number of based on share price equivalent shares Number of Number of grant price growth additional Total succession plan to address and implemented within agreed plan. Executive Director granted shares vested shares lapsed £ £ shares £’0001 short and medium-term capability/resource gaps in Alex Smith, CFO 143,521 27,685 115,836 98,836 n/a 2,723 80.2 the new operating model. 1. Based on an average share price of 264.0p over the last quarter of the year. Operational and process • New monthly re-forecasting to guide business 75% improvement planning and investments implemented for 2021. Section 2 – How we will apply our remuneration policy in 2021 Implement operational and • New budget process introduced to better align 2.1 Base salary process improvements in key operational priorities and target setting finance processes of budget across SThree. 2.2 Benefits and pension formulation and approval, 2.3 2021 annual bonus including financial, strategic and personal measures reforecasting, monthly 2.4 Long Term Incentive Plan awards reporting, cash collections 2.5 Non-Executive Directors (‘NEDs’) and expense management. 2.6 Payments to former Directors

Investor Relations • Continued improvement in ongoing 50% 2.1 Base salary Drive continued improvement communications with investors, including better in Investor Relations activities tying of operational activities, Thought Leadership The table below illustrates the most recent base salary review (effective for 2021). The average budgeted salary increase for and outcomes, building on and scenario planning to disclosures. employees generally is 2.5%. progress made in FY19. • Highlighted as best practice by the FRC. Base salary Increase (from Base salary 2020 1 Dec 2020) 2021 Risk and control • Established an internal senior management ‘crisis’ 50% Executive Director £’000 £’000 £’000 management team, combined with continued improvement in Mark Dorman, CEO 483.9 0% 483.9 Shape and implement a overall risk assessment, understanding significant improvement in the and mitigation. Alex Smith, CFO 358.8 0% 358.8 risk and control environment of • Enabled a successful response to the pandemic The CEO and CFO agreed to a temporary 20% base salary reduction from 1 April to 1 August 2020. Base salary paid in 2020 for the CEO was £451.8k and the CFO was £334.9k. the Group. with crisis management, business continuity and disaster recovery plans in place. 2.2 Benefits and pension

1.3 2018-2020 LTIP award vested by reference to performance over the three years to 2020 (audited) There are no changes to benefits. The CEO receives a pension contribution of 5% of salary. The CFO receives a capped pension contribution of £51,237, being 14.3% of salary. Earnings Per Share (‘EPS’) for 50% of the award: The majority of UK employees receive a pension contribution of 4% of salary. As set out in the Chair’s Statement, the pension Actual Vesting % of total EPS Pay-out range performance Vesting level LTIP award contribution rates will align to the percentage rate applicable to the majority of UK employees by 1 December 2022. Between 30.0p and 41.0p per share 25% – 100% 12.5p 0% 0%

Total Shareholder Return (‘TSR’) for 30% of the award:

Actual Vesting % of total TSR – Rank of the Company compared to the peer group Pay-out range performance Vesting level LTIP award 63rd TSR performance between the median and upper quartile 25% – 100% percentile 64.3% 19.3%

Strategic objectives for 20% of the award

Actual Vesting % of total Measure Target performance Vesting level LTIP award Revenue generation between £11m to £17m from New product lines new product lines £10.3m 0% 0% Financial OP conversion ratio of between 17.3% and OP conversion ratio 21.1% in 2020 9.5% 0% 0% SThree plc SThree plc 126 Annual Report and Accounts 2020 Annual Report and Accounts 2020 127

ANNUAL REPORT ON REMUNERATION CONTINUED

2.3 2021 annual bonus scheme, including financial, strategic and personal measures 2.5 Non-Executive Directors (‘NEDs’)

The maximum annual bonus remains capped at 120% of base salary. One third of bonus is deferred in shares for two years. NED base fees will remain the same for 2021: The bonus metrics and weightings for the 2021 annual bonus scheme are summarised in the table below. As the target 2020 annual 2021 annual ranges for each metric are considered to be commercially sensitive, they will be disclosed retrospectively in the following fee fee year’s Directors’ remuneration report. Role £‘000 £‘000 Chair 150 150 Metric Weighting Measure Sub-weighting Link to strategy/notes NED base fee (x 3 NEDs) 48 48 Group financial 80% These are considered by the Committee to be the targets four most relevant financial KPIs for bonus purposes. Committee Chair (Audit and Remuneration) 10 10 – Adjusted 50% Operating profit is the key underlying measure of SID 7.5 7.5 operating profit profitability used within the business. Employee engagement NED 5 5 - Group net fees 15% Revenue less cost of sales. A broad indicator of Total (Articles of Association limit is £500k per annum) 326.5 326.5 the trading. – Free cash flow 10% Free cash flow conversion ratio indicates how 2.6 Payments to former Directors conversion ratio efficient the business is in terms of controlling costs and improving consultant productivity, Gary Elden stepped down from the Board as CEO on 18 March 2019 and remained with the Company until 24 April 2019. After turning profit into cash or collecting cash. ceasing active employment, he was placed on garden leave for the remainder of his contractual notice period. As such, it is a key strategic measure. Justin Hughes stepped down from the Board as COO on 1 July 2019 and was placed on garden leave for the remainder of his – Group revenue 5% Revenue is a headline measure of income contractual notice period. generation, used to assess the underlying financial performance delivered by management. The payments made for the remainder of the financial year from the time that Gary Elden and Justin Hughes stepped down from the Board comprise:

Long Term Personal objectives 20% 20% Delivery versus agreed objectives to produce Salary Incentive 2 value or efficiency gains. and fees Benefits Annual bonus Plan Pension Total Director £’000 £’000 £’000 £’000 £’000 £’000 Total 100% 100% Gary Elden* 17. 2 1.7 – 62.9 5.7 87.5 2.4 Long Term Incentive Plan awards Justin Hughes** 174.7 11.5 – 53.4 25.6 265.2 * Salary and fees pro rated to 14 December 2019. Pension was overpaid by £3.1k in error and will be deducted from the LTIP on vesting, giving the outcome shown in the table. LTIP awards to be granted in early 2021 will be granted over shares worth 150% of salary. Awards will vest on the third anniversary of grant, with a further two-year holding period on vested shares. Performance conditions will be based on EPS, ** Pro rated due to departure 1 July 2020. TSR and strategic metrics, each applied independently, and there will be a straight-line sliding scale between points. For 2. 2020 LTIP awards relate to those granted in early 2018 and vesting in early 2021, based on performance assessed over 2018 to 2020, pro rated for time, and also, including the value of any related dividends accrued during the vesting period on vested awards. The value has been calculated using a share price of 263.98p, being the average comparison, LTIP targets are summarised in the following table, for awards made in 2019, 2020 and 2021: share price over the last quarter of the year. As the market price at grant 357p, no value is attributable to this award from the share price increasing.

