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SAGE GROUP PLC

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Sage : Governance report

12/02/2021 | 04:11am EST

Chair's introduction

Corporate Governance

Andrew Duff

Chair

Dear shareholder

On behalf of the Board, I am pleased to introduce our Governance Report for the year ended 30 September 2021. This report sets out our approach to effective corporate governance and outlines key areas of focus of the Board and its activities undertaken during the year as we continue to drive long-term value creation for all our stakeholders.

Board succession and diversity

There have been changes to the Board composition during the year as part of the Board's ongoing succession planning processes. After serving as Chair for nine years, Sage announced in March 2021 that Sir Donald Brydon would retire from the Board at the end of September 2021. Our Nomination Committee, led by our Senior Independent Director, Drummond Hall, with support from the whole Board and the Company Secretary, oversaw the succession and appointment process which led to my appointment as Non-executive Director and Chair designate in May 2021. Further information on the Chair selection process can be found on pages 104 and 105.

I was delighted to be appointed Chair designate of Sage and have worked closely with Sir Donald Brydon, Steve Hare and the rest of the Board over the last few months to ensure a smooth transition and effective handover. A comprehensive induction programme has provided me with an opportunity to meet members of the Executive Committee, senior management and a number of other Sage colleagues and to gain rapid insight and understanding of Sage, its business and culture. You can read more about my induction programme on pages 78 and 79.

In March 2021, following a formal and thorough recruitment process, the Board appointed Derek Harding as a Non- executive Director, with Derek also joining the Audit and Risk Committee upon appointment. We have been delighted to welcome Derek onto the Sage Board and his financial acumen, commercial expertise and experience of leading business transformation has enhanced the strength and depth of existing Board capabilities.

The Board and the Nomination Committee continue to drive the agenda of diversity, equity and inclusion across the Group. At Sage, it is our ambition for our workforce to reflect the diversity of our customers and partners in the communities where we operate. We strongly believe that a diverse and inclusive workforce brings a broader range of perspectives, accelerates growth and innovation, helps to understand the needs of our wide range of stakeholders and helps us to find and retain the best talent. During the year, a formal Diversity, Equity and Inclusion Policy was adopted by the Board which sets out the approach to diversity, equity and inclusion for the Board itself. We recognise and are fully supportive of the recommendations of the Hampton- Alexander and Parker Reviews and as a collective Board will continue to ensure that diversity in its broadest form is fully considered in the context of future Board composition.

Company purpose and culture

The Board is cognisant that it has the ultimate responsibility for ensuring an appropriate company culture to act as a backdrop to the way in which Sage behaves towards all its stakeholders. Our culture provides the foundation to drive our purpose and delivery of our strategy. As a Board, we continue to spend time focused on ensuring that our culture enables us to build the organisational capability required to deliver on our promises to our stakeholders, customers, colleagues, society and shareholders.

With the launch of our Sustainability and Society strategy in June, Sage has set out its commitment to tackle societal and economic inequality and to play its part in tackling the climate change crisis. As a Board we believe Sage can play a pivotal role in supporting a new generation of diverse and sustainable businesses and we are excited by the opportunity to help the millions of small and medium businesses we serve worldwide as we execute against this strategy. We live our purpose of knocking down barriers every day by helping small and medium businesses with our technology and our support. However, our purpose extends beyond our customers. It speaks to a wider economic significance of a thriving small and medium business sector; shapes the wider role that we play in helping our communities and the planet, and underlines the importance we place on acting with the highest levels of integrity within a strong governance framework.

More information on our purpose and culture can be found on pages 3 and 38 to 41. Information on our Sustainability and Society strategy can be found on pages 29 to 31.

Annual Report and Accounts 2021  |  The Sage Group plc.

67

Chair's introduction continued

Engagement with our stakeholders

The success of our strategy is reliant on the support and commitment of all our stakeholders. Balancing stakeholders' needs and views is a key part of Board decision making.

The Board recognises the importance of two-way communications with our colleagues. The role of our Board Associate has been in place since 2017 and continues to be a successful way of ensuring that the Board appropriately considers the interests of colleagues in its deliberations and, in doing so, makes better decisions. The creation of the Associates' Council last year has provided the Board with further insight from a colleague perspective on the consequences of strategic decisions in the long term as well as giving a clearer sense of the day-to-day colleague experience and how it can be enhanced.

