AIM Rule 26

The key challenges to the business and how these are mitigated is detailed on pages 18 and 19 of the company’s Annual Report and Accounts for the year ended 31 December 2017, with further explanation of potential industry threats contained in a Q&A published in May 2018.

Taptica also provided investors with an in-depth review of its strategy and how it manages risks at its Capital Markets Day, held in London in June 2018.

The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

The CFO, Yaniv Carmi, meets regularly with institutional investors, usually in regard to the issuance of financial results, and endeavour to accommodate all meeting requests from investors.

The Board recognises the AGM as an important opportunity to meet private shareholders. The Directors – Non-executive and Executive – are also available to listen to the views of shareholders informally immediately following the AGM.

Three out of Taptica’s four Non-executive Directors are UK-based and available to meet with shareholders as requested. This includes the Chairman, who meets regularly with shareholders (independent of management) and seeks to understand voting decisions/intentions where appropriate. The Chairman either directly or indirectly through Taptica’s brokers regularly solicits feedback from its investors. The Chairman also receives questions from shareholders and looks to address them in a timely manner.

Regular reports are provided to the Board on meetings with shareholders and any concerns are communicated.

Taptica also seeks to meet the needs of shareholders on an ad hoc basis where necessary, such as with the recent publication of a detailed Q&A document to address common queries/concerns that were being raised by individual shareholders. Members of the management team also conduct interviews with Proactive Investors and seek to address any matters that have been commonly raised by shareholders.

Taptica maintains a consistent dividend policy of distributing 25% of net profit to shareholders.

Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

Staff retention rate is a key consideration and is a factor in determining the bonus payment of the Executive Directors. Retention is also a matter reported on to the Board. Each year, at least one Board meeting is held at the company’s headquarters in Israel, and the Non-executive Directors will interact with the employees and present to them.

The company communicates and builds a relationship with external stakeholders via its marketing efforts, including social media, events, PR, direct marketing, online advertising and more. The company offers to meet with stakeholders at regular events globally, and also sometimes directly contacts investors to offer meetings.

Taptica has a ‘People & Culture’ program, which includes providing employees with opportunities for volunteering in the community – with a particular focus on education, such as tutoring youth at risk and collaborating with schools that care for underprivileged children. Taptica also regularly donates to voluntary associations.

Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).

Both the Executive Directors and senior managers are responsible for reviewing and evaluating risk on an ongoing basis and the Board considers risks to the business at every Board meeting. The Board also allocates certain meetings to have a more in-depth review of strategy and risk, such as in the June 2018 meeting where Mr Tal Mor, the Chief Technology Officer, provided a detailed presentation for Board members on the state of ad-tech industry and the actions the company takes to address the risks of operating in a constantly evolving industry.

The Audit Committee of the Board consults with external advisers as/when needed to support execution on strategy and risk mitigation, such as holding executive sessions with KPMG to discuss the audit process and the manner in which the company’s finance team is expanding to address the significant international growth of the business.

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non-executive directors. Independence is a board judgement.

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

Directors must commit the time necessary to fulfill their roles.

High level and in-depth analytic materials, including the minutes from the prior meeting, are sent in a timely manner ahead of each committee or Board meeting allowing the Board members adequate time to review the materials. After each meeting, the minutes are sent to the chair for review and approval. All directors have direct access to the advice and services of the Company Secretary and are able to take independent professional advice in the furtherance of the duties, if necessary, at the company’s expense.

The composition of the Board is outlined on pages 10-11 of the Annual Report 2017. The Board considers all of the Non-executive Directors to be independent.

The time devoted by directors to their duties varies depending on the activities of the company. In 2017, the company held 11 meetings plus numerous phone calls. Each year, the Board holds at least one 3-day meeting to review strategy and interact with senior managers. The Executive Directors work full-time for Taptica. The Non-executive Chairman spends a minimum of three to four days per month on Taptica business. This primarily via in-person meetings or phone calls with management, brokers and shareholders. The other Non-executive Directors spend a minimum of two days per month on their duties, primarily through formal face-to-face meetings and phone calls with management and other Board members.

The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.

As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.

The Nomination Committee of the Board oversees the process and makes recommendations to the Board on new Board appointments as well as re-election of existing directors. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender. The Nomination Committee also considers succession planning.

The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.

It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.

All directors are subject to re-election by the shareholders each year (excluding the External Non-executive Directors, which are subject to re-election every three years, in accordance with Israeli law).

The Executive Directors are subject to an annual performance review with they are measured against pre-set criteria.

The Board is constantly looking at ensuring the executive management of the company evolves. The company conducts a leadership program to ensure talent can be promoted within the business. If there are skill gaps, we look to fill those externally. At present, the directors are confident there is sufficient talent within the company to be able to appoint new leadership from within.

The directors – Executive and Non-executive – are, however, required to give three months’ notice under their employment contracts if they wish to leave the company.

The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team. Corporate values should guide the objectives and strategy of the company.

The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.

The company has a ‘Leadership Program’ that is designed to facilitate career progression while promoting leadership based on Taptica’s core values and ethical behaviour. Similarly, the company’s recruiting efforts and methods are based on the notion of being the culture’s gate keepers: aiming to recruit people who are a cultural fit and share a common ground of ethical values and behaviours.

The company’s senior management team observes the culture of the company in operation at the local business units (throughout its geographies) through visits and maintaining company culture is a matter discussed by the Board. The Board also maintains regular dialogue with company management outside of the Executive Directors to monitor the disposition of the broader employee-base and ensure the continuation of a healthy, growth-oriented culture.

• size and complexity; and
• capacity, appetite and tolerance for risk.

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

In particular, appropriate communication and reporting structures should exist between the board and all constituent parts of its shareholder base. This will assist:

• the communication of shareholders’ views to the board; and
• the shareholders’ understanding of the unique circumstances and constraints faced by the company.

It should be clear where these communication practices are described (annual report or website).

The Chairman meets regularly with shareholders (independent of management) and either directly or indirectly through Taptica’s brokers regularly solicits feedback from its investors.

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors – Non-executive and Executive – are also available to listen to the views of shareholders informally immediately following the AGM.

Taptica also seeks to meet the needs of shareholders on an ad hoc basis where necessary, such as with the recent publication of a detailed Q&A document to address common queries/concerns that were being raised by individual shareholders.

Taptica describes it communication practices in its annual report under ‘Relationship with Shareholders’ (page 15 of the Annual Report and Accounts 2017).

The company communicates and builds a relationship with external stakeholders via its marketing efforts, including social media, events, PR, direct marketing, online advertising and more. As noted above, Taptica Board and management have established practices for communicating with employees and for receiving their feedback.