Mosaic
- Corporate Governance
-
Corporate governance in Mosaic Fashions hf. is regarded as the framework by which the company is directed and controlled and the means by which relationships between the company’s management, its board, its shareholders and other stakeholders are conducted.
The aim of the corporate governance programme in Mosaic Fashions hf. is to ensure disclosure and transparency, define the responsibilities of the board and the management, define the rights and obligations of shareholders and stakeholders, ensure the equitable treatment of shareholders and avoid conflicts of interests between the parties.
The board is ultimately responsible for the Group’s system of internal controls and for reviewing their effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable assurance against material misstatement or loss. The board has adopted a Code of Business Conduct, which provides practical guidance for all staff and which helps identify and evaluate the significant risks affecting the business and the policies and procedures by which these risks are managed.
In 2004, the Iceland Chamber of Commerce, ICEX and the Confederation of Icelandic Employers issued Guidelines on Corporate Governance. Mosaic Fashions hf. has studied this and intends to follow them with respect to its future structure and management.
Statutory bodies
Shareholders’ meetings
The supreme authority in the affairs of Mosaic Fashions hf., within the limits established by its Articles of Association and statutory provisions, is the company’s shareholders’ meeting. Shareholders’ meetings may be attended by shareholders, their representatives and advisors. Shareholders’ meetings are open to representatives of the press and the ICEX and OMX.
The Annual General Meeting of Mosaic Fashions hf. will be held before the end of May each year.
At shareholders’ meetings each share carries one vote. Decisions at shareholders’ meetings are made by majority vote unless otherwise provided for in the Articles of Association or prescribed by law.
Board of directors
The board of Mosaic Fashions hf. manages the company’s general affairs and endeavours to keep the organisation and its operations on course. The company’s board of directors directs company affairs and strives to ensure that the company’s organisation and activities are in good order at all times and that the accounting for and the handling of the company’s funds are sufficiently supervised.
The board of directors appoints the CEO of Mosaic Fashions hf. and decides on the terms of his employment.
Mosaic Fashions hf. plans to assess the activity, work practices and procedures of the board annually in light of the company’s progress, with the assistance of outside parties, when appropriate. The Working Procedures of the Board of Directors state that board members should familiarise themselves with the provisions of law, the company’s Articles of Association, the general securities regulations, the special regulations of the company on the handling of inside information and insider trading and other relevant rules.
The board of Mosaic Fashions hf. has a majority of board members that are independent of the company and had two members that were independent of major shareholders throughout 2006-07.
The following section lists the current members of the board of directors and their activities. It is not intended to be exhaustive, but details the main occupations and/or other occupations that are linked to the ownership or operations of Mosaic Fashions hf.
Thór Sigfússon was voted on to the board of Mosaic Fashions hf. on 25 May 2006. Stewart Binnie, Derek Lovelock, Richard Glanville and Gunnar Sigurdsson were voted on to the Mosaic Fashions hf. board of directors on 28 April 2005. Apart from Thór Sigfússon, all board members have been involved as directors of the Mosaic Fashions’ group of companies for the past twelve months or more. In references made to the ‘related parties’ that hold shares in Mosaic Fashions hf., related parties are linked to board members, where the board members have extensive influence over the investment activity of the related party. There were no extraordinary transactions between the board of directors and the company. The board of directors has not received any loans or stock options from the company.
Stewart Binnie, London, United Kingdom. Chairman of the board, elected to Sierra Holdings Ltd’s board in November 2002. Occupation: A private equity investor with a background in retailing,media and financial services who serves on the board of a number of UK public and private companies. Own holding and holding of spouse and children under 18 years of age in Mosaic Fashions hf.: 4,655,486. Stewart Binnie is not related to other parties that own shares in Mosaic Fashions hf.
