Corporate Governance

QCA Code Explanation

The Board must be able to express a shared view of the Company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the Company intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the Company from unnecessary risk and securing its long-term future.

Renold Application

Renold has outlined its strategy in its announcements and presentations to investors, particularly at the time of its financial results. Our Strategic Report, which includes the business model and strategy, is outlined on pages 13-57 of the Company’s Annual Report and Accounts for the year ended 31 March 2024.

QCA Code Explanation

Directors must develop a good understanding of the needs and expectations of all elements of the Company’s shareholder base. The Board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

Renold Application

Renold encourages participation of both institutional and private investors and responds quickly to all queries received. Renold proactively engages with investors through regular meetings, arranged via its brokers, usually in regard to the issuance of financial results, and endeavours to accommodate all meeting requests from investors. The Board recognises the AGM as an important opportunity to meet private shareholders. The Directors – Non-executive and Executive – are also available to listen to the views of shareholders informally immediately following the AGM. Renold’s Non-executive Directors are UK-based and are available to meet with shareholders as requested. This includes the Chairman, who, upon request, makes himself available to meet with shareholders (independent of management if required). The Chairman and the Non-executive Directors, through Renold’s brokers, regularly solicits feedback from its investors. Regular reports are provided to the Board on meetings with shareholders and any concerns are communicated. Renold also seeks to meet the needs of shareholders on an ad hoc basis where necessary, to address common queries/concerns that were being raised by individual shareholders.

QCA Code Explanation

Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The Board needs to identify the Company’s stakeholders and understand their needs, interests and expectations. Where matters that relate to the Company’s impact on society, the communities within which it operates, or the environment have the potential to affect the Company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the Company’s strategy and business model. Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

Renold Application

We are committed to running our business in a responsible way and continue to develop our corporate social responsibility practices to support our employees, our customers and the environment. Protecting the health, safety and wellbeing of our employees, those who work with us and those who are affected by our business operations is a responsibility we take very seriously. We have a dedicated team responsible for health and safety standards and comprehensive policies on safe working and accident management. The Board receives regular reports on accident frequency rates and types of injuries. The Renold management team encourages employees to share their feedback, ideas and thoughts by promoting a transparent organisational culture and an “open door” policy. Employees share feedback with their managers on a regular basis, one-on-one. Those participating in the leadership programs are asked to share any feedback they might have in regard to management, culture and the Company’s actions. The Company shares its list of core values with all employees, which are the foundation of its culture:

• Operate with integrity
• Value our people
• Work together to achieve excellence
• Accept accountability
• Be open-minded

Staff retention rate is a key consideration and is a factor in determining the bonus payment of the Executive Directors. Retention is also a matter reported on to the Board.

QCA Code Explanation

The Board needs to ensure that the Company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the Company’s supply chain, from key suppliers to end-customer. Setting strategy includes determining the extent of exposure to the identified risks that the Company is able to bear and willing to take (risk tolerance and risk appetite).

Renold Application

The Board, which is ultimately responsible for overseeing the effective management of risk, has delegated oversight of risk management and internal controls to the Audit Committee. A risk management framework is in place and a robust and detailed assessment of the risks facing the Group is undertaken by the senior management team in line with that framework. A Group level risk register, recording the risk and mitigating factors and actions in place for each risk, is regularly reviewed by the Executive Risk Management and Monitoring Committee and submitted to the Audit Committee in line with the risk management framework. Renold’s Annual Report and Accounts for the year ended 31 March 2024 details risks to the business and how these are mitigated on pages 49 to 55. The approach to risk management and the risk management process is outlined on pages 46 to 48.

QCA Code Explanation

The Board members have a collective responsibility and legal obligation to promote the interests of the Company and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the Board. The Board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight. The Board should have an appropriate balance between executive and non-executive Directors and should have at least two independent non-executive Directors. Independence is a Board judgement. The Board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively. Directors must commit the time necessary to fulfill their roles.

