Corporate Governance Code

The current UK Corporate Governance Code (the ‘Code’) was published in July 2018. The Code is accompanied by supporting guidance on Board Effectiveness, which was published alongside the Code, to assist companies address specific aspects of governance and accountability.

UK Corporate Governance Code

Guidance on Board Effectiveness

Improving the Quality of Comply or Explain

Guidance on Audit Committees

Guidance on Risk Management Internal Controls and Related Financial Business

Guidance on AGM Best Practice

Guidance for Company Meetings

The UK Corporate Governance Code recommends that at least half the board of directors of a UK listed company, excluding the Chair, should comprise non-executive directors determined by the board to be independent in character and judgement and free from relationships or circumstances which may affect, or could appear to affect, this judgement. The Board has determined that all of the non-executive directors (other than the Chair) are free from any business or other relationship that could materially interfere with the exercise of their independent judgement and are therefore "independent non-executive directors" within the meaning of the Code. The Company has two executive directors and four independent non-executive directors plus the Chair and therefore complies with the Code in this respect.

The UK Corporate Governance Code recommends that a chair should meet the independence criteria set out in the Code on appointment. Amit Bhatia is not considered to have been independent on appointment to the Breedon Board, having been initially appointed as the representative of Abicad Holding Limited (a significant Breedon Shareholder which retains a major shareholding in New Breedon) pursuant to the terms of a relationship agreement then in force between it and Breedon. Accordingly, although Mr Bhatia is no longer a representative of Abicad Holding Limited, he is not considered to have been independent on appointment to the Board and therefore the current Board structure does not comply with Provision 2.9 of the UK Corporate Governance Code. By way of background, Mr Bhatia was appointed to the Breedon Board in August 2016, appointed Deputy Chair in April 2018, and non-executive Chair in 2019. He has considerable experience in both the materials sector and through corporate finance. Mr Bhatia had also been appointed as executive chair of Hope Construction Materials in 2013, then the UK's largest independent building materials business before it was acquired by the Group in August 2016 (which is when he subsequently joined the Breedon Board). Given Mr Bhatia's longstanding experience in the sector and tenure with the Group, the Company does not propose to appoint a new independent Chair in order to comply with the Code. No material impact on the ability of stakeholders to form suitable investment decisions in the Group is foreseen with Mr Bhatia as Chair.

The UK Corporate Governance Code recommends that the board of directors of a company should appoint one of the independent non-executive directors to be the senior independent director to provide a sounding board for the chair and to serve as an intermediary for the other directors when necessary. The senior independent director has an important role on the Board in leading on corporate governance issues and being available to shareholders if they have concerns which contact through the normal channels of the Chair, CEO or other executive directors has failed to resolve or for which such contact is inappropriate. Clive Watson acts as the senior independent director of Breedon.

The UK Corporate Governance Code recommends that all directors should be subject to election by shareholders at the first annual general meeting after their appointment, and to annual re-election thereafter. The directors therefore intend to put themselves up for election at the Company's next annual general meeting. It is also intended that the directors will continue to put themselves up for annual re-election at each further annual general meeting of the Company. In addition, prior to recommending their re-election to shareholders, the Board intends to carry out an annual re-assessment of the ongoing independence of each of the non-executive directors and to make an appropriate statement disclosing their status in the Company’s annual report.

The Board includes three (42%) female directors and two directors from ethnic minority backgrounds (out of seven). The Board and Nomination Committee have regard to diversity, including gender when considering further appointments. The Company reported on the gender and ethnicity breakdown of the Board and the Executive Committee (and its direct reports) in the 2022 Annual Report..

As one of the Company's methods to gather the views of the workforce and take these views into consideration in Board discussions and decision-making, the Company has appointed Pauline Lafferty as its designated Non-executive Director for Workforce Engagement.

The Company will formally propose a new directors' remuneration policy for approval by shareholders at the Annual General Meeting of the Company in 2024, in accordance with section 439A of the Companies Act 2006 and regulations set out in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended from time to time). It is currently intended that, if approved, that policy will apply for three years from the date of that Annual General Meeting.

It is intended that until the shareholder-approved directors' remuneration policy is put in place, remuneration for each executive director will operate in line with the directors' remuneration policy included in the Company's 2022 Annual Report, at pages 120 and 121. To reflect best practice amongst premium listed companies on the London Stock Exchange, the new directors' remuneration policy to be proposed at Annual General Meeting in 2024 will additionally include a formal policy for post-employment shareholding requirements for executive directors encompassing both unvested and vested shares.