Diageo : Governance report 2022

Board of Directors

Leadership and experience

N

Javier Ferrán

Chairman

Nationality: Spanish

Appointed: Chairman and Chairman of the Nomination Committee: January 2017 (Appointed Chairman Designate and Non-Executive Director: July 2016)

Key strengths: Brings extensive board-level experience from the drinks and consumer products industry, including at chief executive level, and has a wealth of experience in consumer goods through his venture capital activities to draw from in his role as Chairman and leader of the Board

Current external appointments: Chairman, International Consolidated Airlines Group, S.A.; Senior Advisor and chairman of investee company board, BlackRock Long Term Private Capital

Previous relevant experience: Non-ExecutiveDirector and Senior Independent Director, Associated British Foods plc; Non-ExecutiveDirector, Coca-ColaEuropean Partners plc; Member, Advisory Board of ESADE Business School; President and CEO, Bacardi Limited; Non-ExecutiveDirector, SABMiller plc

E

Ivan Menezes

Chief Executive

Nationality: American/British

Appointed: Chief Executive:

July 2013 (Appointed Executive

Director: July 2012)

Key strengths: Has extensive experience of over 20 years with the Diageo group at operational and leadership levels and within the consumer products industry, which brings valuable insight to lead the group and implement the strategy

Current external appointments: Chairman of the Council, Scotch Whisky Association; Non- Executive Director, Tapestry Inc.; Member of the Global Advisory Board, Kellogg School of Management, Northwestern University; Trustee, Movement to Work; Member, International Alliance for Responsible Drinking, CEO Group

Previous Diageo roles: Chief Operating Officer; President, North America; Chairman, Diageo Asia Pacific; Chairman, Diageo Latin America and Caribbean; senior management positions, Guinness and then Diageo

Previous relevant experience: Marketing and strategy roles, Nestlé, Booz Allen Hamilton Inc. and Whirlpool

E

Lavanya Chandrashekar

Chief Financial Officer

Nationality: American

Appointed: Chief Financial Officer and Executive Director: July 2021

Key strengths: Brings broad financial expertise, commercial skills and strong consumer goods experience to manage the group's affairs relating to financial controls, accounting, tax, treasury and investor relations

Previous Diageo roles: Chief Financial Officer, Diageo North America and Global Head of Investor Relations

Previous relevant experience: Vice President Finance, Global Cost Leadership and Supply Chain, Mondelēz International; VP Finance, North America, Mondelēz International, VP Finance, Eastern Europe, Middle East and Africa, Mondelēz International; various senior finance roles at Procter & Gamble

A N R

Susan Kilsby

Senior Independent Director

Nationality: American/British

Appointed: Senior Independent

Director: October 2019 (Appointed Non-Executive Director: April 2018 and Chairman of the Remuneration Committee: January 2019)

Key strengths: Brings wide- ranging corporate governance and board level experience across a number of industries, including a consumer goods sector focus, with particular expertise in mergers and acquisitions, corporate finance and transaction advisory work

Current external appointments: Non-ExecutiveChair,

Fortune Brands Home & Security, Inc.; Non-Executive Director, Unilever PLC, NHS England; Member, the Takeover Panel

Previous relevant experience: Senior Independent Director and Chair of Remuneration Committee, BHP Group Plc, BHP Group Limited; Senior Independent Director, BBA Aviation plc; Chairman, Shire plc; Chairman, Mergers and Acquisitions EMEA, Credit Suisse; Senior Advisor, Credit Suisse; Non-ExecutiveDirector, Goldman Sachs International, Keurig Green Mountain, L'Occitane International, Coca-ColaHBC

A N R

Melissa Bethell

Non-Executive Director

Nationality: American/British

Appointed: Non-Executive

Director: June 2020

Key strengths: Has extensive international corporate and financial experience, including in relation to private equity, financial sectors, strategic consultancy and advisory services, as well as having strong non-executiveexperience at board and committee levels across a range of industries, including retail, consumer goods and financial services

Current external appointments: Managing Partner, Atairos Europe; Non-ExecutiveDirector, Tesco PLC, Exor N.V.; Trustee, Sadlers Wells

Previous relevant experience: Managing Director and Senior Advisor, Private Equity, Bain Capital; Non-ExecutiveDirector, Atento S.A., Worldpay plc, Samsonite S.A.