Renold Application

The Board comprises two executive Directors and four independent Non-executive Directors, being the non-executive Chairman and three other non-executive Directors. There is a clearly documented division between the executive role of the Chief Executive and the non-executive role of the Chairman. The Directors believe that as a Board they have an appropriate mix of skills and experience to provide strong and effective leadership to the business. The Chairman fosters a collegiate atmosphere at Board meetings that supports wide-ranging discussion and constructive challenge of the executive team. The time commitment expected of the non-executive Directors is commensurate with the size and complexity of a listed Company and as necessary to properly perform their duties. The letters of appointment can be inspected at the Company’s registered office. Please see the Board of Directors and the Corporate Governance Report sections of the Annual Report and Account for the year ended 31 March 2024 on pages 62 to 71 for information about the Directors, the Board and its activities and the roles of the Board’s Sub-Committees.

QCA Code Explanation

The Board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The Board should understand and challenge its own diversity, including gender balance, as part of its composition. The Board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a Board. As companies evolve, the mix of skills and experience required on the Board will change, and Board composition will need to evolve to reflect this change.

Renold Application

The Directors bring a wealth of commercial and financial expertise to the Board from a variety of backgrounds. The mix of experience, skills and capabilities is reviewed annually as part of the Board evaluation process. The composition of the Board and the credentials of the individual Directors are outlined on pages 62 and 64 of the Annual Report and Accounts for the year ended 31 March 2024. The Nomination Committee of the Board oversees the process and makes recommendations to the Board on new Board appointments as well as re-election of existing Directors. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender. The Nomination Committee also considers succession planning.

QCA Code Explanation

The Board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual Directors. The Board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual Directors or the wider senior management team. It is healthy for membership of the Board to be periodically refreshed. Succession planning is a vital task for Boards. No member of the Board should become indispensable.

Renold Application

The Board currently runs a self-evaluation process on Board effectiveness and encourages open and transparent communication. All Non-executive Directors are subject to re-election by the shareholders each year. The Executive Directors are subject to election by the shareholders every three years. The Nomination Committee also considers succession planning.

QCA Code Explanation

The Board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage. The policy set by the Board should be visible in the actions and decisions of the chief executive and the rest of the management team. Corporate values should guide the objectives and strategy of the Company. The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the Company. The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the Company.

Renold Application

We adopted our ‘core values’, following extensive engagement with employees. Our values, which are widely publicised within our business are: operate with integrity, value our people, work together to achieve excellence, accept accountability and be open-minded. We have a whistleblowing policy providing guidance so employees know they can raise any concerns about possible wrongdoing. Please see the Sustainability section of the Annual Report and Accounts for the year ended 31 March 2024, which includes information on Renold’s values, approach to business integrity and ethics and our interactions with our communities and the environment.

QCA Code Explanation

The Company should maintain governance structures and processes in line with its corporate culture and appropriate to its:

• size and complexity; and
• capacity, appetite and tolerance for risk.

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the Company.

Renold Application

The Board meets in accordance with a scheduled meeting calendar and there is a formal document setting out matters reserved for approval by the Board (which is available on our website). Board papers are distributed prior to each meeting and any actions arising from the meeting are documented and progress reported at the next Board meeting. The Board has established an Audit Committee, a Remuneration Committee and a Nominations Committee and has formally delegated specified responsibilities to those committees. The terms of reference of those committees are available on our website. There is a documented delegation of authorities for the executive team to assist in ensuring all members of management understand the level of their authority when making financial and non-financial decisions. The Corporate Governance Report on page 64 to 71 of the Annual Report and Accounts for the year ended 31 March 2024 details the corporate governance structures and processes for the Company.

QCA Code Explanation

A healthy dialogue should exist between the Board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the Company.

In particular, appropriate communication and reporting structures should exist between the Board and all constituent parts of its shareholder base. This will assist:

• the communication of shareholders’ views to the Board; and
• the shareholders’ understanding of the unique circumstances and constraints faced by the Company.

It should be clear where these communication practices are described (annual report or website).

Renold Application

The Board communicates with shareholders and other stakeholders about governance and performance through the Annual Report and Accounts and full year and half year results announcements and at our Annual General Meeting and meetings with existing and potential institutional investors. We also make stock exchange announcements to provide trading updates. Renold also seeks to meet the needs of shareholders on an ad hoc basis where necessary. Our Annual Report and Accounts for the year ended 31 March 2024, results announcements, notices of annual general meetings and results of voting at those meetings are available on the Investor Relations page of our website.