A Year of Challenge and Change
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GOVERNANCE CHAIR’S INTRODUCTION A YEAR OF CHALLENGE AND CHANGE DEAR SHAREHOLDER Sue Clark became our Senior Independent Director when I was appointed Chair in January, and after six and a half This Corporate Governance Report details our approach to years on the Board, Karen Witts stepped down in June. governance and the responsible way we run our business. She left with our thanks for her service and best wishes My first year as Chair has seen a mix of challenge and for the future. Jon Stanton replaced Karen as Chair of the change for Imperial Brands. I would like to thank our Audit Committee. In July we welcomed Pierre-Jean previous Chair, Mark Williamson, for his contribution to Sivignon and in November Bob Kunze-Concewitz to the the development of the Company since his appointment Board as Non-Executive Directors. Read about our Board as a Non-Executive Director in 2007. members’ skills and experience on pages 64, 65 and 71. We have completed our first year with new external “Our primary focus, along with that auditors EY. You can read more about the audit process of people all around the world, was on pages 83 to 85. the safety of our people, their families This is our first Annual Report under the 2018 UK Corporate Governance Code, which we have complied with in all but and our communities during the two provisions – that of an external Board evaluation and COVID-19 pandemic.” our former Chair being in post for more than nine years from the date of his first appointment to the Board. We set For many months of 2020, our primary focus, along with out details on page 86. that of people all around the world, was the safety of our Details of the Company’s governance framework and how people, their families and our communities during the it contributes to the delivery of our strategy are set out in COVID-19 pandemic. the following sections. We have also been focused on building a Board with the skills and experience to meet these challenges. We welcomed Stefan Bomhard as our new Chief Executive Officer in July; Stefan took on the Chief Executive role at a significant point in Imperial’s development and the Board THÉRÈSE ESPERDY is confident that his experience and expertise will drive the Chair business forward. As part of this development the Board recognises that the new strategy needs to be underpinned by a renewed culture focused on the consumer and ensuring we deliver the products they want. 62 Imperial Brands | Annual Report and Accounts 2020 STATEMENT OF COMPLIANCE WITH PROVISIONS AND PRINCIPLES OF THE CODE This is the first Annual Report under the revised 2018 UK Corporate Governance Code. As mentioned in the Chair’s introduction, the Company has complied with all requirements of the Code apart from Provision 21 regarding an external evaluation of the Board’s effectiveness. See page 86 for our explanation. The Company was also not compliant with Provision 19 as former Chair, Mark Williamson, had served as a Director for more than nine years prior to his retirement in December 2019. Further detail regarding how we have complied with the Code is set out below and included in the individual Board Committee reports on pages 74 to 85 and pages 96 to 123. BOARD LEADERSHIP AND PURPOSE COMPOSITION, SUCCESSION AND EVALUATION Details of: We set out our Board composition and • Board leadership and Company purpose are set biographies of the members on pages 64 and out on pages 66 to 68 65 and a skills matrix of the Board can be • Division of responsibilities below and page 70 found on page 71. Details of succession and • Board skills matrix page 71 Board evaluation can be found on pages • Engaging stakeholders pages 68 and 69 74 to 75 and 86. • Celebrating our people pages 16-19 We are mindful of our diversity obligations, including the Parker review, and incorporate these into our search criteria. DIVISION OF RESPONSIBILITIES Our Chair and Chief Executive have clearly defined and separate responsibilities divided AUDIT, RISK AND INTERNAL CONTROL between the leadership and effectiveness of the Board and the running of the business Details of how the Audit Committee has respectively. Working together with the Board, discharged its responsibilities can be found on they are responsible to our stakeholders for the pages 76 to 85. How we manage risk is included on successful delivery of our strategy. They pages 42 to 59 and our viability and going concern communicate regularly between Board meetings statements can be found on pages 60 and 61. The to ensure a full understanding of evolving issues external auditor’s report begins on page 125. and to facilitate swift decision making. See Division of responsibilities on pages 70 to 71 and ‘Conflicts of Interest’ on page 86 regarding independence. MATTERS RESERVED REMUNERATION The Remuneration Policy is to be brought In order to retain control of key decisions the before shareholders at the 2021 