Report of the Directors

Corporate Governance Report

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This section of the annual report discusses the company’s corporate governance structures and processes.

The UK Corporate Governance Code

The UK Corporate Governance Code (the Code), issued by the Financial Reporting Council (FRC) in June 2010, contains broad principles together with more specific provisions which set out standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders. Listed companies, such as Johnson Matthey, are required to report on how they have applied the main principles of good governance set out in the Code and either to confirm that they have complied with the Code’s provisions or to provide an explanation where they have not. The Code replaced the previous Combined Code on Corporate Governance and applied to the company throughout the year ended 31st March 2012.

In his statement, the Chairman comments on how the Code principles relating to the role and effectiveness of the board (in Sections A (Leadership) and B (Effectiveness) of the Code) have been applied throughout the year ended 31st March 2012.

This Corporate Governance Report, together with the Nomination Committee Report, the Audit Committee Report and the Remuneration Report, describes how the company has complied with the provisions of the Code and applied the main principles set out in the Code during the year ended 31st March 2012.

Statement of Compliance with the Provisions of the Code

Except as referred to below, the company has complied with all relevant provisions of the Code throughout the year ended 31st March 2012 and from that date up to the date of publication of this annual report.

The company has not complied with part of Code provision E.1.1, which provides that “the senior independent director should attend sufficient meetings with a range of major shareholders to listen to their views in order to help develop a balanced understanding of the issues and concerns of major shareholders”. The board considers that there are appropriate mechanisms for the views of shareholders to be listened to and communicated to the board as a whole, without it being necessary for the Senior Independent Director to attend meetings with major shareholders. The Senior Independent Director is, however, available to attend such meetings if requested by shareholders. The board believes that its practices in this respect are both consistent with the relevant main principle of the Code concerning dialogue with shareholders, to which the Code provision relates, and consistent with good governance. More information on relations with shareholders is set out below.

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