LTIP weighting EPS TSR Strategic 2019-2021 50% 30% 20% 2020-2022 50% 30% 20% 2021-2023 50% 30% 20%

LTIP targets EPS TSR Strategic 2019-2021 Between 35.5p (25% vesting) Between median (25% vesting) See notes under section 3.1 and 46.0p (100% vesting) and UQ (100% vesting) 2020-2022 Between 38.6p (25% vesting) Between median (25% vesting) Adjusted operating profit conversion and 46.9p (100% vesting) and UQ (100% vesting) ratio between 18.5% (25% vesting) and 22.0% (100% vesting) 2021-2023 TSR condition to be unchanged EPS and Strategic (adjusted operating profit conversion ratio) to be considered by the Remuneration Committee later this year and disclosed at the time of grant in the RNS Announcement for the Directors’ awards and again next year in the Directors’ remuneration report

Notes: Composition of the TSR comparator groups and prior-year strategic targets for each LTIP award are shown under the table in section 3.1. For TSR, the participant group approved for the 2020 grant has remained unchanged for subsequent grants, except for adjustments due to any companies delisting. SThree plc SThree plc 128 Annual Report and Accounts 2020 Annual Report and Accounts 2020 129

ANNUAL REPORT ON REMUNERATION CONTINUED

Section 3 – Directors’ interests in shares and broader context for Directors’ pay Level of OP conversion 3.1 Outstanding share awards held by Directors under LTIP, deferred bonus and SAYE ratio in 2021 3.2 Statement of Directors’ shareholdings Threshold (25% vesting) 18% 3.3 Total Shareholder Return (‘TSR’) performance of SThree over the last ten-year period Maximum 22% 3.4 Historical levels of CEO remuneration and incentive plan pay-outs 3.5 Year-on-year percentage change in CEO remuneration compared to employees 4. For awards which have vested but remain unexercised, dividends are accrued as additional shares, as shown in the final column above. 5. For the 2020-2022 LTIP awards, the 50% of the award based on EPS requires the Company to achieve an EPS of between 38.6p (25% pay out) and 46.9p (100% pay out). For 3.6 Comparison of CEO remuneration to workforce remuneration by quartiles the strategic measures these require the adjusted OP conversion ratio to be between 18.5% (25% vesting) & 22.0% (100% vesting). 3.7 Relative importance of spend on all employees’ pay compared to dividend payments 3.2 Statement of Directors’ shareholdings (audited) 3.1 Outstanding share awards Under the remuneration policy Executive Directors must build and maintain a level of shares equivalent to at least 200% of Awards outstanding (including those granted in the year), comprising LTIP, SAYE and deferred share awards (audited) base salary. Directors’ interests in the ordinary share capital of the Company as at the year end, are shown in the table below, Executive Directors’ awards outstanding under the LTIP are set out in the table below. Awards are currently structured as including any changes since the start of the year. There have been no changes since the year end and no Director had any conditional awards of shares, with no exercise price. Earlier awards were granted either as nil-cost options, save for a notional other interest in the share capital of the Company or its subsidiaries, or exercised any option during the year, other than £1 sum payable on vesting, exercisable between three and ten years from grant. as disclosed.

Ordinary Ordinary Indirect Remaining shares held at Ordinary Ordinary shares held at interest (ie Shareholding Shareholding unexercised at 1 December shares shares 30 November LTIP/other requirement (% of 2020 Shares vested 30 Nov 2020 Executive Director 2019 acquired disposed 2020 awards) (% of salary) salary) Dates of LTIP Market price Shares (incl. rolled-up (incl. rolled-up grant/ at grant/ originally Face value dividend Gain on exercise dividend Mark Dorman 4,150 – – 4,150 441,820 200% 2% Executive Director award award awarded £ shares) Vesting date £ shares) Alex Smith 368,527 129,851 100,000 398,378 519,428 200% 293% Mark Dorman 19/03/2019 287.0 0 248,258 712,500 – 19/03/2022 – 248,258 James Bilefield 10,000 – – 10,000 – – – 05/02/2020 375.00 193,562 725,859 – 05/02/2023 – 193,562 Anne Fahy 4,000 – – 4,000 – – – Alex Smith 01/02/2011 371.30 10 4,511 388,049 40,685 01/02/2014 Not exercised 40,685 Denise Collis 5,000 – – 5,000 – – – 02/02/2018 3 57.0 0 143,521 512,370 – 02/02/2021 – 143,521 Barrie Brien – – – – – – – 30/01/2019 274.00 191,672 525,181 – 30/01/2022 – 191,672 05/02/2020 375.00 143,550 538,311 – 05/02/2023 – 143,550 3.3 Total Shareholder Return (‘TSR’) performance of SThree over the last ten-year period

