Corporate Governance Statement

Date of last update:
27 September 2018

Introduction

The Board is accountable to the Company’s shareholders for good corporate governance and it is the objective of the Board to attain a high standard of corporate governance. The Board has adopted the Quoted Companies Alliance Corporate Governance Code (QCA Code) and the following text sets out how the Group complies with the 10 Principles of the QCA Code. The Board will monitor the suitability of this code on an annual basis and revise its governance framework as appropriate as the Group evolves.

References to the Company refer to Synairgen plc, and to the Group refer to Synairgen plc and its wholly-owned subsidiary Synairgen Research Ltd.

Principle 1 - Establish a strategy and business model which promote long-term value for shareholders

Our business model is to leverage our deep understanding of respiratory biology to discover and develop novel therapies in areas of high unmet respiratory medical need, including severe asthma, chronic obstructive pulmonary disease (COPD) and idiopathic pulmonary fibrosis (IPF).  Using our BioBank platform (consisting of human tissue models of respiratory disease), and our clinical trial capabilities, Synairgen’s strategy is to identify novel drug targets, progress them through early stage clinical trials and license them to partners to advance through to commercialization.

The strategy is reviewed at the annual strategy Board meeting and more frequently if circumstances dictate.

Principle 2 - Seek to understand and meet shareholder needs and expectations

The Company is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood.  We communicate with shareholders through the Annual Report and Accounts, the preliminary statement and half-year announcements, press releases on RNS and the annual general meeting (AGM), and we encourage shareholders’ participation in face-to-face meetings.  A range of corporate information (including all Synairgen announcements and the most recent investor presentation) is also available to shareholders, investors and the public on our website. We also maintain a mailing list for announcements,

Private shareholders: The AGM is the principal forum for dialogue with private shareholders, and we encourage all shareholders to attend and participate.  The Notice of Meeting is sent to shareholders at least 21 clear days before the meeting.  The chairs of the Board and all committees, together with all other directors whenever possible, attend the AGM and are available to answer questions raised by shareholders.  Shareholders vote on each resolution, by way of a poll.  For each resolution we announce the number of votes received for, against and withheld.  We present, from time to time, at investor meetings which are particularly focused at private/retail investors.

Institutional shareholders: The directors actively seek to build a mutual understanding of objectives with institutional shareholders.  Our CEO and Finance Director make presentations to institutional shareholders and analysts immediately following the release of the full-year and half-year results.  The majority of meetings with shareholders and potential investors are arranged by the broking team within the group’s nominated advisor.  Following meetings, the broker provides anonymized feedback from fund managers met.

The CEO and Finance Director are the key contacts for shareholder liaison.

Principle 3 - Take into account wider stakeholder and social responsibilities and their implications for long-term success
Stakeholder Reason for engagement How we engage
Staff Motivation, operational efficiency, alignment with strategic objectives and opportunity to contribute ideas Company and departmental meetings, appraisals, LTIP participation
Pharmaceutical companies Customers and future potential customers Conference attendance, early stage interaction on projects, website awareness
Collaboration partners Maximize outcome from project Regular meetings
Consultants and advisers Synairgen runs a virtual model and therefore relies heavily on external experts Regular interaction and project meetings (weekly if necessary)
University of Southampton Synairgen collaborates closely with University of Southampton researchers, and has intellectual property licences and a facilities agreement in place with the University. Meetings with academic founders and other researchers, joint projects, and jointly written academic papers
Major suppliers Regular project meetings where appropriate
Shareholders Annual report, interims, meetings formal (AGM) and post results or major announcements
Principle 4 - Embed effective risk management, considering both opportunities and threats, throughout the organization

A summary risk register is maintained and this is reviewed by the Board on an annual basis.  The principal risks and uncertainties facing the Group, with mitigation strategies, are set out in the Annual Report and Accounts.

Project risk management is continually evaluated by weekly project meetings and other management tools.  IT risk is covered at bi-annual meetings with external IT advisers.  An annual Health and Safety report is prepared for the Board.

