CHAIRMAN’S INTRODUCTION TO CORPORATE GOVERNANCE A strong governance structure COVID-19 response Since the World Health Organisation declared the COVID-19 virus a pandemic back in March 2020, the hospitality industry has been presented with a unique set of challenges. During this time, we have taken a number of steps to ensure the safety of our customers and employees, while also supporting and leading management as they seek to make rapid decisions in an uncertain and challenging time in the industry. It was important to the Board that the decisions made during this time aligned with the Company’s purpose and values while also supporting our long-term growth strategy and practising good governance. In particular the Board closely reviewed health and safety arrangements for teams and guests and had a close involvement in the rights issue, the Green Bonds issuance, changes to Whitbread's revolving credit facilities and negotiations with the pension fund Trustee. The Executive Committee began meeting daily by video conference and twice a month for more formal meetings, also via video conference. This ensured we were available to respond rapidly to the ever-changing restrictions issued by the UK Government at its daily press briefings. The Board was provided with regular updates following these meetings. ADAM CROZIER CHAIRMAN In addition to this, the Company established the COVID-19 Working Group to ensure the effective operation of our business within the constraints of the restrictions issued in the UK and Ireland. The party consists of representatives from all functions of the business and meets on a weekly basis. I am pleased to present the Board’s The swift response from our Board, Executive Committee and management team demonstrate the strength of the Group's report on the Company’s compliance strategy, risk management and leadership, while also providing with the UK Corporate Governance an insight of our dedication to maintaining strong governance. Further information on our overall response to the COVID-19 Code. This year has been an extremely pandemic can be found on pages 4 and 5. uncertain period as a result of the Our strong governance framework The Board's primary objective is to create and maintain COVID-19 pandemic. The Board a strong governance structure in order to support the long- term success of the business and also generate lasting value remains committed and focused on for all our stakeholders. At Whitbread, we are committed to driving forward a strong corporate ensuring the Company's actions are in keeping with our culture, values and strategic goals. This is achieved by understanding governance framework, while the critical role that strong corporate governance plays. also taking the necessary steps to In last year’s corporate governance report we provided our first full review on our compliance with the 2018 Code. The new code successfully navigate Whitbread provided the Board with an opportunity to reassess what good corporate governance meant to us and provides a new standard through these unprecedented times. against which we measure ourselves. We continue to focus our governance on complying with the new provisions and applying the new principles introduced in this code. We hope to demonstrate throughout this report the Board’s emphasis on issues such as Company purpose, culture, strategy and the relationships with shareholders and stakeholders. With the exception of one provision, which is explained in more detail below, I am pleased to report that we have complied with the Code throughout the 2020/21 financial year. In the pages that follow we have set out how we have complied with the principles set out in the Code. 68 Whitbread Annual Report and Accounts 2020/21 Strategic reportStrategic The one provision that we cannot report full compliance with On 1 March 2021 the Board was pleased to welcome Fumbi Governance this year is the new provision requiring that pension contribution Chima and Kal Atwal as new independent non-executive rates for executive directors should be aligned with those directors fulfilling the need recognised in last year’s Board available to the workforce. As discussed in last year’s report, evaluation for technology and digital experience. Fumbi is we are taking steps to bring us closer in line. The remuneration skilled in digital transformation strategy in high-growth policy, approved in December 2019, is phasing the pension environments, with a great understanding of overall strategic contribution of current executive directors by 10% from 25% to planning and technology. Kal has a substantial amount of statements Financial 15% over a period of three years. The provision for new executive digital and marketing experience; she played a central part directors was also reduced to 10%, which aligns with the in driving strategic growth and scaling of the business in her workforce. We are committed to aligning contribution rates previous role. Fumbi and Kal bring an invaluable mix of skills and will further review at the end of the policy period. and will provide a breadth of knowledge to the Board. Further information on our executive pensions can be found in As a Board, we believe we have put in place a strong non-executive the remuneration report on page 89. team with a wide range of skills, knowledge and experience to help assist the Company in pursuing its strategic objectives. Culture and purpose Whitbread’s culture is underpinned by ensuring that our Board evaluation Other information customers have a great experience, which we call the It was highlighted in last year's Board evaluation that directors ‘Customer Heartbeat’, comprising: wanted to focus on succession planning and diversifying Board experience. As mentioned above, there was exciting › Winning Teams; progress in this area with the appointment of two new › Profitable Growth; non-executive directors joining the Board in March. However, succession planning has become less of a priority during the › Force for Good; and exceptional year we have experienced. › Everyday Efficiency. The Board and its main committees participated in an internal This aligns with our purpose of providing sustainable long- evaluation during the current year. The results of the review term value for our shareholders while delivering a quality and have produced some opportunities for improvement, and value for money hotel experience to our customers. We aim to a refocus of recommendations made in last year's evaluation: follow Whitbread’s key values of being genuine, confident and › Further focus on succession planning for the CEO, executive committed to reach our goal of becoming the best budget directors and wider senior leadership teams. hotel business in the world. This is accomplished by ensuring our teams are happy and engaged through training and › Emphasis on training and development. progression opportunities and by continuing to develop › Evolving the strategy for a post-COVID world and our sustainability programme under Force for Good with exploration of how technology can be used to support this. the intention of enabling everyone to live and work well. Overall, the results were very positive. They were reported to The Board usually assesses and monitors the Company’s the Board by the Company Secretary in March and discussed culture by making regular visits to Whitbread’s hotels and thoroughly to ensure a full understanding. restaurants and taking the opportunity to meet and speak to team members. Unfortunately, this has not been possible this Further information on the Board evaluation and areas for year but the Board is excited to get back into the business focus in the year ahead can be found on page 76. when it's safe to do so. The Board relies on the regular reports Our stakeholders from the executive team, particularly the Chief Executive and The Board has always ensured that it considers the impact of its the Group HR Director, both of whom are members of the decisions on all our various stakeholders, but even more so now Board. The Group HR Director provides input specifically on following the recent focus on s172. It is important to understand employee issues, employee satisfaction surveys, which include the views of our stakeholders in order to build constructive questions on culture, and reports from the Employee Forum. relationships. For example, we consider the views of our wider Culture is also addressed at the strategy day, and through workforce through the use of the Whitbread Employee Forum recruitment decisions to senior positions, including for the new and 'Our Voice' representatives which gives our employees HR Director, where cultural fit was discussed by the Board. an opportunity to shape strategic plans and major decisions. The Board has re-committed to the purpose as being fit for In addition to this, as Chairman I hold governance meetings the current environment. Regular reports are produced for the each year with major shareholders to listen to their views and Board by functions across the Group to enable the Board to any issues they may have. satisfy itself that the purpose its being met. Further information on our stakeholder engagement can be The Board found on pages 56 and 57. The Board is committed to regularly reviewing the skills, experience and knowledge that it has in place as well as those that can be added. It is part of the Nomination Committee’s role to regularly review the structure, size and composition of the Board. This helps ensure there is a balance of skills, knowledge, independence and diversity around the table. Adam Crozier In April 2021, Susan Taylor Martin retired from the Board after Chairman completing nine years. Deanna Oppenheimer also stepped 26 April 2021 down from the Board in December 2020. Whitbread Annual Report and Accounts 2020/21 69 CHAIRMAN’S INTRODUCTION TO CORPORATE GOVERNANCE The UK Corporate Governance Code 2018 The UK Corporate Governance Code 2018 is the standard against which we measure ourselves.