1. The TSR comparator group for the 2019-2021 and 2020-2022 LTIP awards is: Adecco, Amadeus Fire, Brunel, Empresaria, Groupe Crit, Hays, Impellam, Kelly Services, Kforce, The following graph shows the TSR of the Company, compared to the FTSE 350 Support Services and FTSE Small Cap indices. Korn Ferry, Manpower, Gattaca, Page Group, On Assignment, Randstad, Robert Half, Robert Walters and Staffline. For awards in 2018, the comparator group also included Harvey Nash. These are considered the most illustrative comparators for investors as the Company is or has been a constituent in the past. 2. For the 2018-2020 LTIP awards, the 20% of the award based on strategic targets is split between two targets equally: new product net fees between £11 million and £17 million/OP conversion ratio between 17.3% and 21.1%. Where sliding scales operate, 25% of the award will vest at threshold. 3. For the 2019-2021 LTIP award, the 20% of the award based on strategic targets is split between two targets equally, set out as (i) and (ii) below. Where sliding scales operate, 25% of the award will vest at threshold: Total Shareholder Return (i) Improving the level of churn in the sales teams (10% of LTIP award) Turnover of employees (churn) in members of the sales team with 12-24 months experience was 49% in 2018. The Board has identified churn reduction as a strategic priority. This measure formed part of the 2018 annual bonus, with the outcome a major underperformance against the threshold target, despite substantive management efforts. A detailed follow-up review has highlighted the full complexity of factors that cause churn within this particular group. These include the ongoing appropriateness of the traditional target demographic for entry level hiring, the evolving competencies required for success, and the vulnerability of SThree trained individuals to competitor approaches, particularly from those smaller businesses, with a lower cost base, who can offer substantially higher financial rewards. Addressing churn at this level will require a longer-term, multi-dimensional approach to retention incorporating recruitment, talent management, career progression, employee engagement and reward. Improved retention of the SL1 (Level 1 cohort represents Sales consultants) 12-24 month cohort will also directly impact retention across all levels of our salesforce, reflecting the marked difference in average length of service once the 24-month time horizon has been passed. From a 2018 base line of 49% the target range for the 2019-2021 LTIP is as follows:

Level of sales team churn in 2021

Threshold (25% vesting) 42%

Maximum 40% (ii) Improving our long-term operating profit conversion ratio (10% of LTIP award) As part of the Capital Markets Day long-term strategy to grow our PBT by 2022, the Board identified that improving our operating profit conversion ratio from the level at that time of 16.8% was a critical step to achieving this goal. At that time, we had an element of the annual bonus given over to this measure to ensure near-term, tactical focus. In addition, and in order to encourage initiatives of a more strategic, longer-term nature, the Board felt that it was appropriate that this measure was additionally included in the LTIP.

hree upport ervies mall ap SThree plc SThree plc 130 Annual Report and Accounts 2020 Annual Report and Accounts 2020 131

ANNUAL REPORT ON REMUNERATION CONTINUED

3.4 Historical levels of CEO remuneration and incentive plan pay-outs The three employees used for comparison for 2020 are shown below:

The table below shows historical levels of CEO total remuneration over a ten-year period, as well as annual bonus and LTIP Employees’ Employees’ total vesting percentages over the same period. salary remuneration % change (£) (£) 2020 to 2019 CEO total Annual bonus LTIP awards remuneration (% of vesting (% of Q 25 pay 22,162 22,162 (9.5%) Year CEO £’000 maximum) maximum) Q 50 pay 23,562 24,229 (24.3%) 2020 Mark Dorman 500.2 0% –1 Q 75 pay 47,15 6 47,15 6 (6.9%) 2019 Mark Dorman (appointed 18 March 2019) 629.1 55.7% –2 2019 Gary Elden (stepped down 18 March 2019) 832.1 53.2% 63.5% The pay ratios have fallen year on year largely because the CEO pay has reduced by more than the reduction in employees’ pay over the year. The decrease for employees’ total pay was largely due to the reduction in commission and bonus 2018 Gary Elden 1,064.0 73.4% 18.8% payments for staff in a year where Company profitability decreased. 2017 Gary Elden 1,228.9 76.2% 41.0% 3.7 Relative importance of spend on all employees’ pay compared to dividend payments 2016 Gary Elden 1,058.5 56.4% 50.0% 2015 Gary Elden 1,284.9 92.8% 50.0% The table below sets out the change to the total employee remuneration costs compared with the change in dividends for 2020 compared to 2019. All figures are taken from the relevant sections of the Annual Report. 2014 Gary Elden 852.2 54.6% 18.5% 2013 Gary Elden 752.8 44.3% 25.5% Item 2020 2019 Change 2012 Russell Clements 1,295.0 77. 4% 88.0% Dividends 0 £18.8m (100%)1 2011 Russell Clements 1,264.9 56.0% 100.0% Remuneration paid to employees (incl. Directors) £209.4m £211,029 2 (0.8%)

1. Mark Dorman was not eligible to receive the 2018-2020 LTIP award for which the performance period ended in 2020, the LTIP vested at 19.3% of maximum for participants. 1. As mentioned earlier in this report, in response to the COVID-19 health crisis, the Board took the decision to not pay the 2019 final or the 2020 interim dividends. 2. Mark Dorman was not eligible to receive the 2017-2019 LTIP award for which the performance period ended in 2019, the LTIP vested at 71.8% of maximum for participants. 2. 2019 numbers restated reflecting Australia being treated as a discontinued operation.

3.5 Year-on-year percentage change in CEO remuneration compared to employees Section 4 – Governance 4.1 The Committee and its advisors The table below shows the percentage increase for each element of remuneration between the current and previous 4.2 Statements of voting at most recent AGMs financial periods for the CEO, compared with all Group employees. 4.3 Approval Percentage change 2019-2020 Average for all 4.1 The Committee and its advisors Remuneration element CEO employees The Committee’s Terms of Reference (available at www.sthree.com) are reviewed periodically to align as closely as possible Salary and fees (4.9%) (1.5%) with the UK Corporate Governance Code (‘Code’) and CGI best practice guidelines. During the year, the Committee Other benefits1 (2.5%) (5.7%) comprised only independent NEDs, being Denise Collis, Chair, James Bilefield, Barrie Brien and Anne Fahy. The Committee Annual bonus2 (100.0%) (3.0%) therefore meets Code requirements to comprise at least three independent NEDs.