AGM, in Board has adopted a schedule of matters on which accordance with the Companies Act 2006. it must make the final decision. During the year The revised Policy, which, in accordance with such decisions included approval of Stefan Code provision 36, includes a post-employment Bomhard’s appointment as Chief Executive, the shareholding requirement, is set out on pages appointments of Pierre-Jean Sivignon and Bob 100 to 109 The Board believes that the Policy Kunze-Concewitz as Non-Executive Directors, the has been appropriately designed to attract, Group’s financial statements, its business plan, retain and motivate the talent required for a major capital expenditure, material investments successful Company producing sustainable or disposals including the sale of the Premium returns for investors, and that the Policy is Cigar Division, capital allocation and returns, and aligned with the purpose and values of the material changes to the Group’s principal policies Group as a whole. (including treasury and tax). www.imperialbrandsplc.com 63 GOVERNANCE BOARD LEADERSHIP AND COMPANY PURPOSE THÉRÈSE ESPERDY STEFAN OLIVER TANT, SUE CLARK ROBERT (BOB) Chair of the Board BOMHARD BSC, CA Senior Independent KUNZE- Chief Executive (SCOTLAND) Director CONCEWITZ Officer Chief Financial Officer Non-Executive Director D R N Chair E E D A N R Chair D R N Skills and experience Skills and experience Skills and experience Skills and experience Skills and experience Thérèse has significant Stefan joined Imperial in Oliver held a number of Sue has strong Bob is an experienced international investment July 2020 from Inchcape senior positions in a international business marketing professional banking experience plc, a global distribution 32-year career at KPMG, credentials with over 20 and has held a number of having held a number of and retail leader in the including Global years’ Executive senior roles at leading roles at JP Morgan premium and luxury Managing Director Committee and Board FMCG companies. He has including Global Chair of automotive sectors, Financial Advisory and level experience in the been Chief Executive JP Morgan’s Financial where he delivered Private Equity Division FMCG, regulated Officer at Campari Group Institutions Group, successful and Head of UK Audit. transport and utility since May 2007 having Co-Head of Asia-Pacific transformational change sectors. Sue held the role joined the business in Corporate & Investment during a five-year tenure He was also a member of of Managing Director of 2005 as Group Marketing Banking, Global Head of as Chief Executive. both the UK and German SABMiller Europe and Director. Prior to his time Debt Capital Markets, and boards of KPMG. He was an Executive at Campari Group, he held Head of US Debt Capital Prior to his role at brings to Imperial Committee member of positions of increasing Markets. She began her Inchcape, Stefan was international experience SABMiller plc. She joined responsibility at Procter & career at Lehman President of Bacardi in change management, SABMiller in 2003 as Gamble, including Global Brothers and joined Limited’s European organisational Corporate Affairs Director Prestige Products Chase Securities in 1997 region and was also restructuring, corporate and was part of the Corporate Marketing prior to the firm’s merger responsible for Bacardi’s finance and mergers and executive team that built Director. with JP Morgan in 2000. Global commercial acquisitions. the business into a top organisation and Global five FTSE company. Appointment Travel Retail. In his current role he is Appointment responsible for finance, Appointed Non-Executive Appointed Chair in Stefan has a PhD in treasury, investor Appointment Director on 1 November January 2020, having marketing and has relations, procurement Appointed Non-Executive 2020. joined the Board in July accrued significant and information Director in December 2016. Thérèse was experience in the technology. 2018, Chair of the Committee appointed Senior consumer and retail Remuneration membership Independent Director in sectors during his career. Appointment Committee in February May 2019. Previous roles have 2019 and Senior Member of the included Chief Appointed to the Board of Independent Director Remuneration Directors in October 2013 Committee and the External Commercial Officer of in January 2020. Cadbury plc and Chief and became Chief Succession and appointments Financial Officer in Nominations Committee. Operating Officer of External Non-Executive Director Unilever Food Solutions November 2013. appointments and Chair of the Finance Europe. This followed External Committee of National senior management and External Non-Executive Director 1 appointments Grid Plc ; Non-Executive sales and marketing appointments and Chair of the Director of Moody’s positions at Diageo Remuneration Director of Davide 1 No external Director 1 Corporation . (Burger King) and Procter Committee of Britvic plc , Campari-Milano N.V. appointments.