THE MAIN BOARD OF DIRECTORS OF TFG

The board supports the long-term strategy of sound corporate governance, balanced economic, social and environmental performance, as well as appropriate engagement with stakeholders. The detailed responsibilities of the board are contained in its charter which is aligned with King III and which is updated annually.

ROLE

The direction and leadership of TFG is the responsibility of the directors of the main board of TFG whilst the operating board has responsibility for the day-to-day management of the group.

FUNCTION

King III imposes various specific responsibilities on the board and the directors of TFG embrace this responsibility and acknowledge that:
  • the board should act in the best interests of TFG;
  • the board is the custodian of corporate governance and undertakes to provide leadership based on an ethical foundation, as well as ensuring that ethics are managed effectively;
  • TFG is, and must be seen to be, a responsible corporate citizen;
  • strategy, risk, performance and sustainability are inseparable;
  • TFG has an effective and independent audit committee;
  • risk management and IT governance
    • The board is responsible for the governance of risk (including information technology governance) as well as for determining the levels of risk tolerance.
    • Whilst management has responsibility for the implementation of the risk management plan and for providing assurance to the board in this regard, the board will ensure that risk monitoring is a continual process and that risk assessments are performed on an ongoing basis with appropriate risk responses.
    • In addition, the board will ensure that the frameworks are such that they increase the probability of anticipating unpredictable risks and that appropriate risk disclosure is made to stakeholders;
  • compliance
    • The board should ensure compliance with applicable laws and ensure that compliance risk is addressed in the risk management process.
    • In addition each individual director undertakes to maintain a working understanding of the laws, rules, codes and standards applicable to TFG.
    • Management will be responsible for the implementation of an effective compliance function and processes;
  • internal audit
    • TFG has an effective internal audit function known as TFG Internal Audit, which follows a risk-based approach to its plan.
    • TFG Internal Audit is appropriately positioned to achieve its objectives and is overseen by the audit committee.
    • TFG Internal Audit provides a written assessment of the effectiveness of TFG’s internal controls to the audit and risk committees of the board;
  • stakeholder engagement
    • Whilst management are tasked with managing stakeholder relationships, the board gives due consideration to the effect of stakeholder perceptions on TFG’s reputation and strives to achieve a balance between the various stakeholder groupings in its decision-making process.
    • Appropriate consideration is given to the format and content of communication with stakeholders, as well as ensuring that disputes resolution is an effective process
    • Every effort is made to ensure equitable treatment of shareholders; and
  • the board should ensure the integrity of the integrated report that should include financial and sustainability performance.

LEADERSHIP

In accordance with King III and the JSE Listings Requirements, the position of chairman is undertaken by an independent non-executive director, Mr D M Nurek, whose role is separate and clearly defined from that of the chief executive officer (CEO), Mr A D Murray. There is a clear division of responsibilities between the chairman and the CEO with both providing leadership and guidance to the company’s board, encouraging deliberation on all matters requiring the board’s attention and obtaining optimum input from the other directors.

COMPOSITION

In line with the requirements of King III, the board of directors of TFG comprises a majority of non-executive directors, the majority of whom are independent. The current board structure comprises 12 directors, nine of whom are non-executive directors (of whom seven are independent) and the remaining three who are executive directors. The executive directors, being the chief executive officer, the chief financial officer and the Group Director − TFG Financial Services are all salaried employees of the group.

Five sub-committees comprising the audit, remuneration, risk, nominations and transformation committees assist the board in the discharge of its duties. The functions of these sub-committees are discussed later in this report.

The board and its committees were constituted as follows at the year-end:

MAIN BOARD OF DIRECTORS

  

REMUNERATION COMMITTEE

Prof. F Abrahams (Chairperson)
D M Nurek

Directors present by invitation:
A D Murray
 
Independent non-executive directors  
  D M Nurek (Chairman)
Prof. F Abrahams
S E Abrahams
W V Cuba
K N Dhlomo
E Oblowitz#
N V Simamane 		 
   
   
   

RISK COMMITTEE

D M Nurek (Chairman)^
E Oblowitz##
D M Polak
A D Murray
R Stein
   
   
Non-executive directors  
  M Lewis
D M Polak		  
   
Executive directors  

AUDIT COMMITTEE

S E Abrahams (Chairman)
W V Cuba
K N Dhlomo
E Oblowitz#
N V Simamane

Directors present by invitation:
D M Nurek
A D Murray
R Stein
  A D Murray (CEO)
R Stein (CFO)
P S Meiring (Group Director − TFG Financial Services)		  
   
   
   
   
   
 
   
 

NOMINATIONS COMMITTEE

D M Nurek (Chairman)
S E Abrahams
M Lewis

Directors present by invitation:
A D Murray
 
 
     
     
     
     
# appointed 1 October 2010  

TRANSFORMATION COMMITTEE

Prof. F Abrahams (Chairperson)
D M Nurek
A D Murray

Directors present by invitation:
R Stein
## appointed February 2011  
^ M r D M Nurek (the chairman of the board) is also the chairman of the risk committee which is not in line with the recommendation of King III. The nominations committee however recommended that Mr D M Nurek continues to serve as chairman as he is thought to be the most relevant and suitable candidate.  
 