1. Includes salary supplement of 5% in lieu of pension. Relocation costs have been excluded. The Chief Executive Officer, Chief Financial Officer and the most senior HR representative attend meetings by invitation, 2. As announced on 6 April 2020 the Executive Directors agreed to forego the 2020 annual bonus. excluding matters related to their own remuneration. The Committee met four times during the year for routine business, in addition to unscheduled meetings for specific items and no member of the Committee has any personal financial interest 3.6 Comparison of CEO remuneration to workforce remuneration by quartiles (other than as a shareholder) in the matters decided. The Committee has decided to use Option B in the relevant regulations to calculate the Chief Executive Officer pay ratio, The Committee appointed Korn Ferry as its independent remuneration advisor in 2016, following a comprehensive review. using 2020 gender pay gap information to identify the three UK employees as the best equivalents of P25, P50 and P75, calculated based on full-time equivalent base pay data as at April 2020. This methodology was selected as the Committee Fees paid to Korn Ferry for advice in relation to remuneration matters during the year were £60,577 (2019: £64,971), both believes this provides a more accurate and consistent calculation based on the information available at this time. The excluding VAT. Korn Ferry are members of the Remuneration Consultants Group (‘RCG’) and comply with the RCG Code of Committee will monitor investor guidance and evolving best practice which may move in favour of using Option A to Conduct. Korn Ferry has no other relationship with the Company and the Committee are satisfied that their advice was and is calculate the ratios and will review its approach next year (restating any prior year figures, as appropriate). objective and independent.

The following table sets out the CEO pay ratio at the median, 25th and 75th percentile.

25th percentile 75th percentile Financial year Method pay ratio Median pay ratio 2020 Option B 23.1 21.1 11.1 2019 Option B 34.1 26.1 16.1 2018 Option B 39.1 24.1 20.1 SThree plc SThree plc 132 Annual Report and Accounts 2020 Annual Report and Accounts 2020 133

ANNUAL REPORT ON REMUNERATION DIRECTORS’ REPORT CONTINUED

4.2 Statements of voting at most recent AGMs The Directors present their Annual Report on the the Strategic report). Information on the Company, including activities of the Company and the Group, together legal form, domicile and registered office address is included At the AGM held in April 2020, the following votes were cast in relation to the advisory vote on the Annual report on with the financial statements for the year ended in note 1 to the financial statements. remuneration and the binding vote on the remuneration policy. 30 November 2020.

Resolution For % Against % Withheld Results, dividends, going concern and post reporting The Board confirms that these, taken as a whole, are fair, date events Directors’ remuneration report (2020 AGM) 91,697,14 4 92.38 7,562,250 7.62 50,109 balanced and understandable and that the narrative Directors’ remuneration policy (2020 AGM) 94,753,657 95.46 4,505,467 4.54 50,380 sections of the report are consistent with the financial Information in respect of the Group’s results, dividends and statements and accurately reflect the Group’s strategy, other key financial information is contained within the * Votes withheld are not counted in the % shown above. performance and financial position. Our Compliance Strategic report and other Officers’ sections of this Annual Report. A going concern and viability statement are included 4.3 Approval statements and corporate governance report section are presented separately and do not form part of the Directors’ within the Compliance statements section. No significant This report was approved by the Board of Directors on the date shown below and signed on its behalf by: report. An overview of the principal risks and uncertainties events have occurred since the year end. Denise Collis faced by the Group are also provided in the Strategic report Directors and their interests Chair of the Remuneration Committee along with the Company’s Section 172 statement. The Directors of the Company, including their biographies, 22 January 2021 The Strategic report, including the Chief Executive Officer’s are shown within ‘Our Board’ section of this Annual Report, and other Officers’ sections of this Annual Report, provide with further details of Board Committee membership being information relating to the Group’s activities, its business, set out in the ‘Board and Committee structure’ section. governance, strategy, future developments and the principal risks and uncertainties faced by the business, including All Directors served throughout the financial year, except as analysis using financial and other KPIs where necessary. disclosed, and in accordance with the UK Corporate These sections, together with the Compliance statements, Governance Code, will retire at the 2021 AGM and submit Governance, Audit Committee, Nomination Committee and themselves for election or re-election, as necessary, as set out Directors’ remuneration reports, provide an overview of the in the Notice of Meeting. Group, including environmental and employee matters, and Other than employment contracts, none of the Directors had give an indication of future developments in the Group’s a material interest in any contract with the Company or its business, so providing a balanced assessment of the Group’s subsidiary undertakings. Key terms of the Directors’ service position and prospects, in accordance with the latest contracts and interests in shares and options are disclosed in reporting requirements. The Group’s subsidiary undertakings, the Directors’ remuneration report. including branches outside the UK, are disclosed in the notes to the financial statements Any related party interests applicable to the Directors are shown in the notes to the financial statements. The purpose of this Annual Report is to provide information to the members of the Company, as a body. The Company, its Essential contractors and implications following a Directors, employees, agents or advisors do not accept or change of control or takeover assume responsibility to any other person to whom this document is shown or into whose hands it may come and The Group has business relationships with a number of clients any such responsibility or liability is expressly disclaimed. This and contractors but is not reliant on any single one. There are Annual Report contains certain forward-looking statements no significant agreements, which the Company is party to, with respect to the operations, performance and the that take effect, alter or terminate upon a change of control financial position of the Company and the Group. By their of the Company following a takeover offer, with the exception nature, these statements involve uncertainty since future of the Citibank and HSBC Revolving Credit Facility agreements. events and circumstances can cause results and The Company does not have agreements with any Director developments to differ from those anticipated. or employee that would provide compensation for loss of The forward-looking statements reflect knowledge and office or employment resulting from a takeover, except that information available at the date of preparation of this provisions of the Group’s share plans and tracker share Annual Report and nothing in this Annual Report should be arrangements may cause options, awards or tracker shares construed as a profit forecast. to vest on a takeover.

