The Board of Telit Communications PLC (“Telit”) believes that Telit and its subsidiaries (together, the “Group”) and the delivery of its strategy should be based on strong corporate governance. The Board also believes that good governance is essential to the way in which the Group operates on a day-to-day basis. The Board is committed to developing a culture of openness, transparency, constructive challenge and support.
As an AIM-listed company, Telit follows the requirements of the AIM Rules for Companies. In accordance with AIM Rule 26, Telit has adopted the Quoted Companies Alliance’s Corporate Governance Code for small and mid-size quoted companies (the “QCA Code”). The Board considers that Telit complies with the principles of the QCA Code, except as set out below.
The sections below set out how we currently comply with the ten principles of the QCA Code.
The strategy and business operations of the Group are set out in the Strategic Report on pages 4 to 25 of the Group’s Annual Report 2018.
The Board realizes that effective communication with shareholders on strategy and governance is an important part of its responsibilities. The Group’s Investor Relations Manager has responsibility for ensuring that Telit communicates openly with shareholders and that shareholder views are communicated back to the Board. Following their release to the market, interim and final results are presented to institutional shareholders and analysts. The Chairman, the CEO and the Finance Director meet regularly with investors and analysts via investor roadshows, participation in conferences and additional dialogue with key investor representatives held in the intervening periods.
The Board uses the AGM to encourage communication with private shareholders. Where voting decisions are not in line with Telit’s expectations the Board will engage with those shareholders to understand and address any issues.
Care is taken to ensure that all price sensitive information is made available to all shareholders at the same time.
The Senior Independent Non-Executive Director also makes himself available to shareholders if they have concerns, where contact through the normal channels of Chairman, CEO, and Finance Director has failed to resolve, or for which such contact is inappropriate.
Telit understands that its relationship with its staff, shareholders, customers, partners and suppliers is critical to achieving its goals.
Telit’s employees are at the heart of the business and Telit recognises that its employees play a part in the delivery of its goals. Telit aims to attract, retain and motivate the best people and take responsibility for staff welfare, training and development.
Despite the breadth of the location of staff, Telit strives to bring staff together through communication, engagement and empowerment. Telit’s technological infrastructures enable staff to easily communicate with colleagues, wherever they are located. An intranet portal provides staff with relevant information and discussion opportunities.
In addition, Telit aims to be an inclusive and professional workplace. Telit is opposed to discrimination and is committed to sustaining equality in all employment matters. Telit has a whistleblowing policy in place which includes arrangements by which staff can, in confidence, raise concerns about possible improprieties in financial or other matters. The policy aims to encourage staff to report suspected wrongdoing in the knowledge that their concerns will be taken seriously; to provide staff with guidance as to how to raise concerns without fear of reprisals.
Telit works with customers to provide them with products and solutions that will be right for their needs and, in turn, continuously assesses how it can bolster its operations and business to better serve its customers. Throughout the customer relationship life-cycle, different Telit departments engage with customers including sales, product marketing, and customer support at varying stages of the customer relationship, so that the customer is always supported.
Telit nurtures a panel of strategic suppliers and partners able to deliver top-tier technologies with a focus on quality. Telit operates a best in class system of category management, performance assessment (cost, quality, delivery), costing, and measures in near real-time its supply chain performance. Regular management meetings, roadmap reviews, technical workshops, and risk assessments are performed to ensure the health and proper functioning of the entire supply chain. In addition, Telit operates a supplier compliance program that includes modern slavery and conflict mineral checks.
The Group’s approach to risk is set out in the Audit Committee’s Report on pages 43 to 44 of the Group’s Annual Report 2018. The Board has responsibility for establishing and maintaining the Group’s internal risk control systems. The Board regularly reviews and evaluates such internal controls, ensuring they meet the needs of the Group.
The internal controls are designed to manage risk rather than eliminate it and therefore cannot provide absolute assurance against material misstatement or loss.
While the Group does not have an internal audit function presently, the Board has engaged Grant Thornton to perform a risk analysis. This risk analysis will form a basis for an internal audit plan to be discussed by the audit committee during 2020.