 
 
   

SUB-COMMITTEE COMPOSITION

The following changes were made during the year after due consideration by the nominations committee:

Audit Committee
Mr E Oblowitz was appointed to this sub-committee simultaneously with his appointment to the board in October 2010.

Risk Committee
Mr E Oblowitz was appointed to this sub-committee during February 2011.

DIRECTORS

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 TFG. 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 into the remuneration process.

All directors exercise unfettered discretion in the fulfilment of their duties, resulting in constructive debate at meetings that continues to yield well-considered decisions. Detailed information on the directors and their credentials appear in the directorate section of this report.

DIRECTOR APPOINTMENT AND INDUCTION

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. This is in line with the requirements of King III. The nominations committee recommends re-election by the shareholders after due consideration is given to the individual directors’ attendance and performance. 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.

CHANGES TO THE BOARD DURING THE CURRENT YEAR

The appointment of Mr E Oblowitz to the board and the audit committee were both effective on 1 October 2010, whilst his appointment to the risk committee was effective from February 2011. Aside from these changes, no other changes were made in respect of the composition of the main board during the year under review.

CHANGES TO THE BOARD SUBSEqUENT TO THE YEAR-END

Subsequent to the year-end, Mr D M Polak has resigned from the risk committee and Ms K N Dhlomo has chosen not to make herself available for re-election to the audit committee.

INDEPENDENCE ASSESSMENT

All directors completed the annual independence questionnaire to establish whether they satisfy the objective independence criteria of King III. Seven of the non-executive directors are independent according to the King III definition.

Mr M Lewis is not considered independent in terms of the King III definition by virtue of the fact that he is a representative of shareholding in excess of 5%. Mr D M Polak is likewise not considered independent in terms of the King III definition by virtue
of the fact that his shareholding is material to his personal wealth.

Of the seven directors that satisfy the objective independence requirements, three directors have served a term exceeding nine years and were therefore subjected to rigorous review by the board. Following this review (during which the directors recused themselves) the board concluded that Mr D M Nurek, Mr S E Abrahams and Mr W V Cuba were nonetheless independent and
that their long association with the group had in no way impaired their independence.

BOARD MEETINGS

The board typically meets quarterly in Cape Town, and further meetings are held at short notice when necessary.

Proceedings at meetings are directed by a formal agenda. The proposed agenda is circulated prior to the meeting to allow board
members sufficient opportunity to request additional agenda items.

In addition a comprehensive board pack is distributed to all members in advance of meetings to ensure that they are properly informed and enable them to undertake meaningful discussion and effectively discharge their duties. These packs typically include:
  • Agenda
  • Previous meeting minutes
  • Copies of any resolutions passed since the last board meeting
  • Update on matters arising since the last board meeting
  • Minutes of all sub-committee meetings which have taken place since the last board meeting
  • Shareholder analysis
  • Summary of any announcements on SENS (securities exchange news service) in the intervening period
  • Governance update to assist directors in remaining abreast of relevant legislation


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 and each of the sub-committees is undertaken by means of a questionnaire sent to all board
members. The results are collated by the company secretary and passed on to the chairman who has a one-on-one interview session with each director to discuss their feedback as well as any areas of concern. The chairman provides feedback to the
full board on any actions arising from the evaluation process.

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 difference in perception.

The annual board evalution process was undertaken at the end of May 2011 and is in the process of being finalised.

Directors ’ remuneration and shareholdings

The remuneration paid to directors during the current year is disclosed in the Remuneration Report that appears elsewhere in this report.

Information relating to the direct and indirect holdings of the directors at 31 March 2011, as well as their participation in share incentive schemes (where relevant) are likewise disclosed in the Remuneration Report.

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.

DIRECTORS’ INTERESTS IN CONTRACTS

In addition to a formal annual disclosure process, directors are required to make ongoing disclosures of any interests in contracts. During the year under review the directors had no interests in contracts as contemplated in section 234 of the Companies Act No. 61 of 1973.

SUCCESSION

It is the responsibility of the nominations sub-committee to ensure adequate succession planning for all main board directors, as well as to ensure that all subcommittees are appropriately constituted and chaired. The nominations sub-committee believes that advanced planning is the key to succession and gives due consideration to succession planning on an ongoing basis.

BOARD ATTENDANCE

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

    REMUNERATION   AUDIT NOMINATIONS TRANSFORMATION
  BOARD COMMITTEE RISK COMMITTEE COMMITTEE COMMITTEE COMMITTEE
Number of meetings 4 3 4 3 1 3
Directors' attendance            
D M Nurek 4 3 4 3* 1 3
F Abrahams 4 3       3
S E Abrahams 4     3 1  
W V Cuba 4     3    
K N Dhlomo 1^     0^    
M Lewis 4       1  
E Oblowitz 1#   1## 2#    
D M Polak 1^^   1^^      
N V Simamane 4     3    
A D Murray 4 3 4 3* 1* 3
R Stein 4   4 3*   3*
P S Meiring 4          
* By invitation            
^ Granted leave of absence for medical/maternity leave reasons        
^^ Granted leave of absence for travel reasons        
# Attended all meetings following his appointment on 1 October 2010      
## Attended all meetings following his appointment in February 2011