The Audit Committee oversees, monitors and makes recommendations as appropriate in relation to the Company’s financial statements, accounting processes, audit (internal and external), risk management and internal controls and matters relating to fraud and whistleblowing.

The Board considers that the Committee has recent and relevant financial experience in its membership and that each member of the Committee is independent within the definition set out in the UK Corporate Governance Code. Members of the Committee between them possess significant international, commercial, retail, financial and human resource skills and expertise which are relevant to an international specialist distribution company.

The Audit Committee is made up of seven Independent Non Executive Directors and has five scheduled meetings each year.

Members

Role and responsibilities

The Audit Committee has wide-ranging oversight of responsibilities assigned to it by the Board. 

These are to:

• assist the Board to fulfil its responsibilities relating to external financial reporting and associated announcements including:
  • Half Year and Full Year financial statements, including financial reporting requirements;
  • Half Year and Annual Full Year results announcements made to the London Stock Exchange;
• review key accounting and auditing issues;
• review the effectiveness of the Company’s internal control and risk management procedures;
• report regularly to the Board on compliance in relation to the business activities for which it has responsibility within its terms of reference;
• ensure that it has an agenda which is linked to events in the Company’s financial calendar;
• review the Company’s policies and procedures relating to governance, risk and control and, in addition to the regular items, each member of the Committee may request reports on matters of interest;
• develop, implement and monitor the Company’s policy on external audit;
• monitor independence, objectivity and compliance with ethical and regulatory requirements in relation to external audit;
• review the effectiveness of the external auditor;
• recommend the appointment and reappointment of the Company’s external auditors;
• review at least annually a formal letter provided by the external auditors confirming their independence and objectivity within the context of applicable regulatory requirements and professional standards;
• review the effectiveness of the internal audit function;
• review litigation, contingent liabilities and tax matters, including compliance with statutory tax obligations; and
• monitor fraud reports and the operation of the Company’s whistleblowing policy.

External auditor independence

The Company has policies and procedures in place to ensure that the independence and objectivity of the external auditor are not impaired. These include restrictions on the types of services which the external auditor can provide, in line with the Audit Practices Board Ethical Standards on Auditing. The services which the external auditors cannot be engaged to perform are set out in the Company’s External Auditor Independence Policy and details are provided below:
 

• book-keeping services related to accounting records or financial statements;
• design and implementation of financial information systems;
• appraisal or valuation services, fairness opinions and contributions in kind reports;
• actuarial services;
• internal audit outsourcing services;
• management functions including human resources;
• broker or dealer, investment adviser or investment banking services; or
• legal and other expert services unrelated to audit work.
   

When considering the award of non-audit work to the external auditor, an assessment is made to consider if it is more effective for the work to be carried out by the external auditor who has existing knowledge of the Company and all appointments are made on a case-by-case basis. The prior consent of the Committee Chairman is required before the Company’s external auditor is appointed to undertake non-audit work where such work is expected to exceed $65,000. Where the fee for non-audit work is expected to be less than $65,000, the Committee Chairman must be notified that the external auditors are to be engaged to provide a non-audit service but approval is not required in advance. The external auditor will not be appointed to provide non-audit services where the Chairman or the Committee considers it might impair their independence or objectivity in carrying out the audit.

Download our full terms of reference

Annual Report 2018: Audit Committee

The Remuneration Committee reviews and recommends to the Board the framework and policy for the remuneration of the Chairman, the Executive Directors and the Executive Committee, taking into account the business strategy of the Group and how the Remuneration Policy reflects and supports that strategy.

The Committee is made up of seven Independent Non Executive Directors, all of whom are independent within the definition set out in the UK Corporate Governance Code. Committee meetings are both scheduled and ad hoc.

The Committee also seeks internal support from the Group Chief Human Resources Officer, the Group Chief Executive and the Group Company Secretary together with other senior Group employees as necessary. Those who attend by invitation do not participate in discussions that relate to the details of their own remuneration.

