Introduction from the Chairman, Sir John Armitt CBE
2020 has been an extraordinarily challenging year for many companies, including ours, due to the significant impact of the Covid-19 pandemic and resulting measures taken by governments around the world to seek to control the spread of the virus, specifically those restricting mobility.
The Board of Directors has therefore needed to be agile and, during 2020, we have met significantly more often and via new means to quickly and effectively take the decisions necessary to enable the Company to respond to these challenges.
Our management teams and indeed all our colleagues, particularly those working on the frontline who have continued to provide vital transport services to key workers during lockdowns and to all others needing to travel outside of lockdowns, have also demonstrated incredible dedication and professionalism.
I believe it is a testament to our Company, our people, our strong Values and the relationships we have built with our stakeholders, as well as our strong corporate governance, that we have been able to weather the pandemic as we have.
Vision, Values, Purpose and culture
While the Board is conscious that the pandemic has caused many people’s travel behaviours to change in the short-term, it also believes that providing transport solutions which connect people to their schools, work, family, friends and leisure activities in a safe, reliable and environmentally friendly way remains of critical importance to people’s lives.
As such, our Vision, Values and Purpose endure, as leading a modal shift away from cars to high quality mass transit remains critical to balancing the need for social mobility with concern for the environment.
An assessment of how our Values have served us well during the pandemic and why our Purpose remains the right one is set out on page 64 of this Corporate Governance Report. How we, as a Board, have continued to monitor our culture during this critical time is also explained on page 65.
The Company’s culture is one of safety first, which has benefitted our people, passengers and other stakeholders alike. We also greatly value diversity and inclusion and are taking proactive steps to ensure that inclusion is another embedded feature of our culture.
We, as others, witnessed during 2020 the way in which racial tensions around the world, exacerbated by the impact of Covid-19, created division and distrust in communities. Through our Diversity & Inclusion Council, the activities of which are described in the Nominations Committee Report, we are actively promoting diversity and inclusion across our global businesses to guard against division and distrust and reap the rewards that diversity and inclusion can bring to all.
Board composition and succession
2020 was a year of the change for the Board.
We were of course sorry to see our former Group CEO, Dean Finch, leave the Company at the end of August and, before him, Matt Ashley, both of whom left to pursue new opportunities. We are grateful to our Group CFO, Chris Davies, for his sound leadership as interim Group CEO and we were delighted, in November, to welcome our new Group CEO, Ignacio Garat. Ignacio brings with him a wealth of experience from an adjacent industry as well as strong commitment to the same Values the Company holds dear, including Safety, People and Customers. Ignacio’s biography is included on our management page and further information about his recruitment and induction are contained on pages 78 and 71 of the Corporate Governance Report, respectively.
Lee Sander and Chris Muntwyler also left the Board at the end of December after nearly 10 years of dedicated and valued service to the Company, although Mr Muntwyler continues in the role of an adviser to the Board on safety and environmental matters.
As part of the Board’s ongoing succession plans, we intend to engage one additional Non-Executive Director in the year ahead to enhance our Board’s diversity and, as I approach my nine-year tenure as Chairman, the Nominations Committee has also commenced the work to identify my successor. More information about Board and Senior Management succession plans is set out in the Nominations Committee Report.
Risk and internal control
The Company’s principal and emerging risk registers were reviewed by the Board and updated in 2020 to take account of Covid-19 and other developments, as explained on page 36 of the Strategic Report. Through its Audit and Safety & Environment Committees, the Board also reviewed new risks arising from the rapidly changing trading environment and working practices across the Company caused by Covid-19 and whether the Company’s internal controls were appropriate or otherwise how they were being adapted to manage these new risks. Further information about the Company’s management of risk and internal controls and the outcomes of such reviews are set out in the Audit and Safety & Environment Committee Reports.
Director and Senior Management remuneration
The challenges faced by the Company during the pandemic have naturally created focus on Executive and Senior Management remuneration. I am pleased that all Board members and our most Senior Managers voluntarily offered to take pay reductions at the height of the first wave of the pandemic and both our CFO and former CEO offered to forgo their 2020 pay increases.
The Board’s Remuneration Committee also sought to achieve an appropriate balance between retaining and incentivising Executive Directors and Senior Management and exerting restraint on pay in the decisions it took in the year on the new CEO’s, the CFO’s and Senior Managers’ remuneration, further details of which are set out in the Annual Statement by the Remuneration Committee Chair.
This year we are proposing a new Directors’ Remuneration Policy for approval by shareholders, about which we have consulted with over 70% of our shareholders. The new Policy is set out on pages 104 to 112 and a summary of the changes from the current Policy is included on page 101.
The Covid-19 pandemic has made engaging with and understanding the views of our stakeholders more important than ever. By doing so, we have been able to respond to the needs of our customers, take care of our colleagues and partner effectively with other stakeholders through the pandemic. It has also ensured that we, as a Board, have taken account of our stakeholders in all our decisions and thereby properly discharged our duties under section 172(1) Companies Act 2006.
More information about our stakeholders and our section 172(1) statement are set out on pages 44 and 45 and pages 46 and 47 of the Strategic Report, respectively.
Annual General Meeting
This year’s Annual General Meeting (AGM) is scheduled to be held at, and broadcast from, Ashurst LLP, London Fruit & Wool Exchange, 1 Duval Square, London E1 6PW at 2.00pm on Wednesday, 12 May 2021.
The Company is conducting the 2021 Annual General Meeting as a ‘hybrid’ meeting as permitted by our revised Articles of Association adopted at our 2020 AGM. A hybrid meeting would ordinarily gives shareholders (or their proxies or corporate representatives) the opportunity to attend and participate in the meeting both physically and virtually. However, in line with the UK government’s roadmap out of the current UK national lockdown, it is unlikely that indoor public gatherings will be permitted on the date of the meeting. Accordingly, we currently expect to hold it as a ‘closed’ meeting with physical shareholder presence at the AGM venue restricted to the necessary quorum. Nevertheless, shareholders will still be able to attend and participate in the meeting virtually. Full details on how to attend and vote at the meeting virtually can be found in the Notice of Meeting. Any updates to the arrangements for the conduct of the meeting will be given by market announcement and communicated via our AGM page.
Before looking ahead, I wish to pause and remember once again the valued colleagues we have lost as a result of Covid-19 and to extend the Board’s deepest sympathies to their families and friends. We will miss them.
We also remember that Covid-19 has affected many of our people’s lives in other ways, with many hardships experienced and sacrifices made. We thank them for their endurance and commitment.
While the pandemic is not yet over and there are undoubtedly challenges still to come, I remain positive about the Company’s ability to continue to respond to these challenges and ultimately to restore the Company’s financial performance to match its continued exceptional operational performance
Sir John Armitt, CBE