Governance: 4.1 - 4.10
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4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.
Integrated Report 2014:
Corporate governance report 2014:
The board and its committees are constituted in terms of the requirements of the Companies Act and The King Report on Governance for South Africa (King III), and are governed by written terms of reference.
The board recognises it is the central point for and custodian of corporate governance. As such, the board always strives to ensure that the group aligns itself with local and international codes of good corporate governance, seeks to apply best practice and follows relevant trends of good corporate governance.
King III became effective for the group in its 2011 financial year. The board continuously reviews the extent to which Barloworld applies the principles and recommended practices.
This review identifies the governance principles already being applied and those which the company needs to address or further entrench. The review also identifies areas of improvement or ways in which our governance practices could be enhanced.
The group applies the governance principles contained in King III and continues to further entrench and strengthen recommended practices in our governance structures, systems, processes and procedures.
Membership of the board, which is the group's ultimate governance structure, is reflected in the table below. Also reflected is membership of board sub-committees.
Board and subcommittees composition
Name
Independent Non-Executive Directors |
Year Appointed |
Audit |
General Purposes |
Nomination |
Remuneration |
Risk & Sustainability |
Social,
Ethics & Transformation |
| DB Ntsebeza (Chairman) |
1999 |
|
chairman |
chairman |
member |
|
member |
| NP Dongwana |
2012 |
|
|
|
|
member |
member |
| FNO Edozien * |
2014 |
|
|
|
|
|
|
| AGK Hamilton |
2007 |
chairman |
member |
member |
member |
member |
|
| A Landia |
2013 |
|
member |
|
|
|
|
| SS Mkhabela |
2006 |
|
|
member |
|
|
chairman |
| B Ngonyama |
2012 |
member |
|
|
member |
|
|
| SS Ntsaluba |
2008 |
member |
|
|
member |
chairman |
|
| HT Nyasulu # |
|
|
member |
|
|
|
|
| SB Pfeiffer |
2001 |
|
member |
member |
chairman |
|
|
Non-Independent
Non-Executive
Directors |
|
|
|
|
|
|
|
| OI Shongwe |
2007 |
|
|
|
|
member |
member |
| Executive directors |
|
|
|
|
|
|
|
| CB Thomson (CE) |
2003 |
|
member |
|
|
member |
member |
| PJ Blackbeard |
2004 |
|
|
|
|
member |
member |
| PJ Bulterman |
2009 |
|
|
|
|
member |
|
| M Laubscher |
2005 |
|
|
|
|
member |
|
| DM Sewela * |
2014 |
|
|
|
|
|
|
| DG Wilson |
2006 |
|
|
|
|
member |
|
| # |
retired with effect from 29 January 2014 |
| * |
appointed with effect from 19 March 2014 |
Board Diversity
| Age |
|
|
Male |
Female |
White |
Other |
| <50 yrs |
50 – 60 yrs |
>60 yrs |
| 31% |
50% |
19% |
75% |
25% |
50% |
50% |
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4.2 Indicate whether the Chair of the highest governance body is also an executive officer.
Integrated Report 2014:
Corporate governance report 2014:
The chair of the highest governance body, the board of directors, is not an executive officer.
No individual has unfettered powers of decision-making. Responsibility for running the board and executive responsibility for conducting the business are differentiated. Advocate Dumisa Ntsebeza SC, an independent non-executive director, is chairman of the board and Clive Thomson, an executive director, is chief executive officer.
The roles of the chairman and chief executive are separate and clearly defined. The chairman is responsible for leadership of the board, ensuring its effectiveness on all aspects of its role and setting its agenda. The chief executive provides leadership to the executive team in running the business and co-ordinates proposals developed by the executive committee for consideration by the board.
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4.3 For organisations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.
Integrated Report 2014:
Annual General Meeting Document 2014:
Corporate governance report 2014:
Considerable thought is given to board balance and composition. Collectively the board believes that the current mix of knowledge, skill and experience meets requirements to lead the company effectively. The board has sixteen (16) directors, comprising ten (10) non-executive directors, and six (6) executive directors. There are four (4) female directors.
Ms Ngozichukwuka Edozien and Mr Dominic Sewela were appointed to the board on 19 March 2014 as an independent non-executive director and executive director respectively.
The Barloworld board has a majority of non-executive directors. The board considers nine of the ten non-executive directors to be independent. Mr Isaac Shongwe is not considered independent as he was an executive director of Barloworld Limited until 31 May 2014. Despite the determination reached, the board believes the skills, knowledge and experience of these directors remain valuable to the organisation.
