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About the report
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This is Barloworld
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What is material to us
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Strategic performance
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Corporate governance
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Assurances
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| Currently viewing: Corporate governance summary report / Next: Remuneration report |
Corporate governance summary reportEthical leadershipThe board provides effective leadership based on a principled foundation and the group subscribes to high ethical standards. Responsible leadership characterised by responsibility, accountability, fairness and transparency has been a defining feature of the group since its establishment in 1902. The fundamental objective has always been to do business ethically while building a sustainable company that recognises the short and long-term impact of its activities on the economy, society and the environment. In its deliberations, decisions and actions, the board is sensitive to the legitimate interests and expectations of the company’s stakeholders. The business of the group is governed by a Worldwide Code of Conduct and a Code of Ethics, both 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 our values of integrity, excellence, teamwork and commitment. The Code of Ethics enjoins Barloworld directors, management and employees to obey the law, to respect others, to be fair, honest and to protect the environment. Corporate citizenshipThe board and management recognise that Barloworld is an economic entity and also a corporate citizen. As such, it has a social and moral standing in society with all the attendant responsibilities. Compliance with laws, rules, codes and standardsThe board is responsible for ensuring that the group complies with applicable laws and considers adhering to non-binding rules, codes and standards. The board recognises that the group’s operations are located in many jurisdictions which are at different levels of maturity and in which the rule of law exists in varying degrees. Corporate governanceThe 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. Regulatory complianceBarloworld is listed on the Johannesburg Stock Exchange (JSE) Limited and maintains secondary listings on the London Stock Exchange (LSE) and Namibia Stock Exchange. The board annually confirms that the company complies with the Listings Requirements of the JSE Limited. Barloworld is not registered with the Securities and Exchange Commission in the United States and has unsponsored American depository receipts. Accordingly, the Sarbanes-Oxley Act of 2002 does not apply to the company. Statutory complianceCompliance remains a core focus of the board, which is ultimately responsible for ensuring that the group identifies and complies with applicable laws. Standards of directors’ conductThe board always acts consistently in its duties of care, skill and diligence as well as its fiduciary duties. These are now partly codified in the Companies Act as standards of directors’ conduct. Conflict of interestThe 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 Companies Act 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 in accordance with the requirements of the Companies Act. Among other measures to deal with conflicts of interest, the company has a policy that addresses the acceptance of gifts which requires that gifts be officially declared and registered on the company’s gift register. Statutory powersSection 66(1) of the Companies Act provides that the business and affairs of a company must be managed by or under the direction of its board which has the authority to exercise all the powers and perform all the functions of the company, except to the extent that the Act or the company’s Memorandum of Incorporation provides otherwise. The general powers of the directors are set out in the company’s Memorandum of Incorporation. The directors have further unspecified powers and authority for matters that may be exercised and dealt with by the company, which are not expressly reserved to shareholders of the company in a general meeting. Role and function of the boardThe board functions in accordance with the requirements of King III and within the context of the Companies Act, the Listings Requirements of the JSE Limited and other applicable laws, rules and codes of governance. The board is responsible for, among other things, the governance of risk and information technology and has ensured that the company has an effective, independent audit committee and an effective risk-based internal audit function. Composition of the boardConsiderable thought is given to board balance and composition. Collectively, the board believes the current mix of knowledge, skill and experience meets the requirements to lead the company effectively. The board has fourteen directors, comprising eight non-executive directors and six executive directors. Six non-executive directors are independent and two directors are not independent. Having reached retirement age, Mr Gonzalo Rodriquez de Castro Garcia de Los Rios retired from the board on 23 January 2013. Dr Alexander Landia was appointed to the board on 1 October 2013 as an independent non-executive director. Board and committee composition Board appointment processTo ensure a rigorous and transparent procedure, any new appointment of a director is considered by the board as a whole, on the recommendation of the nomination committee. The selection process involves considering the existing balance of skills and experience, and a continual process of assessing the needs of the company. Independence of non-executive directorsThe board comprises a majority of non-executive directors. The board considered the issue of independence of directors, evaluating the rationale and meaning of the requirements of independence according to King III. An assessment, considering the salient factors and unique circumstances of each director, is performed annually for each non-executive director. Furthermore, the independence of non-executives who have served on the board for longer than nine years is assessed annually. The board is satisfied that six of the eight non-executive directors are independent. Ms Hixonia Nyasulu and Neo Dongwana are not regarded as independent. Retirement of directorsIn terms of the company’s Memorandum of Incorporation, at least one-third of the directors retire from the board at every annual general meeting. According to the Companies Act, a director appointed by the board to fill a vacant seat will serve as a director of the company on a temporary basis until the vacancy has been filled by election at the next annual general meeting. Messrs Clive Thomson, Peter Bulterman, Gordon Hamilton, Steven Pfeiffer and Ms Hixonia Nyasulu retire by rotation at the upcoming AGM. All retiring directors are eligible and, with the exception of Ms Hixonia Nyasulu, have offered themselves for re-election. Ms Nyasulu will retire from the board at the AGM. Chairman and chief executiveNo individual has unfettered powers of decision-making. Responsibility for running the board and executive responsibility for conducting the business are