The Directors confirm that they have carried out a robust Share capital and share rights assessment of the principal risks facing the Company and the Group, including those that would threaten the business Details of the share capital of the Company, together with model, future performance, solvency or liquidity, and movements during the year, are shown in the notes to the explained how they are being managed or mitigated (see financial statements. The rights and obligations attached to analysis of key risks, mitigation and impact on strategy within the Company’s ordinary shares are contained in the Articles. SThree plc SThree plc 134 Annual Report and Accounts 2020 Annual Report and Accounts 2020 135

DIRECTORS’ REPORT CONTINUED

Ordinary shares allow holders to receive dividends and to The Company’s policy is to comply with investor guidelines on Related party transactions (‘RPT’) the Directors’ remuneration report and the notes to the vote at general meetings of the Company. They also have the dilution limits for its share plans by using a mixture of market financial statements. Details of any RPT undertaken during the year are shown in right to a return of capital on a winding-up. purchased and new issue shares. the notes to the financial statements. Health, safety and equal opportunities There are no restrictions on the size of holding or the transfer Some 651,068 shares were purchased in the market during of shares, which are both governed by the general provisions the year at a cost of £2.0 million. Purchases may be made for Financial instruments and research and development The Group is committed to providing for the health, safety of the Company’s Articles and legislation. Under the Articles, cancellation, to be held as treasury shares, or for the and welfare of all current and potential employees. Every Information and policy in respect of financial instruments and the Directors have the power to suspend voting rights and the Employee Benefit Trust (‘EBT’). The Directors will seek to renew effort is made to ensure that country health and safety financial risk management is set out in the notes to the right to receive dividends in respect of ordinary shares, as well the authority to purchase up to 10% of the Company’s issued legislation, regulations or similar codes of practice are financial statements, together with information on price, as to refuse to register a transfer in circumstances where the share capital at the next AGM. complied with. credit and liquidity risks. The only expenditure incurred in the holder of those shares fails to comply with a notice issued area of research and development relates to software and The Group is also committed to achieving equal under Section 793 of the Companies Act 2006. The Directors Directors’ indemnities, Directors’ and Officers’ system development, which is shown in the notes to the opportunities and complying with anti-discrimination also have the power to refuse to register any transfer of insurance and conflicts of interest financial statements. legislation and employees are encouraged to train and certificated shares that does not satisfy the conditions set out The Directors have the benefit of the indemnity provisions develop their careers. Group policy is to offer the opportunity in the Articles. contained in the Company’s Articles of Association Substantial shareholdings to benefit from fair employment, without regard to gender, (‘Articles’), and the Company has maintained throughout the sexual orientation, marital status, race, religion or belief, age The Company is not aware of any agreements between As at the date of this report, the Group has been notified, in year Directors’ and Officers’ liability insurance for the benefit or disability, and full and fair consideration is given to the shareholders that might result in the restriction of transfer accordance with the Companies Act, of the significant of the Company, the Directors and its officers. The Company employment of disabled persons for all suitable jobs. of voting rights in relation to the shares held by interests in the ordinary share capital of the Company, has entered into qualifying third party indemnity arrangements such shareholders. shown below. In the event of any employee becoming disabled, every effort for the benefit of all its Directors in a form and scope which is made to ensure that employment continues within the Authority to issue or make purchases of own shares comply with the requirements of the Companies Act 2006 No Director held over 3% of the Company’s share capital. existing or a similar role, and it is the Group’s policy to support including as treasury shares and dilution and which were in force throughout the year and remain in Number of Percentage disabled employees in all aspects of their training, force. The Board also confirms that there are appropriate Name of shareholder shares shareholding The Company is, until the date of the forthcoming AGM, development and promotion where it benefits both the procedures in place to ensure that its powers to authorise the J O Hambro Capital generally and unconditionally authorised to issue and buy employee and the Group. Directors’ conflicts of interest are operated effectively. Management Limited 13,265,368 9.98% back a proportion of its own ordinary shares. FIL Limited (Fidelity) 7,442,318 5.60% Employee involvement Legal & General Investment Management Limited 7,030,279 5.48% The Group systematically provides employees with Listing Rules (‘LR’) requirement Confirmation HBOS plc 6,983,314 5.209% information on matters of concern to them, consulting where Harris Associates L.P. 6,575,593 5.17% appropriate by surveys or other means, so that views can be A statement of interest capitalised by the Group during the period and an indication of Not applicable AXA 6,291,253 5.12% taken into account when making decisions likely to affect the amount and treatment of any related tax relief. JP Morgan Chase 7,021,061 5.07% their interests. Employee involvement is encouraged, as is Any information required by LR 9.2.18R (publication of unaudited financial information) Not applicable FMR LLC 6,266,905 4.99% achieving a common awareness, on the part of all regarding information in Class 1 circular or prospectus or a profit forecast and estimate. F & C Management 6,104,400 4.82% employees of the financial, economic or other factors Allianz Global Investors GmbH 6,356,808 4.79% affecting the Group. This plays a major role in ensuring Details of any long-term incentive schemes as required by LR 9.4.3R regarding See Directors’ remuneration report Standard Life Investments Limited 5,845,830 4.775% shared success. The Group encourages this involvement information about the recruitment or retention of a Director. BlackRock, Inc. 6,325,195 4.42% predominantly by communicating via the Group’s intranet Details of the waiver of emoluments by a Director, both current and future. Not applicable Franklin Templeton articles or email updates, training and by participation in the Institutional, LLC 5,722,371 4.37% Group’s employee share plans to align interests. Details of the allotment of equity securities to equity shareholders otherwise than in Not applicable proportion to their holdings and which had not been specifically authorised by the Corporate and social responsibility, including Community shareholders. This information must also be given for any major unlisted subsidiary. diversity, human rights and environmental matters The Group is committed to providing support to the Where the Company is a listed subsidiary, details of any participation by its parent in Not applicable The Board pays due regard to environmental, health and community and society through a number of charitable any share placing during the period. safety, and employment responsibilities and devotes activities and donations, although no donations for political Details of any contract of significance between the Company or one of its subsidiaries Not applicable appropriate resources to monitoring compliance with, and purposes of any kind were made during the year. and a Director or a controlling shareholder. improving, standards. The CEO has responsibility for these areas at Board level, ensuring that the Group’s policies are Annual General Meeting (‘AGM’) Details of contracts for the provision of services to the Company or one of its subsidiaries Not applicable upheld and providing the necessary resources. by a controlling shareholder during the period under review. The AGM of the Company will be held on 22 April 2021, at 75 Further information on diversity, human rights and King William Street, London, EC4N 7BE. A separate Notice Details of any arrangements under which shareholders have waived or agreed to Not applicable environmental matters, including carbon dioxide emissions details all business to be transacted. waive dividends. data, is contained in the ‘Strategy in Action’ and ‘Responsible A statement of the independence provisions and compliance, or not, where there is a Not applicable Business’ sections of this Annual Report, whilst information on controlling shareholder. employee share plans and share ownership is contained in SThree plc SThree plc 136 Annual Report and Accounts 2020 Annual Report and Accounts 2020 137