Whilst for much of the year it has not been possible to meet physically with colleagues and other stakeholders, the Board has recently resumed face-to-face Board meetings and activities, and all Board members are looking forward to meeting and connecting more personally with stakeholders in a Covid-19 safe environment in the coming months.

Further details on how we have engaged with our stakeholders can be found on pages 88 to 95.

Board effectiveness

It is extremely important that the Board, its Committees and individual Directors rigorously review their performance and embrace the opportunity to develop, where necessary. This year an internal effectiveness review was undertaken with support from the Company Secretary. Progress on last year's areas of focus as well as the outcome of this year's effectiveness review can be found on pages 80 to 82. We expect to carry out an external effectiveness review in 2022 in line with the Code.

Directors' Remuneration Policy

Our proposed Directors' Remuneration Policy, which is intended to apply for the coming three years, will be put to our shareholders for their approval at the Annual General Meeting on 3 February 2022. The proposed policy has been designed to continue the close alignment between executive reward and the delivery of our business strategy, purpose and culture, with stakeholders' interests at the heart of the matter. Details of the proposed policy, the outcome of the shareholder consultation process and the implementation of the current policy during the year, can be found in the Directors' Remuneration Report on pages 120 to 157.

Looking forward

We will continue as a Board to maintain the highest standards of corporate governance across the Group, focus on delivery of our strategy and continue to promote and enhance the inclusive culture that management and their teams have worked so hard to establish.

I encourage all our stakeholders to take every opportunity presented to engage with the Company and, subject to any Covid-19 restrictions in place at the time, I would welcome you to attend, and in any case vote at, the forthcoming Annual General Meeting.

In closing, I would like to take the opportunity to thank Sir Donald Brydon for his exemplary leadership as Sage progressed in its transition to becoming a great SaaS business. I look forward to building on his legacy and working with the Board and Sage leadership team to continue building a sustainable business delivering on the interests of all our stakeholders whilst contributing to the communities and the wider society in which we operate.

Andrew Duff

Chair

68 Annual Report and Accounts 2021  |  The Sage Group plc.

The UK Corporate Governance Code 2018 -

Compliance Statement

Sage applied the principles of the UK Corporate Governance Code 2018 (the "Code") and complied with all its provisions throughout FY21, with the exception of provision 38 (alignment of executive directors' pension contributions with those of the wider workforce). We are pleased to confirm that, since 1 October 2021, when the CEO's pension contribution was reduced from 15% to 10% of base salary, Sage has complied with all provisions of the Code. Further information on the Directors' Remuneration Policy 2022 and pension contributions of Executive Directors are in the Directors' Remuneration Report on pages 120 to 157.

In FY21 the Board has continued with its chosen approach to workforce engagement, through the Board Associate programme, and further enhanced by the Associates' Council, to deliver success in enabling efficient and effective engagement with our colleagues. This arrangement has been chosen by the Board as an alternative to the workforce engagement methods referred to in the Code, as is permitted by the Code. Further details on the Board Associate's role can be found on page 95.

We believe good corporate governance provides confidence in the delivery of our strategic performance to our stakeholders and is essential for the long-term sustainable success of our business. The table below shows the principles set out in the Code and where key content can be found in this report showing how we have applied those principles.

The Code is publicly available on the website of the

UK Financial Reporting Council at www.frc.org.uk.

Board leadership and company purpose

Pages

Purpose and culture

3, 38 to 41, 61 and 99

Shareholder engagement

89

Colleague engagement

90

Other stakeholder engagement

92 to 94

Conflicts of interest

83

Division of responsibilities

Pages

The role of the Board

74

The role of the Committees

74 and 75

Board composition

75

Committee composition

84

Independence of Non-executive Directors

83

Time commitment

83

Composition, succession and evaluation

Pages

Board composition and succession

104 and 105

Diversity and Inclusion

106 to 109

Annual re-election of Directors

83

Induction, Director training and development

78 and 79

programme

Board effectiveness and evaluation

80 to 82

Audit, risk and internal control

Pages

Significant reporting and accounting matters

112 to 115

Fair, balanced and understandable

116

Viability statement and going concern

113

Risk management and internal controls

116

Internal audit

117

External auditor

118 and 119

Principal and emerging risks

57, 111 and 116

Remuneration

Pages

Remuneration principles

121

Remuneration Policy

130 to 139

Pension and benefits

149 and 150

Directors' shareholdings and share interests

153

External advisors

157

Annual Report and Accounts 2021  |  The Sage Group plc.