A N R

Karen Blackett

Non-Executive Director

Nationality: British

Appointed: Non-Executive

Director: June 2022

Key strengths: Brings expertise in marketing, media and the creative industries, as well as broad experience in public policy and strategic initiatives through a number of different government, industry and public bodies

84 Diageo Annual Report 2022

Current external appointments: UK Country Manager, WPP plc; Chief Executive Officer, GroupM UK; Chancellor, University of Portsmouth; Founding Trustee, Black Equity Organisation; Non-ExecutiveDirector, Creative UK; Non-ExecutiveDirector, The MOBO Trust

Previous relevant experience: UK Race Equality Business Champion, HM Government; Business Ambassador, Department for International Trade, HM Government; Chairwoman, MediaCom UK & Ireland, Chief Executive Officer, MediaCom UK; Chief Operations Officer, MediaCom EMEA; Marketing Director, MediaCom

A N R

Valérie Chapoulaud-Floquet

Non-Executive Director

Nationality: French

Appointed: Non-Executive

Director: January 2021

Key strengths: Brings strong experience and expertise in the luxury consumer goods sector, having spent her career in the industry working in a number of international markets, including developed and emerging markets, and as a former CEO in the premium drinks industry

Current external appointments:

Non-Executive Director, Danone S.A., Nextstage S.C.A., Jacobs Holding AG; Vice Chairman, Sofisport

Previous relevant experience: Chief Executive Officer, Rémy Cointreau S.A.; President and CEO for the Americas, Louis Vuitton, LVMH Group; President and CEO for North America, Louis Vuitton, LVMH Group; President South Europe, Louis Vuitton, LVMH Group; President and CEO, Louis Vuitton Taiwan, LVMH Group; President, Luxury Product Division for the USA, L'Oréal Group

A N R

Sir John Manzoni

Non-Executive Director

Nationality: British

Appointed: Non-Executive

Director: October 2020

Key strengths: Has strong commercial executive experience as a former CEO in the energy sector and non-executiveboard level experience, including in the alcoholic beverage industry, as well as more recent expertise in public policy and government affairs

Current external appointments: Chairman, SSE plc; Chairman, Atomic Weapons Establishment; Non-ExecutiveDirector, KBR Inc.

Previous relevant experience:

Chief Executive of the Civil

Service and Permanent

Secretary of the Cabinet Office,

HM Government; President and

Chief Executive Officer, Talisman

Energy; Chief Executive, Refining

• Marketing, BP p.l.c.; Chief Executive, Gas & Power, BP p.l.c.; Non-Executive Director, SABMiller plc

A N R

Lady Mendelsohn

Non-Executive Director

Nationality: British

Appointed: Non-Executive

Director: September 2014

Key strengths: Has specialist knowledge and understanding of consumer-facingemerging technologies, privacy and data issues, as well as wide experience of board and committee level appointments across diverse commercial, governmental and charitable

institutions, as well as advisory roles in advertising and production of consumer goods

Current external appointments: Head of the Global Business Group, Meta Platforms Inc.; Co-President,Norwood; Member, Mayor's Business Advisory Board; Chair, Follicular Lymphoma Foundation

Previous relevant experience: Executive Chairman, Karmarama; Deputy Chairman, Grey London; Board Director, BBH, Fragrance Foundation; President, Institute of Practitioners in Advertising; Director, Women's Prize for Fiction; Co-Chair,Creative Industries Council; Member, HMG Industrial Strategy Council; Board Member, CEW; Trustee, White Ribbon Alliance; Chair, Corporate Board, Women's Aid

A N R

Alan Stewart

Non-Executive Director

Nationality: British

Appointed: Non-Executive

Director: September 2014 (Appointed Chairman of the Audit Committee: January 2017)

Key strengths: Has a strong background in financial, investment banking and commercial matters, with particular expertise in consumer retail industries, as well as board and committee level experience at industry institutions

Current external appointments: Non-ExecutiveDirector, Reckitt Benckiser Group PLC

Previous relevant experience: Chief Financial Officer, Tesco PLC; Non-ExecutiveDirector, Tesco Bank; Chief Financial Officer, Marks & Spencer Group plc, AWAS; Non-ExecutiveDirector, Games Workshop plc; Group Finance Director, WH Smith PLC; Chief Executive, Thomas Cook UK

A N R

Ireena Vittal

Non-Executive Director

Nationality: Indian

Appointed: Non-Executive

Director: October 2020

Key strengths: Brings a wealth of FMCG experience from a career in executive consulting with a focus on consumer sectors and emerging markets, including India, as well as broad experience in non-executive board roles in the UK and India