Principle 5 - Maintain the Board as a well-functioning, balanced team led by the chair

The members of the Board have a collective responsibility and legal obligation to promote the interests of the Group, and are collectively responsible for defining corporate governance arrangements.   Ultimate responsibility for the quality of, and approach to, corporate governance lies with the Chairman of the Board.

The Board consists of eight directors of which three are executive and five (including the Chairman) are non-executive.  The Board is supported by two committees (audit and remuneration/nomination) and a Scientific Advisory Board.  Non-executive directors are required to attend 5 scheduled bi-monthly Board meetings and committee or Scientific Advisory Board meetings.  Non-executive directors are required to be available at other times as required for face-to-face and telephone meetings with the executive team.

The Board notes that its directors have been in post for more than nine years but considers that they remain independent in that they remain fully committed and prepared to act to promote the success of the Company for the benefit of shareholders as a whole.

The Board also notes that two of its non- executive directors were granted options in 2009.  The practice of granting non-executive directors options has now ceased and the Board considers that the holding of these options (which for each director represents less than 0.3% of the issued share capital) does not compromise the independence of the two directors concerned.

The Board has a schedule of regular business, financial and operational matters, and each Board committee has defined terms of reference to ensure that all areas for which the Board has responsibility are addressed and reviewed during the course of the year.  The Chairman is responsible for ensuring that, to inform decision-making, directors receive accurate, sufficient and timely information.  The Company Secretary compiles the Board and committee papers which are circulated to directors prior to meetings.  The Company Secretary provides minutes of each meeting and every director is aware of the right to have any concerns minuted and to seek independent advice at the Group’s expense where appropriate.

Principle 6 - Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

All eight members of the Board bring relevant sector experience in life sciences.  Five members of the Board have public markets experience from other companies.  The Board has expertise in the following key areas: public markets; discovery and pre-clinical respiratory projects, clinical development, business development/licensing and finance.  The Board believes that its blend of relevant experience, skills and personal qualities and capabilities is sufficient to enable it to successfully execute its strategy.

The Chairman, who is a Chartered Accountant, is the only non-executive director with a recognised financial qualification and therefore chairs the Audit Committee.  The Board is also composed of solely male members and recognises this gender imbalance. In due course the Board will look to amend its composition appropriately.

John Ward fulfils the roles of Finance Director and Company Secretary.  The Board considers that at this stage of the Company’s development this is an appropriate and cost effective modus operandi.  It will continue to monitor when it will be necessary and appropriate to separate the roles.  The Company Secretary reports directly to the Chairman on governance matters.

Principle 7 - Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

A Board evaluation process led by the Chairman took place August 2018.  All of the directors completed a questionnaire about the effectiveness of the Board and the results were compiled on an anonymous  basis by the Company Secretary.  The Board reviewed the outcome of the questionnaire.  A number of refinements in working practices were identified as a result of this exercise and have since been adopted.  Individual effectiveness reviews and succession planning were two particular areas which the Board agreed needed further work.  This was the first time that we have undertaken a Board evaluation questionnaire and we will consider the net benefits of using external facilitators in future annual evaluations.

Also during August 2018 a review of the Chairman’s performance over the last year was carried out by the completion of a questionnaire by other Board members.  It is intended that this internal review will be carried out on an annual basis.

Principle 8 - Promote a corporate culture that is based on ethical values and behaviours

Synairgen is a biotechnology company focussed on developing new respiratory therapies which will make a difference to people’s lives.  We recognise the importance of our relationships with all our stakeholder groups (as set out above).

Our core values are set out in the way we appraise our staff who, in addition to specific objectives, are judged on the following Group values:

Passionate – Demonstrates a passion for delivering high quality service

  • Actively supports and encourages colleagues with a positive attitude
  • Fully engaged with and understands Synairgen’s business strategy and objectives
  • Shows enthusiasm towards their role and the wider company activities

Professional – Demonstrates courtesy, honesty and responsibility when dealing with individuals or others in the business environment

  • Earns colleagues trust by being open and transparent
  • Takes a conscientious approach to work and demonstrates behaviours that are appropriate to the role
  • Treats colleagues and other Synairgen contacts with respect

Collaborative – Works effectively and inclusively with individuals, institutions, or other companies in the business environment