Derek Lovelock, Buckinghamshire, United Kingdom. Member of the board, elected to Oasis Stores plc’s board in November 1999. Occupation: CEO of Mosaic Fashions hf. and Chairman of the board of Jacques Vert plc. Own holding and holding of spouse and children under 18 years of age in Mosaic Fashions hf.: 190,760,706. Derek Lovelock is not related to other parties that own shares in Mosaic Fashions hf.
Richard Glanville, Essex, United Kingdom. Member of the board, elected to Oasis Stores plc’s board in December 2000. Occupation: CFO of Mosaic Fashions hf. Own holding and holding of spouse and children under 18 years of age in Mosaic Fashions hf.: 97,165,510. Richard Glanville is not related to other parties that own shares in Mosaic Fashions hf.
Thór Sigfússon, ID-No: 021164-5189, Holahjalli 11, Reykjavík. Member of the board, elected to Mosaic Fashions hf. board in May 2006. Occupation: CEO of the insurance company Sjóvá in Iceland. Prior to becoming the CEO of Sjóvá Thor was Managing Director of the Iceland Chamber of Commerce and the Iceland Chapter of the International Chamber of Commerce from 2003 - 2005. Own holding and holding of spouse and children under 18 years of age in Mosaic Fashions hf.: 588,748. Related party: Two subsidiaries of Sjóvá hold shares in Mosaic Fashions; SJ1 ehf. holds 33,017,168 shares and Milestone ehf. holds 18,182 shares. Halldora Vifilsdottir holds 7,353 shares.
Gunnar Sigurdsson, ID-No: 091169-3559, London, United Kingdom. Member of the board, elected to Mosaic Fashions Ltd´s board in March 2004. Occupation: Managing Director of Baugur Groups retail division. Own holding and holding of spouse and children under 18 years of age in Mosaic Fashions hf.: 2,308,246 shares. Related party: Baugur Group hf. is, through its subsidiary BG Holding ehf., the largest shareholder in Mosaic Fashions hf. with 1,083,138,488 shares.
Board committees
The board of Mosaic Fashions hf. operates both an Audit Committee and a Remuneration Committee.
Each committee consists of the Chairman and directors of the board of Mosaic Fashions hf. who are competent to deal with the company’s financial issues or remuneration, as the case may be. The independence of a board member is evaluated as specified under 2.6. of the Corporate Governance guidelines published by the Iceland Chamber of Commerce, the Iceland Stock Exchange and the SA-Confederation of Icelandic Employers.
-
The Audit Committee’s role is to ensure the integrity of the financial information reported to shareholders, control the company’s internal auditing and accounting system, evaluate the work of the company’s financial management and the company’s elected auditor.
The Remuneration Committee’s role is to ensure that the CEO’s remuneration reflects the long-term performance of the Group, his personal performance and the interests of the shareholders. The CEO is responsible for the remuneration of other employees and for ensuring that it remains in line with the policy of the Remuneration Committee. The Remuneration Committee’s policy is to ensure that the company can attract and retain high calibre executives. For these purposes the committee consults with external advisers on levels of remuneration in comparable companies where appropriate. The remuneration package for executive directors consists of basic salary, annual bonus, pension arrangements and other taxable benefits.
The Remuneration Committee also determines the policy of the company regarding employee stock options. Future changes to the stock option policy will be submitted to the Annual General Meeting for approval. The existing stock option scheme is through the Employee Benefit Trust described under the Employees section later in this chapter.
The CEO is responsible for the company’s strategy, operations and finance and represents the company in all matters regarding normal operations. He is in charge of accounting, management and HR. The CEO is obliged to provide the board of directors and the auditors with all information on the company’s operations that they may request and is required to be provided according to law.
The head office of the company is 69-77 Paul Street, London EC2A 4PN, UK. However, the Registered Office of Mosaic Fashions hf. is Sudurlandsbraut 4, IS-108 Reykjavík, Iceland, and the Registered Office of Mosaic Fashions Ltd is The Triangle, Stanton Harcourt Industrial Estate, Stanton Harcourt, Witney, Oxfordshire OX29 5UT, as this is where the majority of the accounting team is located.