A summary of the principal risks and uncertainties facing the Group, as well as mitigating actions, are set out on pages 22 to 24 (Principal Risks and Uncertainties) of the Group’s Annual Report 2018.
The board comprises the Independent Non-Executive Chairman, four additional independent non-executive directors, the CEO, and the finance director. The directors are expected to commit sufficient time for the regular business of the board and its committees plus any additional time needed for extraordinary matters requiring the attention of the Board and its committees.
Paolo Dal Pino, Chief Executive Officer
Yariv Dafna, Finance Director, and President
Simon Duffy, Independent Non-executive Chairman
Gil Sharon, Senior Independent Non-executive Director
Harald Rösch, Independent Non-executive Director
Marco Patuano, Independent Non-executive Director
Anthony Dixon, Independent Non-executive Director
In November 2017, the Company’s Board began a process of important changes, driven by a desire to strengthen and enhance the Company’s governance and transparency.
In the previous year’s annual report, Telit stated that it would aim to comply with the principles and provisions of the UK Corporate Governance Code and associated guidance. As the Board’s constitution changed following the 2018 AGM, the new Board, following the advice of its advisors, decided that it was appropriate for Telit to follow the principles of the QCA Corporate Governance Code, which would be in accordance with AIM Notice 50.
Certain provisions were not complied with during 2018. For example, there was no Board performance review due to the frequent turnover of Board members. In addition, at times while there were always at least two non-executive directors on the Board, the general shareholder expectation that at least half of the directors of a board will be independent non-executive directors, was not met due to the changes described above. Telit is also aware that, in accordance with the QCA Code, a single person should not fulfill the roles of both chairman and chief executive officer. Paolo dal Pino was first appointed as a non-executive chairman but temporarily became executive chairman on the departure in September 2018 of the then CEO, Yosi Fait. In the course of 2019, there was a realignment of the board into the positions outlined above so that (a) the majority of the board would be independent non-executive directors and (b) to ensure that the roles of the chairman and the chief executive officer would not be filled by the same person.
The Board is supported by its committees, as set out against principle 9 below.
Details of directors’ attendance at scheduled Board and committee meetings during the financial year ending 31 December 2018 can be found on page 31 of the Group’s Annual Report for the year ending 2018.
The Chief Executive Officer and the Finance Director commit their full time to the Company whilst each of the Non-Executive Directors are considered to be part-time, but they are expected to commit adequate time to their Board duties.
Telit has taken advice from certain of its shareholders on the appointment of the recent non-executive directors to the Board.
Details of each of the current Board’s skills and experience can be found here.
Induction and development
On appointment to the Board, new directors receive a comprehensive and tailored induction program, the aim of which is to introduce them to key management and personnel across the business and to enhance their knowledge and understanding of the Group’s business, strategy and governance structure, as well as their own duties and responsibilities. This includes time with each of the executive directors, and with a wide range of senior management from across the business.
The directors have access to the advice and services of the General Counsel, who is responsible for ensuring that all Board procedures are complied with.
Individual directors are also able to take independent legal advice at Telit’s expense where they judge it necessary to support the performance of their duties as directors. In addition, a Directors’ and Officers’ liability insurance policy is maintained for all directors and each director has the benefit of a Deed of Indemnity.
Appointment and re-election
Directors are appointed by the Board or at the AGM. Pursuant to Telit’s articles of association, any director appointed by the Board, only holds office until the next AGM, where such director may be recommended for re-election. Telit’s articles of association also require that at each AGM any director who was elected or last re-elected as a director at or before the AGM held in the third calendar year before that AGM, shall retire by rotation and, if required, such further directors shall retire by rotation as would bring the number retiring by rotation up to one-third of the number of directors in office at the date of the notice of AGM. However, in line with the best corporate governance practice, all directors elect to resign and if, they so wish put themselves forward for re-appointment by the shareholders at each AGM.