Current external appointments: Non-ExecutiveDirector, Compass Group PLC, Housing Development Finance Corporation Limited; Non- Executive and Lead Independent Director, Godrej Consumer Products Limited, Wipro Limited

Previous relevant experience: Head of Marketing and Sales, Hutchinson Max Telecom; Partner, McKinsey and Company; Non-ExecutiveDirector, Titan Company Limited, Tata Global Beverages Limited, Tata Industries, GlaxoSmithKline Consumer Healthcare

Board committees

1. Audit Committee

1. Executive Committee
   N Nomination Committee
   R Remuneration Committee

Chairman of the committee

GOVERNANCE

Diageo Annual Report 2022

85

Executive Committee

Expertise and diversity

1		2		3		4		5		6

7	8	9	10	11	Ivan Menezes and
					Lavanya Chandrashekar
					are also members of the
					Executive Committee.

Their biographies can be found on page 84.

1 Ewan Andrew, President, Global Supply Chain & Procurement and Chief Sustainability Officer

Nationality: British | Appointed: September 2019

Previous Diageo roles: Supply Director, International Supply Centre; Senior Vice President, Supply Chain & Procurement, Latin America & Caribbean; Senior Vice President Manufacturing & Distilling, North America; various supply chain, operational management and procurement roles

Current external appointments: Member, Scotch Whisky Association Council, Scottish Business Climate Collaboration Board, One Planet Business for Biodiversity Board

2 Alvaro Cardenas, President, Latin America and Caribbean Nationality: Colombian | Appointed: January 2021

Previous Diageo roles: Managing Director, Andean Region; Director, End-to-End Global Commercial Processes; Finance Director, South East Asia Region, PUB (Paraguay, Uruguay and Brazil) Region, Andean Region, Colombia

3 Debra Crew, President, North America & Global Supply Nationality: American | Appointed: July 2020

Previous Diageo roles: Non-Executive Director, Diageo plc

Current external appointments: Non-ExecutiveDirector, Stanley Black & Decker, Inc.

Previous relevant experience: Non-Executive Director, Newell Brands, Mondelēz International Inc.; President and CEO, Reynolds American, Inc; President, PepsiCo North America Nutrition, PepsiCo Americas Beverages, Western Europe Region; various positions with Kraft Foods, Nestlé, S.A., and Mars

4 Cristina Diezhandino, Chief Marketing Officer Nationality: Spanish | Appointed: July 2020

Previous Diageo roles: Global Category Director, Scotch & Managing Director, Reserve Brands; Managing Director, Caribbean and Central America; Marketing & Innovation Director, Diageo Africa; Category Director, Scotch Portfolio & Gins; Global Brand Director, Johnnie Walker

Previous relevant experience: Corporate Marketing Director, Allied Domecq Spain; marketing roles, Unilever HPC US, UK and Spain

5 John Kennedy, President, Europe and India Nationality: American | Appointed: July 2016

Previous Diageo roles: President, Europe and Western Europe; Chief Operating Officer, Western Europe; Marketing Director, Australia; General Manager for Innovation, North America; President and Chief Executive Officer, Diageo Canada; Managing Director, Diageo Ireland

Previous relevant experience: Brand management roles, GlaxoSmithKline and Quaker Oats

86 Diageo Annual Report 2022

6 Daniel Mobley, Global Corporate Relations Director Nationality: British | Appointed: June 2017

Previous Diageo roles: Corporate Relations Director, Europe

Previous relevant experience: Regional Head of Corporate Affairs, India & South Asia, Regional Head of Corporate Affairs, Africa, Group Head of Government Relations, Standard Chartered; extensive government experience including in HM Treasury and Foreign & Commonwealth Office

7 Hina Nagarajan, Managing Director and CEO of United Spirits Limited

Nationality: Indian | Appointed: July 2021

Previous Diageo roles: CEO-Designate, United Spirits Limited; Managing Director, Africa Regional Markets

Previous relevant experience: Managing Director, China & SVP North Asia, Reckitt Benckiser; General Manager, Malaysia & Singapore, Reckitt Benckiser; CEO & MD Mary Kay India; senior marketing and general management roles, ICI Paints India and Nestlé India

8 Dayalan Nayager, President, Africa

Nationality: South African/British | Appointed: July 2022

Previous Diageo roles: Managing Director, Great Britain and Justerini & Brooks, Ireland and France, Global Travel; Regional Director, Global Travel Europe; Commerical Director, South Africa; Customer Marketing Director, South Africa; Key Account Director, South Africa

Previous relevant experience: Various positions, Heinz, Mars and Pick n Pay Retailers

