CORPORATE GOVERNANCE

The board

The board of directors remains fully committed to business integrity, fairness, transparency and accountability in all its activities. In support of this commitment, the board subscribes to the highest standards of corporate governance in all aspects of the business and to the ongoing development and implementation of best practices.

The Foschini Group (TFG) fully endorses the principles incorporated in the code of corporate practices and conduct outlined in the third King report (King llI), and in the Listings Requirements of the JSE Limited, and has complied with King lIl.

Role and composition

TFG has a unitary board structure comprising three executive and nine non-executive directors. Seven of the non-executive directors are independent according to the King llI definition.

The non-executive directors come from diverse backgrounds in commerce and industry, and their collective experience enables them to provide sound, independent and objective judgement in decision-making that is in the best interests of the Group. They are ultimately responsible for the performance of the Group, its long-term sustainable growth, and the enhancement of shareholder value. They review and ratify the Group’s strategy in addition to monitoring and measuring its performance and executive management against key performance indicators. They provide opinion and advice regarding the Group’s financial, audit, governance and risk management controls. In order to ensure sustainable leadership they review Group transformation and succession planning at senior levels, and provide input to the remuneration process.

The roles of the Chairman, D M Nurek, and the Chief Executive Officer, A D Murray, are separate, with a clear division of responsibilities. Both provide leadership and guidance to the company’s board, encourage deliberation on all matters requiring the board’s attention, and obtain optimum input from the other directors. All directors exercise unfettered discretion in the fulfilment of their duties, resulting in constructive debate at meetings that continues to yield well-considered decisions.

Newly appointed non-executive directors hold office only until the next annual general meeting, at which time they retire and become eligible for re-election as directors. Each year, one-third of the existing board members are subject to retirement by rotation and are eligible for re-election as directors by the shareholders. Non-executive directors have no fixed term of employment, and the performance of all directors is subject to annual peer review.

A formal induction programme for new directors is in place with the objective of maximising their understanding of the Group and enabling them immediately to provide input and make well-informed decisions.

Board meetings

The board typically meets quarterly in Cape Town, and further meetings are held at short notice when necessary. The board and its committees are timeously supplied with comprehensive information to enable them to undertake meaningful discussion and effectively discharge their duties. All directors have unrestricted access to the Company Secretary and all company records, as well as to independent professional advice at the company’s expense in appropriate circumstances. Board attendance for the year ended 31 March 2011 can be viewed here

Board evaluations

An annual evaluation of the board is undertaken by the Chairman by means of a questionnaire sent to all board members. The results are collated by the Chairman and feedback is provided to the full board. These are minuted and available for scrutiny by the external auditors.

This evaluation is comprehensive, encompassing all aspects of the board’s responsibilities, covering both individual member contributions and the effectiveness of the board as a whole. The results of the executive and non-executive directors are separately tabulated, in order to gauge any areas of difference in perception.

The nominations committee is responsible for assessing the composition and effectiveness of all of the board committees. Where shortfalls are identified, appropriate action is taken to rectify them.

Directors' shareholdings

The direct and indirect holdings, share options, and transactions of the directors of TFG are disclosed in the Remuneration Report. The 2011 Remuneration Report may be viewed here. Non-executive directors do not participate in the share incentive schemes, with the exception of Mr D M Polak who obtained options whilst still an executive of the company.

Personal share dealings

The board complies with the requirements of the JSE Limited in relation to restrictions on the trading of TFG's shares by directors and employees during the defined closed periods. Restrictions may also be placed on share dealings at other times if the Group is involved in corporate activity or sensitive negotiations. The Company Secretary notifies all directors and employees prior to the commencement of the closed trading periods of the prohibitions contained in the Insider Trading Act relating to share dealings whilst in possession of price-sensitive information.

Details of directors’ share dealings are disclosed to the listings division of the JSE Limited and communicated through its electronic news service, SENS. These dealings are also disclosed at board meetings. There is a process in place in terms of the requirements of the JSE Limited for directors to obtain prior clearance before dealing in the company’s shares. All transactions are conducted at the ruling market price on the JSE Limited.