DIRECTORS’ REPORT STATEMENT OF DIRECTORS’ RESPONSIBILITIES CONTINUED

Modern Slavery Act 2015: slavery and human Championing human rights The Directors are responsible for preparing the Annual Directors’ confirmations trafficking statement Report and the financial statements in accordance with Our Equal Opportunities Policy sets out clear expectations of Each of the Directors, whose names and functions are listed applicable law and regulation. Organisation’s structure how to conduct business in an ethical and transparent way, in ‘Our Board’ section of this Annual Report confirm that, to without compromising integrity and professionalism, and Company law requires the Directors to prepare financial the best of their knowledge: As an international STEM specialist recruitment group, we are respecting the rights and dignity of all people. statements for each financial year. Under that law the committed to combating slavery and human trafficking. The • the Group and Company financial statements, which have Directors have prepared the Group and Company financial Group strives to ensure that appropriate supplier checks Our focus is on ethical recruitment and working conditions at been prepared in accordance with international statements in accordance with international accounting based around governance and financial standing are our sites, security, and community health and livelihoods. accounting standards in conformity with the requirements standards in conformity with the requirements of the always undertaken, and considers these adequate to protect of the Companies Act 2006 and the international financial Given that we also expect our business partners to respect Companies Act 2006 and the international financial reporting against slavery and human trafficking within the Group’s reporting standards adopted pursuant to Regulation (EC) these workplace values, our Code of Conduct promotes: standards adopted pursuant to Regulation (EC) No supply chain. This helps to ensure, as far as possible, that no No 1606/2002 as it applies in the European Union, give a 1606/2002 as it applies in the European Union. element of the supply chain contrives human rights issues. As • ethical handling of actual or apparent conflicts of interest; true and fair view of the assets, liabilities, financial position such, we believe that there are no such issues known to be • compliance with applicable governmental laws, rules Under company law, Directors must not approve the financial and profit of the Group and profit of the Company; and impacting the Group’s business, based on both global and and regulations; statements unless they are satisfied that they give a true and • the Directors’ report, together with the Strategic report, localised legislation and the Directors do not consider there • complete, accurate, fair and balanced disclosure fair view of the state of affairs of the Group and Company Chair and other Officers’ section of this Annual Report, to be a risk of slavery or human trafficking taking place within in reporting; and of the profit or loss of the Group for that period. In includes a fair review of the development and its supplier base. • prompt internal reporting of violations. preparing the financial statements, the Directors are performance of the business and the position of the Group required to: and Company, together with a description of the principal Our supply chains Furthermore, ensuring candidates are placed within a fair risks and uncertainties that it faces. and ethical workplace is a fundamental pillar in the • select suitable accounting policies and then apply Our supply chains include management companies, job recruitment process. We have a responsibility to all them consistently; In the case of each Director in office at the date the Directors’ boards, property, media, IT equipment, stationery and candidates we place to ensure that they are not subjected to • state whether applicable international accounting report is approved: print suppliers, whilst our clients include international bribery, corruption, exploitation, forced labour or modern standards in conformity with the requirements of the STEM businesses. • so far as the Director is aware, there is no relevant audit slavery at the companies they join. Implementation of this is Companies Act 2006 and the international financial information of which the Group’s and Company’s auditors Our policies on slavery and human trafficking ensured through extensive training and the continuous reporting standards adopted pursuant to Regulation (EC) are unaware; and education of our people. Employees, contractors or other No 1606/2002 as it applies in the European Union have We are committed to ensuring that there is no modern • they have taken all the steps that they ought to have taken third parties are required to immediately report any instances been followed, subject to any material departures slavery or human trafficking in our supply chains or in any as a Director in order to make themselves aware of any of unethical behaviour or suspicion of malpractice to disclosed and explained in the financial statements; part of our business, whilst also acting ethically and with relevant audit information and to establish that the Group’s a line manager or a member of the Group HR Team. Any • make judgements and accounting estimates that are integrity in all our business relationships. To do this we have and Company’s auditors are aware of that information. breaches in human rights are reported to our CPO and implemented and enforce a number of effective systems and reasonable and prudent; and relevant authorities. controls to ensure slavery and human trafficking are not • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group taking place anywhere in our supply chains. In 2020, the Directors assessed the risk of modern slavery in By order of the Board and Company will continue in business. our key areas of operation. We also made appropriate Due diligence processes for slavery and supplier checks around governance and financial standing human trafficking The Directors are also responsible for safeguarding the assets and determined that the risk of slavery or human trafficking of the Group and Company and hence for taking Steve Hornbuckle As part of our controls to identify and mitigate risks, we have continues to be low within our supplier base. We have reasonable steps for the prevention and detection of fraud Group Company Secretary in place processes and procedures to: processes in place to: and other irregularities. 22 January 2021