Members

Role and responsibilities

The Board sets the Company’s Remuneration Policy. The Committee makes recommendations to the Board, within its agreed terms of reference, on the Company’s framework of executive remuneration and its cost. Its responsibilities are to:
 

• determine, with the agreement of the Board, specific remuneration packages for each of the Executive Directors, the Chairman and the Group Company Secretary;
• determine the remuneration, based on proposals from the Group Chief Executive, for the members of the Executive Committee (Note: the Chairman and the Executive Directors determine the remuneration of the Independent Non Executive Directors);
• be responsible for Ferguson’s share incentive schemes for all employees;
• carry out reviews of overall remuneration policy for employees below executive level; and
• prepare, for the Board's approval, the Remuneration report, which is presented to shareholders at each Annual General Meeting.
   

To reach informed decisions on executive remuneration, the Committee obtains detailed external research on market data and trends from experienced independent consultants.

Remuneration Policy

The current Directors’ Remuneration Policy was approved by shareholders at the AGM on 29 November 2018 and can be accessed in full using the link below. The Policy took effect from this date and may operate for up to three years. All remuneration and loss of office payments will only be made if they are consistent with the approved Policy in force at the time of payment or otherwise approved by ordinary resolution.

Download our full terms of reference

Download our current Remuneration Policy

Annual Report 2018: Remuneration Committee

Disclosure of Executive Directors’ 2014/15 personal objectives

The Nominations Committee reviews the structure, size and composition of the Board and its Committees and identifies and nominates suitable candidates to be appointed to the Board (subject to Board approval) and considers succession generally.

The Nominations Committee is made up of the Chairman and seven Independent Non Executive Directors. The Committee meets as required.

Members

Roles and responsibilities

The Nominations Committee's responsibilities are to:
 

• regularly review the structure, size and composition of the Board and its Committees;
• make recommendations with regard to any changes that are considered necessary, both in the identification and nomination of new Directors and the continuation of existing Directors in office;
• evaluate the balance of skills, knowledge and experience on the Board and its diversity, including gender, and, in light of that evaluation, prepare the description of the relevant role and capabilities required of prospective candidates;
• make its recommendations to the Board, after a rigorous interview process for shortlisted candidates;
• retain external search consultants for appointments to the Board; and
• advise the Board on succession planning for Board appointments, although the Board itself has overall responsibility for succession generally.
   

Download our full terms of reference

Annual Report 2018: Nominations Committee

The Committee meets as required in exceptional circumstances to consider disclosure obligations in relation to material information where the matter is unexpected and non‑routine.

The Major Announcements Committee is made up of six members. The Committee meets as required.

Members

Role and responsibilities

The Committee meets as required to consider the Company’s disclosure obligations in relation to material information where the matter:
 

• is outside the scope of the authority of the Disclosure Committee; or
• has been referred to it by the Disclosure Committee as being a matter that may involve an announcement relating to a decision of a strategic nature; or
• is otherwise of such significance or sensitivity that it ought properly be considered by the Committee.
   

The Committee’s terms of reference anticipate that it would meet usually only in exceptional circumstances where information has come to light which is of an unexpected, non-routine and material nature.

The Executive Committee addresses operational business issues and is responsible for implementing Group strategy and policies, day-to-day management and monitoring business performance. 

The Executive Committee meets at least 10 times each year. These meetings usually take place prior to Board meetings.

Members

Meet our Executive Committee

The Committee’s role is to consider treasury policy, including financial structures and investments, tax and treasury strategy, policies and certain transactions on behalf of the Group, and to review the performance and compliance of the tax and treasury function, within a framework delegated by the Board.

The Board retains responsibility for treasury and tax strategy. The Committee’s responsibilities are orientated principally towards implementing treasury and tax strategy and policies. The Committee makes recommendations to the Board on overall financing structure and strategy and currency exposure.

Members

The Disclosure Committee meets as required to deal with all matters relating to public announcements of the company, in particular, Fergusons’s obligations under the Listing Rules and Disclosure Guidance and Transparency Rules of the UK Financial Conduct Authority and EU Market Abuse Regulation.

The Committee also assists in the design, implementation and periodic evaluation of the Company’s disclosure controls and procedures.

Announcements relating to any matters which the Board has designated as reserved matters, or matters of a substantive or strategic nature, are dealt with by the Board or by the Major Announcements Committee.

Members

The Board may appoint ad hoc committees to facilitate the implementation of its decisions or to consider specific matters in further detail between scheduled meetings. The Board may delegate matters of a substantive nature to a special purpose committee.