Synthomer confident in chairman despite concerns from some shareholders

Synthomer updated the market on the voting outcomes of its 2019 annual general meeting on Tuesday, following a “significant” minority vote against the resolution relating to the re-election of its chairman Neil Johnson as a non-executive director.

The FTSE 250 company noted that, even though all resolutions were passed, the total votes received in favour of that was 64.72%.

Following the AGM results, it had “actively” sought to engage in dialogue with a number of significant shareholders who voted against Johnson’s re-election, and with a leading proxy voting advisory body.

The dialogue was initiated in order to better understand the reasons behind the dissenting votes, which it said were based on concerns over his availability to devote sufficient time to carry out his responsibilities as chairman, and the absence of a commitment and plan by the Synthomer board to implement the Hampton-Alexander review recommendation of 33% representation of women on the board by the end of 2020.

“The board has carefully considered the over boarding' concerns which are understood to arise due to Neil [Johnson’s] role as chair of two other public company boards - QinetiQ Group and Electra Private Equity,” the Synthomer board said in its statement.

“Whilst the board acknowledges that Neil's role as chairman of the QinetiQ board is a significant commitment which should be counted as such, this is not however considered to be the case with his chairmanship of Electra.

“As Electra has publicly stated, it is conducting a managed wind-down of its final few investments and reducing overheads prior to closing the fund which has currently resulted in it having only two employees and requiring minimal input from Neil.”

As a result, the Synthomer directors said they “strongly believe” that Johnson remained an “effective chairman, with sufficient capacity to meet his commitments, adding that it had no concerns over his availability to deal with company matters.

On the subject of the representation of women, the board said it had adopted its current policy on diversity in 2014, and had not recommended the setting of quotas for female or other representation.

It said it had appointed women to fill the most recent two vacancies that had arisen for independent non-executive directors, resulting in female representation of 22.2% on the board since September last year.

“In order to address both the recommendation and the need for the refreshment of independent non-executive directors over the next 18 months in accordance with the provisions of the UK Corporate Governance Code, the board has decided to commit to the appointment of an additional female independent non-executive director by the end of 2020.

“Whilst this will increase the size of the board in the short term to 10, it is expected that the board will reduce to 9 during the first half of 2021.

“It should be noted that the board has two long standing male non independent non-executive directors who are not subject to the tenure requirements of the code and who each continue to provide a highly valued contribution.”

Synthomer’s directors said they would continue to engage with shareholders on the points of concern as required, and would set out further details of any such dialogue and relevant justification for the re-election for all members of the board in the 2020 annual report and accounts and associated documentation.