Board and committee composition
Name
Independent
Non-Executive
Directors |
Year Appointed |
Audit |
General
Purposes |
Nomination |
Remuneration |
Risk
&
Sustainability |
Social,
Ethics & Transformation |
| DB Ntsebeza (Chairman) |
1999 |
|
chairman |
chairman |
member |
|
member |
| NP Dongwana |
2012 |
|
|
|
|
member |
member |
| FNO Edozien * |
2014 |
|
|
|
|
|
|
| AGK Hamilton |
2007 |
chairman |
member |
member |
member |
member |
|
| A Landia |
2013 |
|
member |
|
|
|
|
| SS Mkhabela |
2006 |
|
|
member |
|
|
chairman |
| B Ngonyama |
2012 |
member |
|
|
member |
|
|
| SS Ntsaluba |
2008 |
member |
|
|
member |
chairman |
|
| HT Nyasulu # |
|
|
member |
|
|
|
|
| SB Pfeiffer |
2001 |
|
member |
member |
chairman |
|
|
Non-Independent
Non-Executive
Directors |
|
|
|
|
|
|
|
| OI Shongwe |
2007 |
|
|
|
|
member |
member |
| Executive directors |
|
|
|
|
|
|
|
| CB Thomson (CEO) |
2003 |
|
member |
|
|
member |
member |
| PJ Blackbeard |
2004 |
|
|
|
|
member |
member |
| PJ Bulterman |
2009 |
|
|
|
|
member |
|
| M Laubscher |
2005 |
|
|
|
|
member |
|
| DM Sewela * |
2014 |
|
|
|
|
|
|
| DG Wilson |
2006 |
|
|
|
|
member |
|
| # |
retired with effect from 29 January 2014 |
| * |
appointed with effect from 19 March 2014 |
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4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.
Integrated Report 2014:
Annual General Meeting Document 2014:
Corporate governance report 2014:
The company is a strong proponent of transparency, best-practice disclosure, consistent communication and equal and timely dissemination of information to shareholders. It encourages active participation by shareholders at general meetings and maintains an investor relations programme which, inter alia, organises for corporate and divisional executives to attend regular meetings with shareholders and potential investors.
The company has regular dialogue with institutional shareholders where it believes this to be in the interests of shareholders generally. Feedback from these visits is shared with the board. The chairman routinely offers key shareholders the opportunity of meeting to discuss governance, strategy or other matters.
The interests of private shareholders remain paramount and, recognising their needs, our website contains information on a range of investor relations and material issues, including an update on activities, copies of all presentation materials given to institutional investors and further explanation of matters in the integrated report.
The Annual General Meeting is normally attended by all directors. Shareholders are encouraged to attend and to ask questions. They also have the opportunity to meet with directors after formal proceedings have ended.
The notice of annual general meeting, detailing all proposed resolutions, appears in the Barloworld Annual General Meeting document.
Barloworld complies with all legal communication requirements. The group regularly engages its shareholders and the investor community through a number of interventions, including:
| • |
Bi-annual results presentations |
| • |
Annual general meetings |
| • |
Annual reporting |
| • |
Investor conferences and presentations |
| • |
Investor site visits and 'Roadshows' |
| • |
Media releases |
| • |
Focused surveys |
Employee engagement processes provide opportunities for our people to make recommendations and influence direction and include:
| • |
Individual meetings |
| • |
Structured team forums |
| • |
Individual and team performance discussions |
| • |
Briefings |
| • |
Strategic plan briefings |
| • |
Anonymous, structured individual perception surveys |
| |
Barloworld Global Leaders Conferences at which strategic aspects are shared with the company's top leadership team, who participates formulating this strategy and related issues. These are conducted on a bi-annual basis with the next one scheduled for March 2015 at which the companies Vision 2020 and related strategic framework for 2016 to 2020 will be featured. |
| • |
Employees are able to bring governance matters to the Board's attention using the Ethics/Tip Offs Anonymous lines. |
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4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organisation's performance (including social and environmental performance).
Integrated Report 2014:
Corporate governance report 2014:
Remuneration report 2014:
The remuneration committee makes recommendations to the board on the structure and development of policy on executive and senior management remuneration, taking into account market conditions. It determines the criteria necessary to measure the performance of executive directors in discharging their functions and responsibilities. It also determines remuneration packages for the chief executive officer and executive directors of the company.
For non-executive directors, the committee makes recommendations to the board on fees to be paid to each non-executive director for services rendered as a member of the board or a board sub-committee. Once these fees have been adopted by the board, they are submitted to shareholders at the general meeting for approval prior to implementation and payment. Details of fees proposed to shareholders for approval are set out in the notice of annual general meeting.
