Report of the Directors

Letter from the Chairman

“Welcome to the Governance section of the annual report, which includes our Corporate Governance Report for the year ended 31st March 2013.”

Tim Stevenson

Dear Shareholder

Good governance is a cornerstone of a successful and sustainable company. Johnson Matthey has a well established framework of policies, processes and management systems to support its governance and sustainability efforts, which apply to all its operations worldwide. These are described in the Governance and Sustainability section.

My Role as Chairman

My role as Chairman is to ensure that Johnson Matthey has a board which works effectively under my leadership. I refer briefly in my Chairman’s Statement and more fully in the Corporate Governance Report to how I have sought to ensure that the UK Corporate Governance Code (the Code) principles on leadership and board effectiveness have been applied during the year.

One of the most important aspects of my role is to foster the right dynamic on the board so as to ensure constructive challenge of the executive directors. This involves having directors with the right range and balance of skills, expertise and attributes (including broad diversity of perspective) for the board and for Johnson Matthey. We have made good progress in this area this year with the appointments of Colin Matthews and Odile Desforges. I am pleased to say that your non-executive directors have a good relationship with the executive and that the vital relationship between me as Chairman and your Chief Executive, Neil Carson, remains a positive and constructive one.

Central to an effective board and to the effectiveness of the contributions of individual non-executive directors is to ensure that the board is provided with the right information at the right time. I continue to place great emphasis on ensuring that this is done and that board and committee agendas cover the right issues.

Through visits to sites and meetings with Johnson Matthey’s management, both at board meetings and otherwise, I try to be as engaged in Johnson Matthey’s various businesses as I can and to gain a good understanding of what is happening on the ground. I aim to suit my approach to being Chairman to what I think is best for Johnson Matthey and its board. Similarly, I aim to ensure that our governance arrangements are appropriate for Johnson Matthey’s circumstances and support its strategy and business model. I believe that our arrangements are appropriate and enable us to respond to any challenges which the company may face.

Board and Committee Evaluation, Boardroom Diversity and Succession Planning

I see regular and appropriate board and committee evaluation as an area which is fundamental to achieving and improving board effectiveness. Last year we informed you of the internally conducted evaluation process which was ongoing when we published the 2012 annual report. It has since been concluded, so this year we report on the methodology used and the outcomes (see the Corporate Governance Report). The board has conducted a further internal review this year and the process and its outcomes are also summarised in the Corporate Governance Report. In addition to evaluation, proper planning for board succession and refreshing and selecting the right individuals for the board from a diverse talent pool are also key issues for me and for the board. We share with you our approaches to these fundamental components of board effectiveness in the Corporate Governance Report.

Relations with Shareholders

I am available to meet the company’s largest shareholders on a one to one basis as requested and am happy to discuss any relevant governance or strategic matters. Generally, I believe I have an appropriate level of engagement with our shareholders. While I don’t formally participate in the presentations on the half year and full year results given by our executive directors, I do find it helpful to attend these meetings to hear questions and the responses from our management team.

The UK Corporate Governance Code

As we did last year, in our Corporate Governance Report we are reporting against the Code, which was introduced in June 2010. As usual, we are reporting on how we have applied the Code’s main principles and whether we have complied with its relevant provisions. Under the Code, companies must explain their business model and strategies for delivering objectives and these explanations are contained in the Business Review.

Johnson Matthey has chosen to adopt certain aspects of the 2012 edition of the Code and to follow relevant aspects of related guidance. In this report we have identified where we have done so. We are adopting these aspects before we are formally required to do so for our year ending 31st March 2014.

UK Corporate Governance Code Compliance Statement

We’ve set out our statement of compliance with the Code’s provisions in the Corporate Governance Report. I am pleased to report that except in two limited respects, one of which was for a short period of time, Johnson Matthey has complied with all relevant provisions throughout the year ended 31st March 2013 and from that date up to the date of approval of this annual report.

Tim Stevenson

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