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Corporate Governance Codes
The Board recognises the value and importance of high standards of corporate governance and since IPO has adopted many aspects of the UK Corporate Governance Code (‘the Code’) so far as the Board considers them appropriate and practical for a group Gear4music’s size. Following due consideration of the recent changes to the AIM rules, the Board has committed to adopt the QCA Corporate Governance Code. More details on implementation and disclosure will appear on the Group’s Plc website in due course.
The Board of Directors and Committees of the Board of Directors
The Board, which is headed by the Chairman, comprises five Directors, of which three are Executive and two are Non-Executive, providing a broad range of relevant skills and experiences. The Board considers Ken Ford and Dean Murray to be ‘independent’ Non-Executives under the criteria identified in the Code. Directors’ profiles are detailed on pages 38 and 39. The Board met regularly throughout the year with ad hoc meetings held when required.
The Role of the Board
The role of the Board is to provide leadership to the Group and to ensure the obligations of being a public company are adhered to. The Board bears collective responsibility for delivering on-going success through the development of appropriate strategies that are aligned to the Group’s objectives, and deliverable with due consideration of risk and the resources available. The Board is also responsible for ensuring that a framework of effective controls is in place.
The division of responsibilities between the Chairman and the Chief Executive Officer is clearly defined. The Chairman is responsible for ensuring the effectiveness of the Board and setting its agenda. The Chairman has no involvement in the day-to-day running of the business. The Chief Executive Officer has direct charge of the Group on a day-to-day basis, and the Executive team has collective responsibility for the implementation of the Group’s strategies, and is accountable to the Board for the financial and operational performance of the Group.
There are certain matters that are reserved for the Board’s consideration and these include, but are not limited to matters of strategy, key commercial developments, risk management, the consideration and approval of budgets, significant capital expenditure and recruitment, acquisitions and disposals, and the approval of financial statements.
The formal Board agenda includes reports from the CEO, CCO and CFO detailing the commercial, operational and financial performance of the Group. Further to formal Board meetings, the Board receives weekly key trend information covering all trading aspects of the business.
The Board determines the fees paid to Non-Executive directors.
The performance of the Board is evaluated informally on an ongoing basis with reference to all aspects of its operation including, but not limited to the appropriateness of its skill level, the way its meetings are conducted and administered (including the content of those meetings), the effectiveness of the various Committees, whether Corporate Governance issues are handled in a satisfactory manner, and whether there is a clear strategy and objectives.
A new Director, on appointment, is briefed on the activities of the Group. Professional induction training is also given as appropriate. The Chairman briefs Non-Executive Directors on issues arising at Board meetings if required, and Non-Executive Directors have access to the Chairman at any time. Ongoing training is provided as needed. Directors are continually updated on the Group’s business and on insurance and on issues covering pensions, social, ethical, environmental and health and safety by means of Board reports.
In the furtherance of his duties or in relation to acts carried out by the Board or the Group, each Director has been informed that he is entitled to seek independent professional advice at the expense of the Group. The Group maintains appropriate cover under a Directors’ and Officers’ insurance policy in the event of legal action being taken against any Director.
Each Director is appraised through the normal appraisal process. The Chief Executive Officer is appraised by the Chairman, the Executive Board members by the Chief Executive Officer, and the Non-Executive Board members by the Chairman. Each Director has access to the services of the Company Secretary if required.
The Non-Executive Directors are considered by the Board to be independent of management and are free to exercise independence of judgement. They receive no other remuneration from the Group other than the Directors’ fees.
The Board is supported by, and receives recommendations from, two committees – an Audit Committee and a Remuneration Committee.
It is recognised that the Code does not treat the Chairman as independent and it is considered best practice that he should not sit on the Audit or Remuneration Committees. The Board, however, takes the view that as the number of Non-Executive Directors is only two, including the Chairman, his participation will continue as the Committees gain the benefit of his external expertise and experience in areas which the Group considers important.
The Audit Committee is chaired by Dean Murray and its other member is Ken Ford. The Audit Committee assists the Board in discharging its responsibilities, within agreed terms of reference with regard to monitoring the quality of internal controls and ensuring that the financial performance of the Group is properly measured and reported on. It receives and review reports from the Group’s management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Group. The Audit Committee meets at least twice a year and has unrestricted access to the Company’s auditors.
The Remuneration Committee is chaired by Ken Ford and its other member is Dean Murray. The Remuneration Committee reviews the performance of the Executive Directors and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also makes recommendations to the Board on proposals for the remuneration packages of each Director, including, where appropriate, the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time (including the Director EMI Plan). The remuneration and terms and conditions of appointment of the Non-Executive Directors are set by the Board.