  • Takes into account the views and suggestions of others
  • Establishes constructive and collaborative relationships with others (externally and internally)
  • Shares knowledge and experience willingly for the benefit of the organisation

Experienced – Demonstrates knowledge and skills in the business environment

  • Actively seeks and shares new knowledge, including building relationships, structure and information
  • Clearly demonstrates knowledge and experience to within the team
  • Role model – Consistently leads by example

Approachable – Accommodating, friendly and transparent when working with others

  • Always happy, willing to offer help
  • Actively listens to the needs of colleagues to ensure their needs are quickly identified and met
  • Happy to provide support and assistance across other teams when asked
Principle 9 - Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board provides strategic leadership for the Group and operates within the scope of a strong corporate governance framework.  Its purpose is to ensure the delivery of long-term shareholder value, which involves setting the culture, values and practices that operate throughout the business, and defining the strategic goals that the Group implements in its business plan.

The Board defines a series of matters reserved for its decision and has approved terms of reference for its audit and remuneration committees to which certain responsibilities are delegated.

The chair of each committee reports to the Board on the activities of that committee.

The Audit Committee has primary responsibility for ensuring that the financial performance of the Group is properly measured and reported on, reviewing the interim financial information and annual financial statements before they are submitted to the Board.  The committee also reviews, and reports on, reports from the Group’s auditors relating to the Group’s accounting controls.  It makes recommendations to the Board on the appointment of auditors and the audit fee. The committee monitors the scope, results and cost-effectiveness of the audit.  It has unrestricted access to the Group’s auditors.  In certain circumstances it is permitted by the Board for the auditors to supply non-audit services (in the provision of tax advice, or on specific projects where they can add value).  The committee monitors the application of this policy in order to safeguard auditor objectivity and independence.

The Remuneration and Nomination Committee is responsible for making recommendations to the Board on remuneration policy for executive directors and the terms of their service contracts, with the aim of ensuring that their remuneration, including any share options and other awards, is based on their own performance and that of the Group generally.  The committee administers the Long-Term Incentive Plan and the staff share option scheme and approves grants under both schemes.  It also advises on the remuneration policy for the Group’s employees.  The committee is responsible for all senior appointments that are made within the Group.

The Scientific Advisory Board provides strategic advice and input on the scientific aspects of Synairgen’s research and development programmes.

The management team, consisting of the three executive directors and the Head of Clinical Operations reviews operational matters and performance of the business, and is responsible for significant management decisions while delegating other operational matters to individual managers within the business.

The Chairman has overall responsibility for corporate governance and in promoting high standards throughout the Group.  He leads and chairs the Board, ensuring that committees are properly structured and operate with appropriate terms of reference, ensures that performance of individual directors, the Board and its committees are reviewed on a regular basis, and leads in the development of strategy and setting objectives.

The CEO provides coherent leadership and management of the Group, leads the development of objectives, strategies and performance standards as agreed by the Board, monitors, reviews and manages key risks and strategies with the Board, ensures that the assets of the Group are maintained and safeguarded, leads on investor relations activities to ensure communications and the Group’s standing with shareholders and financial institutions is maintained, and ensures that the Board is aware of the views and opinions of employees on relevant matters.

The Executive Directors are responsible for implementing and delivering the strategy and operational decisions agreed by the Board, making operational and financial decisions required in the day-to-day operation of the Group, providing executive leadership to managers, and championing the Group’s core values.

The Non-Executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge, scrutinise the performance of management, provide constructive challenge to the executive directors and ensure that the Group is operating within the governance and risk framework approved by the Board.

The Company Secretary is responsible for providing clear and timely information flow to the Board and its committees and supports the Board on matters of corporate governance.

For details of matters reserved for the Board, click here.

Principle 10 - Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

In addition to the investor relations activities described above, a directors’ remuneration report outlining the activities of the Remuneration Committee, Remuneration policy, directors’ interests in share options and directors’ remuneration is included in the annual report and accounts.  Going forward (that is for the annual report for the year ending 31 December 2018), a report from the Audit Committee will also be included in the annual report and accounts