Where appropriate, the committee consults with the chief executive or other executive or non-executive directors in fulfilling their duties under the committee's terms of reference.
Key responsibilities and role of the committee include:
| • |
Reviewing and approving the remuneration policy of the Company |
| • |
Reviewing and approving performance criteria and measurements for incentive scheme and ensuring the continued contribution to shareholder value. |
| • |
Determining any criteria necessary to measure the performance of executive directors in discharging their functions and responsibilities |
| • |
Reviewing the terms and conditions of the chief executive, and executive directors' and prescribed officer's service agreements, taking into account relevant market information and information from comparable companies where relevant, to ensure that they are fairly, but responsibly appraised and rewarded for their individual contributions towards enhancing the company's performance |
| • |
Approving specific remuneration packages for the chief executive, and executive directors and prescribed officer of the company, including but not limited to basic salary, benefits in kind, any annual bonuses, performance-based incentives, share-based incentives, pensions and other benefits |
| • |
Ensuring that the Remuneration Report is accurate, complete and transparent; provides clear explanation of how the remuneration policy has been implemented, provides sufficient forward looking information for the shareholders to pass a special resolution in terms of the Companies Act, 2008. |
Executive incentivisation includes addressing central aspects of group strategy including sustainable development objectives such as energy and emissions efficiency. Managing of this process is facilitated through an integrated performance scorecard system.
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4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided.
Integrated Report 2014:
Corporate governance report 2014:
The board recognises the importance of acting in the best interest of the company and protecting the legitimate interests and expectations of its stakeholders. The board consistently applies the provisions of the South African Companies Act and JSE Listing Requirements on disclosing or avoiding conflicts of interest. Directors are required to declare their interests in general annually, and specifically at each meeting of the board, as well as to recuse themselves when appropriate.
Among other measures to deal with conflicts of interest the company has a policy that addresses accepting gifts. This requires that gifts be officially declared and registered on the company's gift register.
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4.7 Process for determining the composition, qualifications and expertise of the members of the highest governance body for guiding the organisation's strategy on economic, environmental, and social topics, including any consideration of gender and other indicators of diversity.
Integrated Report 2014:
Corporate governance report 2014:
To ensure a rigorous and transparent procedure, any appointment of a director is considered by the board as a whole, on recommendation of the nomination committee.
The selection process involves considering the existing balance of skills and experience and continuously assessing the needs of the company. Barloworld's commitment to empowerment and transformation and the ideal that its employee and leadership profile should reflect the society in which it operates, is an essential element of this process. Non-executive directors are required to devote sufficient time to the company's affairs.
While there is no formal limit on the number of other appointments directors can hold, approval must be obtained from the chairman prior to accepting additional commitments that may affect the time that can be devoted to the company. Non-executive directors are required to advise the board of subsequent changes or additional commitments from time to time as approved by the chairman.
Executive directors are permitted to accept external non-executive board appointments limited to a single external 'for profit' board.
Independence of non-executive directors
The Barloworld board has a majority of non-executive directors. The board has evaluated the rationale and meaning of the requirements of independence of directors according to King III. An assessment of the salient factors and unique circumstances of each non-executive director is performed annually.
Furthermore, the independence of non-executives who have served on the board for longer than nine years was assessed.
The board is satisfied that nine of the ten current non-executive directors are independent.
Mr Isaac Shongwe is not considered independent as he was an executive director of Barloworld Limited until 31 May 2014. Despite the determination reached, the board believes that his skills, knowledge and experience of these directors remain valuable to the organisation.
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4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.
Integrated Report 2014:
Corporate governance report 2014:
A number of these have been developed and contextualised in an overall framework.
The commitment to building and sustaining an ethical organisational culture is entrenched in the company's vision, mission, strategies and operations. The board assumes ultimate responsibility for the company's ethical performance by delegating to executive management the task of setting up a well-designed and properly implemented ethics management process.
In May 2011 the board approved an ethics and compliance programme for the group. This is designed to further entrench and integrate the requirements of good corporate governance throughout the group. The programme addresses governance standards and includes executive commitment to responsible leadership and the Barloworld Worldwide Code of Conduct, systems infrastructure and due-diligence standards. The compliance standards provide the operational requirements for setting and maintaining policies, training, communication and reporting.
The business of the group and its relationship with stakeholders is governed by the Barloworld Worldwide Code of Conduct, a Code of Ethics and a group stakeholder policy, approved by the board.
