Report of the Directors
Governance

Corporate Governance Report

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Remuneration

The board has established a remuneration committee, the Management Development and Remuneration Committee (MDRC).The membership of the MDRC is set out above. The terms of reference of the MDRC are also summarised above. The Remuneration Report describes the work of the MDRC.

Relations with Shareholders

Dialogue with Our Shareholders

The board welcomes the opportunity to openly engage with shareholders as it recognises the importance of a continuing effective dialogue (whether with major institutional investors, private or employee shareholders) based on the mutual understanding of respective objectives. The board as a whole takes responsibility for ensuring that such dialogue takes place.

Reporting of Results, Interim Management Statements and the Investor Day

We report formally to our shareholders when we publish our full year results in June and our half year results in November. These results are posted on the Investor Relations / Results Centre section of our website.

At the same time as publication of the results, our executive directors give presentations on the half year and full year results in face to face meetings with institutional investors, analysts and the media in London. Live webcasts of these results presentations are available on our website.

Our first quarter and third quarter Interim Management Statements (issued respectively in July and in late January / early February each year) are also posted on the Investor Relations / Results Centre section of our website.

In addition, we hold an annual ‘Investor Day’ for our institutional investors and analysts. At the 2013 Investor Day, held in Royston, UK in January, we gave presentations on our Emission Control Technologies business and our new business development activities. The presentation on Emission Control Technologies provided a market update on our light and heavy duty catalyst businesses and included regional commentaries, details on key drivers (including legislation), technology developments and a summary of our market position as regards customers and competitors. The presentation on new business development gave an update on key developments in this important initiative for Johnson Matthey. In addition to the presentations, attendees were able to tour our Royston facility. A live webcast of the Investor Day presentation and a copy of the presentation are available on the Investor Relations / Presentations section of our website.

Contact with Our Shareholders

While the Chairman takes overall responsibility for ensuring that the views of our shareholders are communicated to the board as a whole and that all directors are made aware of major shareholders’ issues and concerns, contact with major shareholders is principally maintained by the Chief Executive and the Group Finance Director. They maintain a continual dialogue with institutional shareholders throughout the year on performance, plans and objectives through a programme of regular one to one and group meetings and they ensure that shareholder views are communicated to the board. Our Investor Relations Department acts as a focal point for contact with investors throughout the year.

The Chairman is available to meet with institutional investors to hear their views and discuss any issues or concerns, including on governance and strategy. The Senior Independent Director and the other non-executive directors are also available to meet with major shareholders if requested, however no such meetings were held or requested during the year or from that date to the date of approval of this annual report.

The board believes that appropriate steps have been taken during the year to ensure that the members of the board, and in particular the non-executive directors, develop an understanding of the views of major shareholders about the company. Such steps have included, for example, analysts’ and brokers’ briefings, consideration by the board of monthly brokers’ reports and of feedback from shareholder meetings on a six-monthly basis. Major shareholders’ views are canvassed for the board in a detailed investor survey which is usually conducted every two years by external consultants, with the last survey being undertaken in October 2011 by Smith’s Corporate Advisory. The purpose of these perception analysis reports is to obtain the views and opinions of a broad range of shareholders and non-shareholders. The board anticipates undertaking a similar review later this calendar year.

The MDRC undertakes detailed collective consultation exercises with a selection of major institutional shareholders and institutional investor bodies as part of its comprehensive review of executive director and senior management remuneration arrangements within the group.

The board believes that these methods, taken together, are a practical and efficient way for the directors, including the Senior Independent Director, to keep in touch with shareholder opinion and views and to reach a balanced understanding of major shareholders’ objectives, issues and concerns.

While the board recognises that the company is primarily accountable to its shareholders, it also recognises the contribution made by other providers of capital and confirms its interest in listening to their views where relevant to the company’s overall approach to governance.

Annual General Meetings (AGMs)

The AGM is an important part of effective communication with shareholders.

Our AGM takes place in London and notice of the meeting and any related papers are sent to shareholders at least 20 working days before the meeting and are also published on the Investor Relations / Shareholder Centre / Annual General Meeting section of our website. The circular sent to shareholders with the notice of meeting aims to set out a balanced and clear explanation of each resolution to be proposed.

All directors, including the chairmen of the Nomination Committee, the Audit Committee and the MDRC, who are able to attend the AGMs do so. In 2012 the entire board attended the AGM.

Our Chief Executive welcomes the opportunity for face to face communication with our shareholders and makes a business presentation at the AGM. Shareholders are encouraged to participate at the meeting and all directors in attendance are available to answer questions in their capacity as directors or as committee chairmen, formally through the Chairman during the meeting and informally afterwards.

At the AGM we propose separate resolutions on each substantially separate issue. For each resolution, shareholders have the option through the proxy appointment forms provided to direct their proxy to vote either for or against the resolution or to withhold their vote. The proxy form itself and the announcement of the results of a vote make it clear that a ‘vote withheld’ is not legally a vote and is not counted in the calculation of the proportion of the votes cast for and against the resolution. All valid proxy appointments received are recorded and counted.

All resolutions at the AGM are decided on a poll as required by the company’s Articles of Association (rather than on a show of hands) and poll voting is carried out by electronic means.

The results of the poll are announced to the market as soon as possible and posted on the Investor Relations / Shareholder Centre / Annual General Meeting section of our website. The announcement shows votes for and against as well as votes withheld.

Details of the AGM to be held on 25th July 2013 are set out in the circular to shareholders accompanying this annual report and the resolutions to be proposed are summarised under ‘2013 Annual General Meeting’ in the Other Statutory Information section.

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All results announcements, presentations and webcasts are posted on Johnson Matthey’s website. The website features a wide range of other information and tools for our shareholders.

During this year’s Investor Day, attendees toured Johnson Matthey’s Emission Control Technologies Technology Centre in Royston, UK.

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