69

Board of Directors

The operation of the Board is supported by the collective leadership of the Directors and complemented by the diverse skills and experience they individually possess. The open and transparent Board dynamic contributes to honest conversations to ensure effective decision making in full consideration of the impact on all stakeholders and long-term value creation.

Andrew Duff

N

Sangeeta Anand

A

Dr John Bates

N R

Chair

Independent Non-executive Director

Independent Non-executive Director

Chair of the Nomination Committee

Member of the Audit and Risk Committee

Member of the Nomination Committee and the

Appointed

Appointed

Remuneration Committee

Independent Non-executive Director on 1 May 2021

1 May 2020

Appointed

and as Non-executive Chair on 1 October 2021

Skills

31 May 2019

Skills

Skills

Silicon Valley-based senior technology leader with

Wealth of experience as a non-executive director and

extensive experience in leading P&L and growth across

Visionary technologist and highly accomplished business

chair, with a strong track record of transforming

a range of public, PE-owned and startup companies

leader in the field of technology innovation including

high-profile international businesses

Deep operating experience in transforming complex

Artificial Intelligence and Machine Learning functionality

Effective leader with strategic insights and

product portfolios and go-to-market to capture the

to improve customer experience

international experience

cloud opportunity

Pioneer focusing on areas such as event-driven

Strong focus on purpose, culture and customer-

Technology and business experience includes

architectures, smart environments, business activity

centricity, and delivering value for all stakeholders

cybersecurity, cloud, enterprise software, SaaS and

monitoring and evolution of platforms for digital business

Key previous experience

application services

Key previous experience

Non-executive chair of Elementis plc

Key previous experience

Co-founder, president and chief technology officer

Non-executive chair of Severn Trent plc

Chief marketing officer, Alkira Inc (disruptive SaaS

of Apama (now part of Software AG)

Non-executive director of Wolseley plc

networking startup)

Head of industry solutions and chief marketing officer

Senior Vice President, F5 Networks Inc (Listed on

of Software AG

Chief executive officer of npower

NASDAQ)

Chief executive officer of Terracotta, Inc. (a subsidiary

Key external commitments

General Manager and Corporate Vice President,

of Software AG)

Non-executive director of UK Government Investments

SafeNet (part of Thales Group)

Executive vice president of corporate strategy and

Ltd (UKGI)

Vice President, Cisco Systems

chief technology officer at Progress Software

Key external commitments

Chief executive officer at Plat.One (now part of SAP)

Chief executive officer of the Eggplant Group, part

None

of Keysight Technologies Inc

Key external commitments

Executive chairman of SER Group Holding GmbH

Jonathan Bewes

A Annette Court

A R

Drummond Hall

A N R

Independent Non-executive Director

Chair of the Audit and Risk Committee

Appointed

1 April 2019

Skills

Has prior experience of serving as chair on an audit committee

A wealth of accounting and financial experience

Strong investment banking experience gained over a 25-year career in the sector

Advisor to boards of UK and overseas companies on a wide range of financial and strategic issues, including financing, corporate strategy and governance

Key previous experience

Investment banking experience with Robert Fleming, UBS and Bank of America Merrill Lynch

Chartered accountant with KPMG

Key external commitments

Senior independent director and chair of the audit committee of Next plc

Vice chairman, corporate and institutional banking at Standard Chartered Bank plc

Independent Non-executive Director

Chair of the Remuneration Committee and member of the Audit and Risk Committee

Appointed

1 April 2019

Skills

Has prior experience of serving as chair of a remuneration committee

Experience in executive and non-executive director roles at the highest levels including as chair of a FTSE 100 company

Strong technology background with a record of using e-commerce to drive commercial success

Expertise in mentoring leaders to achieve greater clarity of purpose and provide a practical approach to problem-solving

Key previous experience

Senior independent director of Jardine Lloyd Thompson Group

Chief executive officer of Europe General Insurance for Zurich Financial Services

