Committee Composition

During the year, the Committee comprised:

• Dennis Millard (Chairman)
• David Adams
• Claudia Arney
• Helen Jones
• Jill McDonald (resigned 29 September 2017)

Three Committee meetings were held during the year, attended by all members, with the exception of David Adams who was unable to attend the Committee meeting on 22 March 2018 due to an unexpected and pressing commitment in relation to another company. After each Committee meeting, I reported to the Board on the key issues that we had discussed. A number of informal discussions, particularly relating to the appointment of a new Chief Executive Officer, were also held between Committee members and me throughout the year as the need arose.

Activities During the Year

During the year, the Committee's main focus was on the search for a new Chief Executive Officer and a new Chairman as detailed in the Board Appointments below.

During the year, the Committee also:

• considered the terms of reference regarding the appointments and roles of the new Chief Executive Officer and Chairman;
• reviewed the composition of the Board and its succession plan with particular reference to the succession of the new Chairman;
• carried out an annual review of the Committee's Terms of Reference;
• recommended re-election of the Board at the forthcoming Annual General Meeting; and
• reviewed the results of the Board performance evaluation process.

Board Appointments

The search for a Group Chief Executive Officer was concluded in September 2017 with the announcement of the appointment of Graham Stapleton with effect from 15 January 2018. MWM Consulting was appointed as advisor to the Committee in the search for external candidates and this process was led by myself, as Chairman, together with the Committee. MWM Consulting does not have any other connection with the Company. The Committee also considered and appointed Jonny Mason, Chief Financial Officer as Interim Chief Executive Officer with effect from September 2017 until Graham Stapleton joined the Company in January 2018.

As announced last year, I will be stepping down as Chairman at the Annual General Meeting in July, and so in November 2017 the Committee began the process of identifying suitable candidates. Odgers Berndston was appointed as an advisor, and the process was led by David Adams, as Senior Independent Director, together with the Committee but excluding myself. Odgers Berndston does not have any other connection with the Company. On 22 May 2018 it was announced that Keith Williams will be appointed as my successor, as Chairman on 24 July 2018.

Diversity

The Group's Diversity Policy ("Diversity Policy") sets out our commitment to eliminate discrimination and to encourage diversity and equality across the Board of Directors and amongst all our colleagues, irrespective of their gender, race, ethnic origin, disability, age, nationality, national origin, sexual orientation, gender reassignment, marital or civil partnership status, pregnancy or maternity, religion, beliefs and social class. This year, the Board has not considered it necessary to set a formal target for including diversity on the Board, this is because one third of our Board is female and we are in excess of the recommended target as published by the Hampton-Alexander Review in November 2017.

The Diversity Policy applies to all our activities, including our role as an employer and as a provider of services, ensuring that no colleague, potential colleague, customer, visitor or contractor will receive less favourable treatment on the grounds of gender, race, ethnic origin, disability, age, nationality, national origin, sexual orientation, gender reassignment, marital or civil partnership status, pregnancy or maternity, religion, beliefs and social class. The Company does not currently publish specific diversity targets but in practice, we have created a more balanced and diverse Board and Senior Management Team. We continue to work to monitor these issues across the entire business, in particular in relation to gender diversity.

Further information regarding Board diversity can be found in the Corporate Governance Report and gender diversity in the Group as a whole in the Corporate Social Responsibility section.

Looking Ahead

It was announced on 27 March 2018, in the year ahead, that Jonny Mason will resign from the position of Chief Financial Officer to take up the position of Group Finance Director at Dixons Carphone plc. Jonny will remain as Chief Financial Officer until the end of his notice period in September 2018. The process is under way by the Committee to find his replacement.

The Committee will also continue to assess the Board and Senior Management Team composition and how they both may be enhanced.

The Terms of Reference for the Committees are available at www.halfordscompany.com/investors/governance