CORPORATE GOVERNANCE

Board Committees

The main board of directors has delegated specific responsibilities to board committees, each with its own terms of reference that define its powers and duties. The board committees meet independently and report back to the board through their chairpersons. All committees are chaired by an independent non-executive director.

Audit committee

Members: S E Abrahams (Chairman and independent non-executive director), W V Cuba (independent non-executive director) and D M Polak (non-executive director).

The committee is governed by a formal audit committee charter that complies with the requirements of King II. This charter guides the committee in terms of its objectives, authority and responsibilities. The role of the audit committee is, inter alia:

to review the effectiveness of the group’s systems of internal control, including internal financial control and risk management, and to ensure that effective internal control systems are maintained;
to ensure that written representations on internal control are submitted to the board annually by all divisional managing directors and general managers (these being representations that provide assurance on the adequacy and effectiveness of the group’s systems of internal control);
to monitor and supervise the effective functioning and performance of the internal auditors;
to ensure that the scope of the internal audit function has no limitations imposed by management and that there is no impairment of its independence;
to evaluate the independence, effectiveness and performance of the external auditors and obtain assurance from the auditors that adequate accounting records are being maintained;
the appointment of the external auditors on an annual basis;
to ensure that the respective roles and functions of external audit and internal audit are sufficiently clarified and co-ordinated; and
to review financial statements for proper and complete disclosure of timely, reliable and consistent information and to confirm that the accounting policies used are appropriate.

The committee typically meets twice annually.
Executive directors, members of executive management, internal audit, and the external audit partners and staff attend meetings at the invitation of the committee. Independently of management, members of this committee meet separately with the external auditors.

The audit committee functions in terms of the Corporate Laws Amendment Act 24 of 2006 include:

confirming the nomination of the group’s registered auditor and being satisfied that they are independent of the company;
approving the terms of engagement and fees to be paid to the external auditors; and
determining the nature and extent of any non-audit services which the external auditors may provide to the company.

In accordance with the JSE Listings Requirements, the committee considers the appropriateness of the expertise and experience of the Financial Director of the company on an annual basis.

Remuneration committee

Members: D M Nurek (Chairman and independent non-executive director), Prof. F Abrahams (independent non-executive director) and C J Ginsburg (Consultant).

This committee is governed by a formal charter to ensure that there is a transparent procedure for developing policies on executive remuneration and determining remuneration packages of individual directors and senior executives, within agreed terms of reference and within the framework of good corporate governance. The key mandate of the committee is to compile emolument proposals in accordance with the group’s remuneration strategy, which are then considered by the board. This is designed and tailored to:

continue to attract, retain and motivate executives of the highest calibre;
enable the group to remain an employer of choice; and
ensure a blend of skills that consistently achieves predetermined business objectives and targets.

The committee’s powers regarding non-executive remuneration are limited to making recommendations to the board. It has access to independent surveys and consultants for best-practice advice and information concerning current and job-specific remuneration levels. Its responsibilities include the making of recommendations to the board on remuneration structures, performance bonuses, conditions of appointment of the Chief Executive Officer and his remuneration, executive and non-executive directors’ remuneration and fees, service contracts, restraints, the remuneration of senior executive management, employee share incentive schemes and general salary guidelines across the group.

The committee meets approximately five times a year and currently comprises two independent non-executive directors and an external consultant. The chairman of this committee attends the annual general meeting.

Risk committee

Members: D M Nurek (Chairman and independent non-executive director), D M Polak (non-executive director), A D Murray (executive director) and R Stein (executive director).

The board is responsible for risk management, while divisional and operational management are accountable to the board for this process.

The group has adopted an ongoing, systematic and documented risk management process that ensures that all material risks are identified, evaluated, effectively managed, and, where this is practical, quantified. This process is undertaken within each division as well as by the operating board. It has served to ingrain a sustainable risk awareness and culture at all levels. The assessments are aligned to the immediate, medium- and long-term strategic and business objectives within each division as well as those of the group as a whole.

All significant projects undertaken by the group are subject to formal risk assessments. Ongoing business sustainability is addressed as part of this process.

The risk committee is responsible for ensuring that:

appropriate risk and control policies are in place and are communicated throughout the group;
the process of risk management and the system of internal control are regularly reviewed for effectiveness;
there is an ongoing process of identifying, evaluating and managing the significant risks faced by the group, and that this is in place throughout the year;
a formal risk assessment is undertaken annually;
there is an adequate and effective system of internal control in place to manage the more significant risks faced by the group to an acceptable level;
there is a documented and tested process in place that will allow the group to continue its critical business processes in the event of a disaster, inter alia the destruction of a distribution centre, head office, or computer facility, that affects its activities;
a risk register is maintained and kept up to date; and
appropriate insurance cover is placed and regularly reviewed, and that all uninsured risks are reviewed and managed.

The committee meets four times a year.

Nominations committee

Members: D M Nurek (Chairman and independent non-executive director), S E Abrahams (independent non-executive director), A D Murray (executive director).

This committee is governed by a formal charter to ensure that there is a process in place to identify and assess new executive and non-executive directors fairly and thoroughly. The committee’s responsibilities include:

reviewing the board structure, size and composition;
succession planning;
reviewing the balance between non-executive and executive directors;
ensuring that the directors have the required blend of experience, skills and knowledge to guarantee the continued success of the group; and
compliance with the principles of good governance and the code of best practice.

The committee meets twice a year.

Transformation committee

Members: Prof. F Abrahams (Chairperson and independent non-executive director), D M Nurek (independent non-executive director), A D Murray (executive director) and R Stein (executive director).

The scope of authority of this committee is clearly defined in a formal charter. It has established a broad-based BEE strategy aligned to the Broad-based Black Economic Empowerment Act of 2003 and the associated codes of good practice, including a BBBEE-level contributor target with timelines. Clear guidelines have been defined for each of the seven elements of BBBEE, being equity ownership, management control, employment equity, skills development, preferential procurement, enterprise development and socio-economic development.

The committee has an ongoing responsibility to monitor and review all aspects of the group’s BBBEE strategies and to ensure the achievement of its targets. In order to attain these targets, sub-committees for each of the seven elements have been established, with meetings taking place at least quarterly.