Chief executive officer of the Direct Line Group

Director of the board of the Association of British Insurers and Foxtons Group plc

Key external commitments

Chair of Admiral Group plc

Senior Independent Director

Member of the Remuneration Committee, the Audit and Risk Committee and the Nomination Committee

Appointed

1 January 2014

Skills

Experienced non-executive director and board chair

Wealth of experience gained across a number of customer-focusedblue-chip businesses in the UK, Europe and the US

Strong knowledge of marketing and customer service and bringing deep insight to how Sage may expand markets and delight customers

Key previous experience

Senior independent director of WH Smith plc Senior independent director of FirstGroup plc Chair of Mitchells & Butlers plc

Chief executive officer of Dairy Crest Group plc

Majority of career was spent with Procter & Gamble, Mars and PepsiCo

Key external commitments

None

70 Annual Report and Accounts 2021  |  The Sage Group plc.

Derek Harding

A

Steve Hare

Independent Non-executive Director

Chief Executive Officer

Member of the Audit and Risk Committee

Appointed

Appointed

3 January 2014 as Chief Financial Officer ("CFO")

2 March 2021

31 August 2018 as Chief Operating Officer, and as

Skills

Chief Executive Officer ("CEO") on 2 November 2018

Skills

Significant financial experience including leading

business transformations and sharp financial acumen

Significant financial, operational and transformation

Broad experience across a range of commercially

experience which includes driving change programmes

focused financial and operational roles including

in several of his previous roles

strategy, investor relations, mergers and acquisitions

Broad knowledge of Sage, having joined the Board in

Key previous experience

January 2014 as CFO

Chief financial officer at Senior plc

Key previous experience

Group finance director at Shop Direct

Extensive understanding of the drivers and priorities

Finance director of Wolseley UK

needed to complete Sage's evolution to a SaaS

company and to create a high-performance culture

Key external commitments

Operating partner and co-head of the Portfolio Support

Chief financial officer at Spectris plc

Group at the private equity firm Apax Partners

Chief financial officer for Invensys plc, Spectris plc and

Marconi plc

Key external commitments

None

Changes to the Board during FY21 and the year to date:

  • Derek Harding was appointed as an independent Non-executive Director on 2 March 2021
  • Andrew Duff was appointed as an independent Non-executive Director on 1 May 2021 and as Non-executive Chair on 1 October 2021
  • Sir Donald Brydon stepped down from the Board on 30 September 2021

Further information on the appointments and Board succession planning activities can be found on pages 104 and 105.

Further information on the composition of the Board can be found on page 75.

Jonathan Howell

Chief Financial Officer

Appointed

15 May 2013 as a Non-executive Director and as CFO on 10 December 2018

Skills

Highly experienced group finance director as well as experience as a chairman and non-executive director

Significant financial and accounting experience gained across several sectors which allow him to provide substantial insight into the Group's financial reporting and risk management processes

Excellent working knowledge of Sage, having joined as an independent Non-executive Director and acting as the Chair of the Audit and Risk Committee for six years

Key previous experience

Group finance director of Close Brothers Group plc Group finance director of London Stock Exchange Group plc

Non-executive director of EMAP plc Chair of FTSE International

Key external commitments

Independent non-executive director of Experian plc

Irana Wasti

Independent Non-executive Director

Date appointed to the Board

1 May 2020

Key strengths and experience

Experienced leader driving international growth

by enabling everyday entrepreneurs to start, grow and run their businesses online

Experience in product development, creating brand identity, go-to-market strategy, customers' experiences, sales and support across diverse cultural regions

Key previous experience

President of GoDaddy EMEA and previously held the role of SVP and general manager for GoDaddy's Productivity business

Worked for Intuit and oversaw launch of QuickBooks POS with Mobile Payments integration

Product and development roles at Google and IBM

Key external commitments

Chief product officer of Typeform

Key

  1. Audit and Risk Committee See pages 110 to 119
  1. Nomination Committee See pages 102 to 109
  1. Remuneration Committee See page 120 to 157

New appointment

Full biographies can be found on our website at sage.com.

Annual Report and Accounts 2021  |  The Sage Group plc.

71

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Sage Group plc published this content on 02 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 December 2021 09:10:07 UTC.


© Publicnow 2021
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