9 John O'Keeffe, President, Asia Pacific & Global Travel Nationality: Irish | Appointed: July 2015

Previous Diageo roles: President, Africa & Beer; CEO and Managing Director, Guinness Nigeria; Global Head, Innovation; Global Head, Beer and Baileys; Managing Director, Russia and Eastern Europe; various management and marketing positions

10 Louise Prashad, Chief HR Officer Nationality: British | Appointed: January 2022

Previous Diageo roles: Global Talent Director; Talent Director, Africa; HR Director, Europe, West Latin America and Caribbean,

Global Functions

Previous relevant experience: various HR roles, Diageo, Stakis Group and Hilton Hotels

11 Tom Shropshire, General Counsel & Company Secretary Nationality: American/British | Appointed: July 2021

Current external appointments: Member of the Steering Committee, The Parker Review; Trustee, Charity Projects Limited (Comic Relief); Director, Comic Relief Limited

Previous relevant experience: Partner & Global US Practice Head, Linklaters LLP

etter from the Chairman of the oard of Directors

Effective governance

na	ing g o	h
	Dear Shareholder
	I am delighted to resent on
	ehalf of the	oard our
	cor	orate governance re	ort for
	the year ended 0 une	0
	hich summarises the role of the
	oard in	roviding effective
	leadershi	in	romoting the long
	term sustaina	le success of
	Diageo

The Board is very conscious of the role that it plays in ensuring that Diageo operates in a manner which is consistent with the highest standards of corporate governance - doing business the right way, from grain to glass. A core element of this is the work that the Board has done over the year to ensure that Diageo contributes to wider society through sustainable, long-term practices as well as through our 2030 targets. This has included reviewing and adapting internal governance processes to ensure that ESG considerations are fully embedded within Diageo's decision-making, and that our planning and decisions can be fully informed by the environmental and societal implications of those decisions. This is of particular importance at a time when we are continuing to invest, for long-term growth, in our brands and portfolio.

Effective leadership is also dependent on a healthy, empowered and positive business culture. Diageo has a strong and long-established purpose, culture and set of values which collectively anchor our priorities and actions even in recent challenging years. The importance of culture has been particularly acute this year as our workforce adapts to new ways of working and is supported to accelerate growth of our business. Further details on how the Board has monitored and assessed culture can be found on pages 9 to 97. The Board has expanded its workforce engagement programme through all Directors directly participating in sessions with a broad cross-section of Diageo's workforce as well as through additional surveys and feedback received on the behavioural change and optimal culture re uired to achieve Diageo's ambition. Insights from this engagement programme have been used to inform the steps taken by the Board to simplify ways of working and to improve efficiency of systems and processes, with the goal of empowering our people through enabling more agility and speed in execution. More details of how we have engaged with and listened to our people are set out in our workforce engagement statement on page 9 .

Diageo is performing strongly despite the challenges of the pandemic over the last few years, continued instability in the global environment and economic uncertainty, and current inflationary pressures on supply chains. Performance is dependent on the Board providing effective leadership and setting Diageo's strategic priorities, enabling swift execution by management underpinned by a transparent and values- based culture. We will continue to refine and develop our governance processes, to ensure robustness and efficiency, at Board level and throughout the company, in a way which enables the creation of sustainable long-term value for our shareholders and other stakeholders.

Javier Ferrán (Chairman)

Com liance ith the	Cor orate
overnance Code

During the year ended 30 June 2022, Diageo has applied the Principles and complied with the Provisions of the Corporate Governance Code 20 (the Code), with the exception of Provision 3 in respect of company pension contributions for incumbent Executive Directors, details of which are set out on page 3. Below are some examples of Diageo's compliance with certain areas of the Code, together with cross-references to other sections of this Annual Report where further information can be found.

• Whistle-blowingmechanisms (Provision ): Speak p is a confidential global service which can be used by the workforce or any third parties to raise concerns about anything relating to Diageo, including potential breaches of Diageo's Code of Business Conduct, policies, standards or the law, or anything which might cause risk of harm to others or the environment. Speak p, which is administered by an independent service provider, can be accessed either online or by telephone and can, in countries where legally permitted, be used anonymously and reports kept confidential. Allegations are investigated by independent Diageo teams and progress on investigations monitored by the Business Integrity team. Where allegations are substantiated, appropriate disciplinary and corrective actions are taken. The Audit Committee receives and reviews regular reports on allegations, including trends information and investigation closure rates. Since all of Diageo's non-executive directors attend the Audit Committee, all non-executive directors who make up the

Board routinely review the findings of the company's whistle- blowing processes in accordance with Provision of the Code. Further information is set out on page 02.

