Corporate Governance

The main board of directors of Foschini Limited

The board of directors of Foschini Limited (referred to in this report as Foschini) 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.

Foschini fully endorses the principles incorporated in the Code of Corporate Practices and Conduct outlined in the second King report (King ll), and in the listings requirements of the JSE Limited.

Foschini has, in all material respects, complied with King ll and continually strives to enhance compliance. The application of King II continues to serve as a valuable guide to the entrenchment of strong governance principles throughout the group.

A board charter to give effect to these principles has been finalised and awaits ratification and adoption.

The main board of directors of Foschini Limited

Role and composition

Foschini has a unitary board structure which, at its 31 March 2008 year-end, comprised two executive and nine non-executive directors. Eight of the non-executive directors are independent according to the King ll definition.

Subsequent to 31 March 2008, L F Bergman resigned as a director, reducing the board composition to ten directors, seven of whom are independent non-executive directors. D M Polak, who became a non-executive director on 1 January 2008, is not independent, based on the King II definition, as he has been employed in an executive capacity by the group within the past three years.

The two executive directors are the Chief Executive Officer, A D Murray, and the Financial Director, R Stein.

Detailed information on the directors and their credentials appear here.

At 31 March 2008, the board and its committees were constituted as follows:

Main Board of directors

Independent non-executive directors

E Osrin (Chairman)
D M Nurek
Prof F Abrahams
S E Abrahams
L F Bergman #
W V Cuba
N H Goodwin
M Lewis

Non-executive director

D M Polak

Executive directors

A D Murray (CEO)**
R Stein (Financial Director)

Remuneration Committee

E Osrin (Chairman); Prof F Abrahams; D M Nurek
C J Ginsburg (Consultant)

Risk Committee

D M Nurek (Chairman); E Osrin; D M Polak; R Stein; A D Murray

Audit Committee

S E Abrahams (Chairman); E Osrin; D M Nurek; N H Goodwin

Nominations Committee

E Osrin (Chairman); D M Nurek; S E Abrahams
D M Polak*, A D Murray***

Transformation Committee

E Osrin (Chairman); Prof F Abrahams; D M Polak*; R Stein;
A D Murray***; G S Naidoo (director, operating board)

The non-executive directors come from diverse backgrounds in commerce and industry. 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 Chairman and Deputy Chairman are both independent non-executive directors. The roles of the Chairman, E Osrin, 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.

An 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 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 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.

This annual evaluation is comprehensive, encompassing all aspects of the board’s responsibilities. It covers 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 differences in perception. No significant variances in this regard were noted in the past year.

Areas of strength included:

confirmation of the group’s compliance with stock exchange requirements;
the level of feedback and assurance from the audit committee; and
the board’s review and consideration of the annual budget.

Areas for improvement included:

the succession plan for board members;
regular review of the board’s limits of authority; and
ensuring that each board member is meeting board standards and expectations.

Specific attention will be given in the next year to those areas where improvement is indicated.

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 Foschini at 31 March 2008 are set out in note 14.5.

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 Foschini’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.

Succession

As is required by its charter, the nominations committee proposed the following changes to directorships during the year and subsequent to the year-end. These changes, approved by the main board, are aligned to the group�s succession planning, which is designed to ensure sustained leadership.

Main board:

D M Polak retired from the position of Chief Executive Officer with effect from 31 December 2007. His experience and expertise will be retained as he has remained on the board in the capacity of non-executive director.

A D Murray was appointed an executive director on 2 April 2007 and Chief Executive Officer on 1 January 2008. He previously held the position of retail director of all trading divisions other than the Foschini division.

S N Bowley, who was appointed as an executive director on 2 April 2007, resigned from the group with effect from 1 August 2007.

L F Bergman resigned as an independent non-executive director with effect from 14 April 2008.

Operating board:

On 31 December 2007, D M Polak retired from the operating board.

On 1 May 2008, D B Gedye was appointed to the operating board.

Directors� interests

The directors had no interest in contracts as contemplated in section 234 of the Companies Act.

Board attendance

The attendance of the directors at board meetings and board committee meetings for the year was as follows:

		Audit	Remuneration	Risk	Nominations	Transformation
	Board	Committee	Committee	Committee	Committee	Committee
Number of meetings	4	3	4	4	2	2
Directors Attendance
E Osrin	4	3	4	4	2	2
D M Nurek	4	3	4	4	2
F Abrahams	4		4			2
S E Abrahams	4	3			2
L F Bergman	3###
W V Cuba	4
N H Goodwin	4	3
M Lewis	1
D M Polak	4	2*	3*	2	1#	2#
R Stein	4	3*		4		2
A D Murray	4**	3*	1*	4	1***
S N Bowley	1**^{# #}	1*
by invitation appointed 2 April 2007 **appointed 1 January 2008 ^#retired with effect from 31 December 2007 ^##resigned with effect from 1 August 2007 ^###resigned with effect from 14 April 2008

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