Paolo Dal Pino, following his appointment as Chairman in 2018, assessed the individual contributions of each of the members of the Board to ensure their individual contribution is relevant and effective and that they are committed members of the Board. Given the changes to the Board during the course of 2019, the Board has begun an evaluation of its own performance and the performance of the Board committees, to ensure that the members of the Board collectively function in an efficient and productive manner. The evaluation will be completed in early 2020 and its results, as well as any actions arising from it, will be included in Telit’s 2020 annual report.
Telit recognizes that it has a social responsibility to ensure that all of its business dealings are ethical and that all employees operate to a high standard. In doing so, Telit promotes a marketplace that does not tolerate social abuses or unethical business.
Telit aims to attract, retain and motivate the best people and take responsibility for staff welfare, training, and development. In addition, Telit aims to be an inclusive and professional workplace. Telit is opposed to discrimination and is committed to sustaining equality in all employment matters.
Telit believes that personal and business integrity is an essential part of delivering strong financial performance and expects every person working for or on behalf of Telit to operate to a high ethical standard. Telit’s efforts to operate ethically, include on-going projects to detect and prevent anti-bribery and corruption, modern slavery and ethical sourcing of materials. In addition, Telit recognizes that as a major, global corporation it has a duty to conduct its business with concern on its impact on the environment.
Telit has a whistleblowing policy in place, which includes arrangements by which staff can, in confidence, raise concerns about possible improprieties in financial or other matters. The policy aims to encourage staff to report suspected wrongdoing in the knowledge that their concerns will be taken seriously; to provide staff with guidance as to how to raise concerns and to reassure staff that they can raise concerns without fear of reprisals.
Further details in relation to Telit’s corporate social responsibility policies can be found here.
Roles of the Board, Chairman, and Chief Executive Officer
The Chairman is responsible for running the business of the Board and for ensuring appropriate strategic focus and direction. This responsibility includes ensuring that the principles of good corporate governance are applied and promoted throughout the Group. The role of the Senior Independent Non-Executive Director is to provide a sounding board to the chairman and to serve as an intermediary for the other directors when necessary. The chief executive officer is responsible for proposing the strategic focus to the Board, implementing it once it has been approved and overseeing the management of Telit operations and business.
It is the Board’s responsibility to:
- formulate, review and approve Telit’s long term strategy and annual plan;
- monitor Telit’s performance against strategy and the annual plan;
- identify principal risks, ensure systems of risk management and control are in place and monitor them; and
- review succession plans for the Board and management.
A number of matters are reserved specifically to the Board including approval of the annual report, adoption of budgets, material financial commitments and any M&A activity. To ensure the Board is the decision-making body for those matters that are considered of significance to the Telit Group owing to their strategic, financial or reputational implications or consequences and to retain control of these key decisions, on 9 February 2018 the Board adopted a schedule of matters reserved for the decision of the Board or a duly authorized committee thereof.
The Board generally meets a minimum of once every quarter and receives appropriate and timely information prior to each meeting. A formal agenda is produced for each meeting, and Board and committee papers are distributed several days before meetings take place. Any director can challenge proposals and decisions are taken democratically after discussion. Any director who feels that any concern remains unresolved after discussion may ask for that concern to be noted in the minutes of the meeting, which are then circulated to all directors. Specific actions arising from such meetings are agreed by the Board or relevant Committee and then followed up by management.
The Board is normally supported by the Audit, Remuneration, Nomination, PDMR Trading and Investigation Committees, each of which has access to the resources, information, and advice that it deems necessary, at the cost of Telit, to enable the committee to discharge its duties.
The duties of the Audit, Remuneration and Nomination Committees are set out in the Terms of Reference of each of these committees, which are available here.
In addition to the steps taken by Telit to communicate with shareholders and stakeholders described above, Telit makes a range of corporate information, including recent announcements, notices for, and results, of any general meetings and its financial statements, available to the public on its website www.telit.com.
The Board receives regular updates on the views of shareholders through briefings and reports from Investor Relations, the Chairman, the Chief Executive Officer, the Finance Director, and the Company’s brokers. Telit communicates with institutional investors frequently through briefings with management. In addition, analysts’ notes and brokers’ briefings are reviewed to understand the external view of the Group.
This statement was last updated on 24 January 2020.