The Worldwide Code of Conduct articulates Barloworld's commitment to doing business the right way, according to best practices, guided by the values of integrity, excellence, teamwork and commitment. The Code of Ethics enjoins Barloworld directors, management, employees and stakeholders to obey the law, respect others, be fair, honest and protect the environment. The group stakeholder policy provides a stakeholder consultation and relationship management framework and guiding principles.
These guiding principles are supported by a group anti-fraud policy and a suite of policies dealing with anti-bribery and corruption, including gifts and hospitality and due diligence of third party service providers.
In addition, other policies include a policy dealing with Sponsorship and Donations and a policy on Hosting Customer Events.
A Supplier Code of Conduct has been developed and approved and has been implemented appropriately by the divisions.
The board and management understand that the company is not only an economic entity but a corporate citizen and, as such, it has a social and moral standing in society with all the responsibilities of that status.
The board is therefore responsible for ensuring that the group protects, enhances and invests in the wellbeing of the economy, society and the natural environment and pursues its activities within the limits of social, political and environmental responsibilities outlined in various international conventions. To give effect to the group's commercial, social and moral responsibilities, a number of standards, guidelines, policies and codes of practice apply, including:
Available on www.barloworld.com
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4.9 Procedures of the highest governance body for overseeing the organisation's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.
Integrated Report 2014:
Corporate governance report 2014:
Remuneration report 2014:
There are essentially three aspects to this:
| 1. |
Oversight and approval of the group’s strategic plan |
| 2. |
Review of group performance at quarterly board meetings. This includes:
| a. |
Economic |
| b. |
Social |
| c. |
Environmental aspects. |
|
| 3. |
Review of performance based on the terms of reference of various board committees which include:
| a. |
Audit |
| b. |
Social, Ethics and Transformation |
| c. |
Risk and Sustainability |
| d. |
Remuneration |
| e. |
Nomination |
| f. |
General purposes |
| g. |
Executive |
|
The social, ethics and transformation committee's responsibilities include adherence and compliance to the Companies Act, internationally agreed standards, codes of conduct and principles, including those in the United Nations Global Compact.
The board is responsible for ensuring that the group complies with applicable laws and regulations and considers adhering to non-binding rules, codes and standards.
The board recognises that the group's operations cover many jurisdictions. These are at different levels of maturity and the rule of law exists in varying degrees with hybrid systems of governance developing in some instances.
The board strives to ensure appropriate structures, processes and procedures with appropriate checks and balances are established to assist it in discharging its legal responsibilities and overseeing legislative compliance.
Processes are also in place to ensure that the board is kept abreast of significant developments in applicable laws, rules, codes and standards. Compliance risk thus forms an integral part of the company's risk management process and the board delegates to management implementation of an effective compliance framework and associated processes.
The board and management understand the company is not only an economic entity but a corporate citizen and, as such, it has a social and moral standing in society with attendant responsibilities.
The board is therefore responsible for ensuring the group protects, enhances and invests in the wellbeing of the economy, society and natural environment and pursues its activities within the limits of the social, political and environmental responsibilities outlined in international conventions.
Identification of risks and opportunities follows a robust and systematic process. A comprehensive risk management policy is in operation throughout the group, complemented by the Barloworld Limited risk management philosophy. This includes dedicated divisional risk assessments with internal audit and group risk management services present. Risk management is incorporated into the group's strategic planning process.
In line with international best practice, risks are assessed on their probability, severity and the quality of the existing control environment. These measures result in residual risk scores that indicate the importance of the risk and evaluate assessment of progress in addressing identified risks.
Risks are detailed, comprehensively assessed and managed through acceptance, transfer, avoidance or reduction measures. Details are recorded in divisional and group risk registers.
Formal reporting to the risk and sustainability committee takes place bi-annually and to the board annually. Initiatives to address identified risks include developing and implementing business continuity and disaster recovery plans. These include information technology and communications solutions as appropriate.
While this planning is regularly reviewed at executive and board levels, internal audit plays a significant role in reviewing processes and procedures.
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4.10 Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance.
Integrated Report 2014:
Corporate governance report 2014:
Remuneration report 2014:
Annually, the performance of the chairman, chief executive and the board as a whole is appraised. The chairman and chief executive do not participate in discussions on their own performance. The chairman holds formal and informal meetings with individual directors during the year and, at the end of the year, there is a formal evaluation exercise.
After the performance evaluation of individual directors by their peers in 2014, the chairman discussed results with individual directors to obtain comment on issues raised by peers and to provide advice, guidance and offer assistance where appropriate.
The group's Annual General Meeting, full-year and interim result presentations and other ad hoc and ongoing stakeholder interventions give external stakeholders an opportunity to review the board's performance against an open set of criteria including economic, environmental and social performance.
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