Auditors
A state authorised public accountant or accounting firm is elected as the auditor at each Annual General Meeting of Mosaic Fashions hf. for a term of one year. The auditor examines the company’s accounts and all relevant accounts documents for each year of operation, and has access to all the company’s books and documents for this purpose. auditors are not elected from among the members of the board of the company or employees. The qualifications and eligibility of the auditor at elections are in other respects governed by law.
The Chartered Accountants and Registered Auditor of Mosaic Fashions hf. are KPMG Endurskodun hf. ID-no. 590975-0449, Borgartún 27, IS-105 Reykjavík, Iceland.
Compliance Officer
A Compliance Officer is employed within the company. The Compliance Officer is directly responsible to the CEO and is independent in his or her duties. The Compliance Officer monitors the implementation of insider rules adopted by the company, including rules regarding securities trading by employees and primary insiders. The Compliance Officer is responsible for interpreting the rules, and takes decisions based on the rules. The Compliance Officer makes proposals for improved working procedures for various positions within the company, and helps develop and maintain the compliance monitoring system.
In accordance with applicable regulations and recommendations of the Icelandic Financial Supervisory Authority (FSA) the company has established rules on the handling of inside information and insider trading which have been confirmed by the FSA.
Key management and employees
Senior management The senior management team under the leadership of the CEO Derek Lovelock comprises three directors at Group level. All have significant management experience in fashion retailing. There were no extraordinary transactions between the Group and the senior management team.
Derek Lovelock, CEO (b.1950), joined Oasis Stores plc as Chief Executive in October 1999. Previously, he was the Chief Executive of the Clothing Division and a board director of Sears plc, where he had responsibility for Wallis, Warehouse, Miss Selfridge, Richards, Adams and The Outfit. Prior to joining Sears plc in 1992, he spent eight years with Storehouse plc where, having spearheaded the creation of a fashion division that included brands such as Blazer, Jacadi and Anonymous, he was promoted to the board and given responsibility for Mothercare. Derek Lovelock is the Non-executive Chairman of Jacques Vert plc and member of its Remuneration and Audit Committees. Jacques Vert plc is a clothing company that is listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
Richard Glanville, CFO (b.1955), joined Oasis Stores plc as Finance Director, responsible for finance, IT, distribution, and Company Secretary in 2000. Previously, he was the IT Director of Hays Information Management. He is a qualified accountant and has relevant retail industry experience including roles as CFO at Richards Ltd, Commercial Director at Sears Clothing Ltd, IT Director at Comet Ltd and Commercial Director at Mothercare Ltd.
Meg Lustman, Strategy and Development Director (b.1962), joined Oasis Stores plc as Business Development Director in January 2000. Prior to joining Oasis, she worked for over nine years in a number of strategic and international development roles within Sears plc. With 15 years’ experience in UK and international retailing, she combines strategic planning, coaching and project management skills at a senior level.
Employees
At the end of FY 2007 the total number of Mosaic employees was 13,159, of whom 11,806 were in the retail teams and 1,353 were in the head office teams based in London, Oxford, Leeds and Hong Kong. There are bonus schemes to motivate and incentivise employees across the Group and reward them if business targets are achieved. In addition, an Employee Benefit Trust (EBT) was established in November 2003 to tie senior managers into the Group’s development.
Employee Benefit Trust
The intention of the Employee Benefit Trust (EBT) scheme is to allow dedicated senior managers to participate in the Group’s development. The Oasis Employee Benefit Trust was established in November 2003 with a £2.3m investment from the company in preference shares and loan notes. In January 2005, the first payments, totalling £0.6m, were made to 85 employees. In March 2005, the scheme was transferred to a Mosaic Fashions EBT and the company injected a further £1.3m. These additional funds have been used to bring Karen Millen’s and Whistles’ senior managers into the scheme and to extend the long-term incentives for the existing and new members. In January 2007, the EBT sold 15,000,000 shares in order to fund payments totalling £1,398,750 to 86 employees.
-