• Independence (Provisions 9, 0, and 2): The Chairman was considered independent on his appointment, as assessed against the criteria set out in Provision 0 of the Code. The roles of chairman and chief executive are not exercised by the same person. ver half of the Directors are independent non-executives and none have served for longer than nine years. Susan ilsby is our Senior Independent Director and meets with other non-executive directors, without the Chairman attending, twice yearly to appraise the performance of the Chairman. Further information about the structure of the Board is set out on pages -90.

• Board effectiveness evaluation (Provisions 2 and 22): A formal rigorous assessment and evaluation of the performance of the Board, its Committees, its processes and procedures, and of individual directors including the Chairman is undertaken each year. During this year, the evaluation was carried out through an internal process overseen by the Nomination Committee and facilitated by Diageo's company secretarial team. Further details about this internal Board evaluation exercise, its methodology, recommendations and actions are set out on page 95.

Diageo Annual Report 2022

87

GOVERNANCE

Cor orate governance re ort

Ena ling our am i ion

Cor orate governance structure and division of res onsi ilities

Non E ecutive Directors

elissa ethell Val rie

Cha oulaud Flo uet Sir ohn an oni ady endelsohn Alan

Ste art Ireena Vittal and aren lac ett

The Non-Executive Directors, all of whom the Board has determined are independent, experienced and influential individuals from a diverse range of industries, backgrounds and

countries.

• Constructively challenge the Executive Directors
• Develop proposals on strategy
• Scrutinise the performance of management
• Satisfy themselves on the integrity of the financial information, controls and systems of risk management
• Set the levels of remuneration for Executive Directors and senior management
• Make recommendations to the Board concerning appointments to the Board
• Devote such time as is necessary to the proper performance of their duties

A summary of the terms and conditions of

• ointment of the Non E ecutive Directors is

availa le at htt s	diageo com en
our usiness cor	orate governance

Nomination

Committee

Audit	Remuneration
Committee	Committee

a

ht n

ig

d

ri

rs

e

g

v

o

r

o

o

t

u

n

s

e

c

d

a

n

l

e

h

p

e

Board of Directors

l

e

g

d

e

n

n

I

Chief Executive has

delegated authority to

these Committees

L		ip
e
	adersh
Executive		Filings
	Assurance
Committee
	Committee
Finance		Audit & Risk
Committee		Committee
		Business unit risk
		management

Senior Inde endent Director

Susan ils y

• Acts as a sounding board for the Chairman and serves as an intermediary for the other Directors where necessary
• Together with the other Non- Executive Directors, leads the review of the performance of the Chairman, taking into account the views of the Executive Directors
• Available to shareholders if they have concerns where contact through the normal channels has failed

Com any Secretary

Tom Shro shire

• The Board is supported by the Company Secretary who ensures information is made available to Board members in a timely fashion
• Supports the Chairman in setting Board agendas, designing and delivering Board inductions and Board evaluations, and co-ordinatespost-evaluation action plans, including risk review and training re uirements for the Board
• Advises on corporate governance matters
• Is a member of the Executive Committee as General Counsel

Chief E ecutive

Ivan ene es

• Develops the group's strategic direction for consideration and approval by the Board
• Implements the strategy agreed by the Board
• Leads the Executive Committee
• Manages the company and the group

• Along with the Chief Financial fficer, leads discussions with investors

• Is supported in his role by the Executive Committee
• Is supported by the Finance Committee and Filings Assurance Committee in the management of financial reporting of the company

Chairman

avier Ferr n

• Responsible for the operation, leadership and governance of the Board
• Ensures all Directors are fully informed of matters and receives precise, timely and clear information sufficient to make informed judgements
• Sets Board agendas and ensures sufficient time is allocated to ensure effective debate to support sound decision making
• Ensures the effectiveness of the Board
• Engages in discussions with shareholders
• Meets with the Non-Executive Directors independently of the Executive Directors
• Acts as designated Non-Executive Director for workforce engagement

Chief Financial Officer

avanya Chandrashe ar

• Manages all aspects of the group's financial affairs
• Responsible for the management of the capital structure of the company
• Contributes to the management of the group's operations
• Along with the Chief Executive, leads discussions with investors
• Is supported by the Finance Committee and Filings Assurance Committee in the management of the financial affairs and reporting of the company
• Is a member of the Executive Committee

88 Diageo Annual Report 2022