differentiated. Adv Dumisa Ntsebeza SC, an independent non-executive director, is chairman of the board and Mr Clive Thomson, an executive director, is chief executive. The chairman is responsible for leading the board, ensuring its effectiveness and setting its agenda. The chief executive leads the executive team in running the business and coordinates proposals approved by the executive committee for consideration by the board. Board meetings and attendanceBoard meetings are convened by formal notice incorporating a detailed agenda and relevant written proposals and reports. Information is distributed in good time before board meetings, to enable adequate preparation for thorough discussion at these meetings. A number of decisions are taken between board meetings by written resolution in accordance with the company’s Memorandum of Incorporation and these are tabled for noting at each subsequent board meeting. When directors are not able to attend in person, video and teleconferencing facilities allow them to participate fully. Where directors are unable to attend a meeting in person or via video/teleconference, they are able to make submissions in advance on matters to be discussed and these submissions are recorded at the meeting. The board and all the board committees meet as scheduled and, where necessary, special meetings are held to deal with specific aspects. Board and committee meetings attendance
* Appointed with effect from 20 March 2013. In addition to the above meetings, further special meetings were held during the year, namely 1 special board meeting, 3 special audit committee meetings, 1 special nomination committee meeting and 1 special general purposes committee meeting. Director developmentThe company secretary arranges an appropriate induction programme for new directors. This includes an explanation of their fiduciary duties and responsibilities, and arranging visits to operations where discussions with management facilitate an understanding of the company’s affairs and operations. Directors are appraised, wherever relevant, of new legislation and changing commercial risks that may affect the company. The board supports the development of directors and, where applicable, training is made available depending on each director’s requirements and the quality and relevance of training available. A formal continuing professional development policy for directors has been approved by the board. Board performance assessmentThe performance of the board as a whole and the board committees individually is appraised annually. The recent performance assessment indicated that the board and the board committees are performing their duties and responsibilities effectively and efficiently. Areas of improvement have been identified and will be addressed during the year. Remuneration of directors and senior executivesRemuneration plays a critical role in attracting, motivating and retaining high-performing and talented individuals to achieve Barloworld’s business objectives. A significant portion is linked to the achievement of strategic, operational and financial objectives. Company secretaryMs Lerato Manaka is the company secretary, duly appointed by the board in accordance with the Companies Act and the JSE Listings Requirements. Ms Manaka succeeded Mr Bethuel Ngwenya who resigned as company secretary with effect from 31 January 2013. The company secretary is not a director of the company. The board of directors annually considers and satisfies itself that the company secretary is properly qualified and experienced to carry out the duties and responsibilities of company secretary and that there is an arm’s-length relationship between itself and the company secretary. The company secretary provides the board as a whole and directors individually with guidance on discharging their responsibilities. She is also a central source of information and advice to the board and the company on matters of ethics and good corporate governance. The company secretary ensures that, in accordance with pertinent laws, the proceedings and affairs of the board and its members, the company itself and, where appropriate, the owners of securities in the company are properly administered. She also assists and ensures that the board, individual directors and board committees are evaluated annually. Board committeesThe board has seven committees. These committees play an important role in enhancing good corporate governance, improving internal controls and, thus, the performance of the company. The committees are: audit; social, ethics and transformation; risk and sustainability; remuneration; nomination; general purposes; and the executive committee. Each board committee acts according to written terms of reference, approved by the board and reviewed annually, setting out its purpose, membership requirements and duties and reporting procedures. Risk management processA written risk management philosophy issued by the chief executive and endorsed by the directors states that the company is committed to managing its risks and opportunities in the interests of all stakeholders. An ongoing systematic, enterprise-wide risk assessment process supports the group philosophy. Divisional boards and senior managers conduct ongoing self-assessment of risk to identify critical business, operational, financial and compliance exposures and the adequacy and effectiveness of control factors at all levels. The group risk department oversees strategic direction and continuous improvement in methodology and process, as well as providing technical assistance. Internal auditThe purpose, authority and responsibility of the internal audit function are defined in the internal audit charter that is consistent with the Institute of Internal Auditors’ definition of internal auditing, and the principles of King III. The charter is updated and approved by the board annually. Although not reliant on external auditors for any resource support, the internal audit function, in accordance with the organisation’s combined assurance model, continues to liaise with the external auditors and other assurance providers to maximise efficiencies in assurance coverage on key risks. Insider tradingThrough appropriate procedures, the board ensures that no director, officer, employee or nominees or members of their immediate family deal directly or indirectly in the securities of the company on the basis of unpublished price-sensitive information, nor during the embargo period determined by the board in terms of a formal policy implemented by the company secretary. A list of people who are restricted for this purpose has been approved by the board and is revised from time to time. A register of directors and officers is available for inspection at the company’s registered office in Sandton, South Africa. Relationship with stakeholdersThe company is a strong proponent of transparency, best-practice disclosure, consistent communication and equal and timely dissemination of information to stakeholders. It encourages the active participation of relevant stakeholders at general meetings and maintains an investor relations programme which, inter alia, arranges regular meetings between corporate and divisional executives, shareholders, potential investors and other relevant stakeholders.
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