• identify and assess potential risk areas in our supply chains; • identify and assess potential risk areas; The Directors are responsible for keeping adequate Registered office: • mitigate risks, including slavery and human trafficking • mitigate risks occurring in our supply chains; accounting records that are sufficient to show and explain 1st Floor occurring in our supply chains; • continually monitor risk; the Group’s and Company’s transactions and disclose with 75 King William Street • continually monitor risk areas in our supply chains; and • protect whistleblowers, via a confidential and independent reasonable accuracy at any time the financial position of the London • protect whistleblowers, via a confidential and independent reporting process. Group and Company and enable them to ensure that the EC4N 7BE reporting process. financial statements and the Directors’ remuneration report All risks in this area are reported to our Chief People Officer comply with the Companies Act 2006 and, as regards the This statement is made pursuant to Section 54(1) of the and where required to the relevant authorities. Modern Slavery Act 2015 and constitutes our slavery and Group financial statements, Article 4 of the IAS Regulation. Independent auditors human trafficking statement for 2020. The Company’s The Directors are responsible for the maintenance and Modern Slavery Act statement can be found on our website, A resolution will be put to the forthcoming AGM proposing integrity of the Company’s website. Legislation in the United www.sthree.com. that PricewaterhouseCoopers LLP be re-appointed as Kingdom governing the preparation and dissemination of auditors for the ensuing year, having indicated their financial statements may differ from legislation in willingness to continue in office. A formal audit tender was other jurisdictions. last completed in early 2017. Audit fees and non-audit services are disclosed in the Audit Committee report. SThree plc SThree plc 138 Annual Report and Accounts 2020 Annual Report and Accounts 2020 139

STHREE PLC’S SECR COMPLIANT DIRECTORS’ STATEMENT

At SThree we recognise the importance Key recommendations Summary Disclosure Reference Governance The Board are responsible for setting the direction of Board and Committee Pages 92-93 of ensuring long-term sustainability Describe the Board’s SThree’s business strategy with respect to ESG matters, structure oversight of climate-related including climate change, setting climate-related Directors’ report Pages 130 -136 through concerted and transparent risks and opportunities. targets and assessing and managing climate-related climate and environmental action. risks and opportunities. Our policy is to go beyond compliance Describe management’s The CEO who sits on the Board, has overall responsibility See our 2020 CDP Our website role in assessing and for ESG matters, including climate-related issues and response (C1.1) at www. to proactively address our environmental managing climate-related is responsible for reporting to shareholders and the sthree.com/ risks and opportunities. Board. To support the CEO in this role, the Board has en/investors/ impacts whilst partnering with clients appointed a Group ESG Committee, with attendees financial- including Executives, senior management, Non- results/ in the renewable energy sector to Executives, as well as key influencers and external advisors. Regular environmental information such address some of the biggest climate as changes in legislation, project ideas for emissions reduction activities, and performance monitoring of challenges facing society. annual emissions are reviewed and discussed by the ESG Committee four times per year.

Strategy We continue to mature our climate-related risk and See our 2020 CDP Our website Describe the climate- opportunity analysis. At present we analyse climate- response (C2.3a) at www. related risks and related risk as short-term (0-3 years), medium (3-5 years) sthree.com/ opportunities the and long-term (5-8 years). en/investors/ TCFD statement associated financial impacts; organisation has identified financial- • Develop our management response to over the short, medium At present the main risks identified include; results/ We welcome the development of the the scenario analysis findings, and and long term. • Emerging regulation and possible financial Task Force on Climate-related Financial • Disclose our findings and management penalties for non-compliance (short-term risk). In Disclosures (‘TCFD’) recommendations. order to mitigate this risk we have contracted a third response in line with the TCFD The TCFD is currently a voluntary party climate specialist who ensures SThree is guidelines in our 2021 Annual Report framework, and we will align our Describe the impact of aware of emerging regulation and we strive to be and Accounts reporting with the requirements of the climate-related risks and ahead of compliance. TCFD by the end of 2021. In the coming We will continue to develop our response opportunities on the • Failure to act in regard to having a progressive organisation’s business, year we will: to the TCFD recommendations around sustainability strategy could result in SThree not strategy and fulfilling growing sustainable vendor requirements governance, strategy, risk management, financial planning. (medium-term risk). To manage this risk we have • Undertake climate-related scenario and metrics and targets. Our TCFD Index introduced ambitious emission targets (see Metrics analysis to develop our understanding summarises the location of our existing and targets). of the material climate-related risks and TCFD disclosures. • Growing costs related to energy and climate control opportunities we face and their Describe the potential requirements within our property portfolio (medium- impact of different term risk). In order to reduce this risk we continually scenarios, including a identify and implement energy saving opportunities. 2°C scenario, on the organisation’s businesses, In terms of climate-related opportunities, there is strategy and a growing need for the right talent to support the financial planning. innovations required to transition to a low-carbon economy and we continue to grow the role we play in sourcing and nurturing this talent.

Climate-related analysis is an area of continuous development. Information on how we have analysed risk to date can be found in our 2020 CDP response however, in 2021 we have committed to undertake thorough climate-related analysis within various scenarios to improve our current climate-related risk and opportunity management. SThree plc SThree plc 140 Annual Report and Accounts 2020 Annual Report and Accounts 2020 141

STHREE PLC’S SECR COMPLIANT DIRECTORS’ STATEMENT CONTINUED

Key recommendations Summary Disclosure Reference CDP performance 2020 results We remain committed to disclosing to investors the risks we We continue to work with Avieco (formerly Carbon Smart) Risks and opportunities Risks are prioritised by way of the Group’s ERM Risks Pages 64 to 75 face from climate change and have responded to CDP for to meet and exceed the energy and GHG emissions Describe the organisation’s processes, with the size and materiality of each risk the sixth consecutive year. In 2020 we maintained our B reporting requirements of The Companies (Directors’ processes for identifying assessed and compared using their likelihood and See our 2020 CDP Our website and assessing climate- potential financial impact. response (C2.1, 2.2) at www. score, consolidating our leadership position amongst report) and Limited Liability Partnerships (Energy and related risks. sthree.com/ international staffing companies. Carbon Report) Regulations 2018. en/investors/ We use quantifiable indicators to measure financial SThree uses the market-based method for calculating impacts, including operating profits and operating financial- 2020 performance scope 2 emissions to account for our efforts in generating costs. A ‘substantive financial impact’ is defined as results/ In 2019 SThree committed to reducing absolute greenhouse and purchasing low-carbon energy. The location-based Describe the organisation’s one that: gas (‘GHG’) emissions by 20% by 2024 relative to 2019, processes for managing method is provided for disclosure only and all emissions aligning our business with climate science. Due to the climate-related risks. • Leads to 5% reduction in operating profits intensities shown are calculated using the scope 2 • Leads to a 5% increase in operating costs exceptional circumstances of the COVID-19 pandemic, market-based method. • Impacts five or more offices business activity within both our direct operations and our value chain changed significantly in 2020 and led to a 56% GHG emissions 2018 to 2020 Describe how processes A ‘substantive strategic impact’ is defined as any risks reduction in annual emissions relative to 2019. 2500 for identifying, assessing, that reduce the ability of the Group to meet its short, Whilst we saw reductions in emissions across all resources and managing climate- medium and long-term objectives. related risks are integrated and geographies, the reductions seen in business travel were 2000 into the organisation’s SThree works closely with a third-party sustainability most significant (-64% relative to 2019) and account for 48% of overall risk management. consultancy to stay abreast of climate-related issues, the total year-on-year variance. We are committed to risks and opportunities. Regular environmental minimising the need for unnecessary business travel and will 1500 information such as changes in legislation are reviewed continue to build on our successful 2019 campaign to raise and discussed by the Board-appointed ESG Committee awareness of the environmental impacts of such travel. four times per year. The Committee is responsible for 1000 relaying relevant information to the Board in order We have maintained carbon neutral status in 2020 by to make decisions and stay up to date with material continuing to offset global emissions with ClimateCare. 500 issues for the business. The Group Risk Committee Since 2012 we have offset 33,443 tonnes of carbon. also considers climate-related risks as advised by the ESG Committee, and all risks are managed within our Energy and carbon action 0 2018 2019 2020 2018 2019 2020 2018 2019 2020 existing risk management framework. In 2020 we undertook the following emissions and energy Scope 1 Scope 2 Scope 3 Metrics and targets Disclosure of scope 1, scope 2 and scope 3 emissions SECR compliant Pages 138 to reduction initiatives: Disclose the metrics used are disclosed within our Annual Report, including a Directors’ statement 142 • We continued our renewable energy transition, with the by the organisation to summary of sustainability actions taken in the reporting carbon intensity of our electricity consumption falling from

assess climate-related risks period. Emissions are calculated in line with the GHG See our 2020 CDP Our website 0.33 kg CO2e/kWh in 2019 to 0.30 kg CO2e/kWh this year. and opportunities in line Protocol methodology to allow for aggregation and response (C4.1, C6.1, at www. • As a result of the transition to homeworking, we with its strategy and risk comparability across organisations. Our emissions 6.3, 6.5) sthree.com/ accelerated plans to deploy more energy efficient management process. performance for the previous reporting period is also en/investors/ technologies and distributed over 2,700 laptops globally. included in our Annual Report for comparison. financial- • Although business travel has been restricted to urgent or results/ essential trips only since March 2020, we have Disclose Scope 1, Scope We have committed to several targets regarding our implemented a new travel policy for colleagues aimed at 2, and Scope 3 GHG society that reflect the importance we put on being a promoting positive environmental behaviours. emissions, and the purpose-driven business: related risks.

• Reduce our absolute CO2e emissions by 20% by 2024, against a 2019 base year. • Offset our full global carbon footprint to achieve SECR achievements in 2020 Describe the targets used carbon neutrality. by the organisation to manage climate-related risks and opportunities and performance kg CO2e/kWh against targets. -56% 33,433 0.30 reduction in annual tonnes of carbon carbon intensity of our electricity emissions relative offset since 2012 consumption falling from 0.33kg to 2019 CO2e/kWh in 2019 SThree plc 142 Annual Report and Accounts 2020

STHREE PLC’S SECR COMPLIANT DIRECTORS’ STATEMENT CONTINUED

Table 1 - Energy and carbon disclosures for 20201

Using a financial control approach, calculated GHG emissions2 arising from business activities in the reporting year 1 December 2019 to 30 November 2020 are as follows:

2019 2020

% change Global in total Global (excluding emissions UK and (excluding UK UK and UK and (vs previous

Emissions Source (tCO2e) offshore and offshore) offshore offshore) year)

Scope 1 Natural gas 130 2 48 0 -64% Leased transport 43 1,095 13 745 -33%

Scope 2 Purchased electricity (market/location based) 84/212 10 45 /1181 44/69 394/441 -61%/-63% Other fuels3 0 13 0 21 61%

Scope 3 Water 7 34 3 15 -55% Business travel4 517 1,454 181 526 -64%

Paper 33 69 1 7 -92%

Waste 20 43 4 22 -59%

Electricity T&D 16 59 6 21 -65%

Total tonnes of CO2e (market based) 850 3,814 300 1,751 -56%

Total tonnes of CO2e (location based) 978 3,950 325 1,798 -57% Number of employees 786 2,323 639 1,969 -16%

Tonnes of CO2e per employee 1.08 1.64 0.47 0.89 -48% Total energy consumption used to calculate emissions 1,948,861 7,428,096 702,440 4,607,879 -43% (kWh)5

1. This work is partially based on the country-specific CO2 emission factors developed by the International Energy Agency, © OECD/IEA 2020 but the resulting work has been prepared by SThree plc and does not necessarily reflect the views of the International Energy Agency. 2. The methodology used to calculate SThree’s GHG emissions is in accordance with the requirements of the World Resources Institute Greenhouse Gas Protocol (revised version); ‘Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance’ (Defra, March 2019), and ISO 14064 – part 1. 3. Emissions from ‘Other fuels’ include purchased heat and steam and have increased since 2019 due to expanded data availability. No restatements have been undertaken for previous years as it would be deemed to be ‘immaterial’ (a movement of less than 5% in the total reported emissions). 4. UK and offshore business travel includes emissions and energy consumption for flights and car hire associated with SThree’s Ireland office as this data is aggregated across SThree’s UK and Ireland offices. 5. Total energy consumption includes energy consumed for heating (natural gas, district heating), power (electricity) and transport (Company leased vehicles, expensed mileage claims) and has been restated for 2019 due to a calculating error relating to SThree’s energy consumption from leased and hired vehicles.