Corporate governance

 
 

Board, directors and committees

Composition of the board
The Reunert board provides strategic leadership and direction to the company. The board duly considers diversity and the appropriate balance of executive, nonexecutive and independent directors when making appointments to the board. There is a clear division of board responsibilities and no one individual has unfettered powers of decision-making.

The board currently consists of 13 directors with nine non-executive directors. Except for Ms Orleyn, all non-executive directors are considered independent as defined in King III.

Three non-executive directors have served more than nine years on the board. Dr Johannes van der Horst has served on the board since 1993, Brian Connellan since 1999 and Sean Jagoe since 2000. The board is satisfied after a rigorous review that all three have retained independence of character and judgement.

Four non-executive directors are black, of whom two are women. There are four executive directors.

During their tenure, they have not formed associations with management, shareholders or other stakeholders that might compromise their decisions to act in the best interest of the group.

Directors bring a wide range of experience, wisdom and professional skills to the board. The directors are deemed to be individuals of calibre and credibility. An induction programme is completed by new board members and ongoing training, development and exposure to the business of the group are conducted through formal processes.

Non-executive directors are not appointed under service contracts and their remuneration does not depend on the group’s financial performance. Non-executive directors do not participate in any share incentive or option scheme of the company. The notice period for all executive directors’ service contracts is less than one year.

The board, on the recommendation of the nomination committee, appoints the chief executive. In addition the board, on the recommendation of the remuneration committee, determines the terms and conditions of the appointment and compensation.

Brief résumés for all directors appear here.

Exceptions to King III

Independence of directors
Ms Thandi Orleyn represents the group’s black economic empowerment partner Peotona, which is deemed a major shareholder of the group and she is therefore not independent. Ms Orleyn was appointed on 2 February 2010 as chairman of the remuneration committee. The board believes her non-independence will not impede her performance as chairman of this committee.

Remuneration
King III requires that the salaries of the three most highly paid employees who are not executive directors should be disclosed. Due to the diverse nature of Reunert’s operations and the highly competitive environment, fuelled by a shortage of critical skills and experience, this information is not disclosed.

Non-executive directors receive a base fee that includes attendance for a set number of meetings per year. A proposal will be tabled at the annual general meeting that additional fees will be paid for any additional meetings required. Details of non-executive directors’ fees appear in note 24 and in the notice of agm.

Roles of the chairman and chief executive
The chairman and chief executive are regarded as experienced board members. Reunert is compiling guidelines and objectives for their roles and responsibilities in writing as proposed by King III.

Audit committee
Shareholders have not had the opportunity to elect the audit and risk committee. The nomination committee presents suitable candidates to the board which elects the members. Shareholders will approve these appointments at the next annual general meeting.

The internal audit function does not go through an independent quality review as the board believes the audit and risk committee is the appropriate body to independently review this function.

Company secretary
The role and function of the company secretary is not formulated in writing since the function is the responsibility of RMS. RMS acts as the company secretary.

Information technology
Reunert does not have an overarching IT governance framework, charter and policies due to the diverse nature of the group’s IT requirements. Key IT risks are reported to the audit and risk committee. Group IT is monitored by the Reunert IT Forum which meets quarterly and is chaired by an experienced IT practitioner in the group.

Integrated reporting and disclosure
The sustainability report has not been externally assured. The board is satisfied with progress being made in internal oversight conducted by the internal audit department. The advantages of external assurance will be periodically reviewed to ensure the integrity of the sustainability report.


Declaration of interests and independence
Several non-executive directors hold directorships in other listed companies. Details of these directorships are listed as part of their résumés.

Declarations of interests are submitted by all directors at least annually to determine any conflict of interest. Any potential conflict of interest is disclosed immediately. Where necessary and appropriate, the director concerned will recuse him-/herself from discussions at board or board committee meetings when the relevant matter is tabled.

In assessing a non-executive director’s independence, the following guidelines are considered:
  • Whether the director has been employed in an executive capacity in the group in the last three years Whether the director has served on the board for longer than nine years
  • Whether the director was a representative of a major shareholder
  • Whether the proportion of that director’s shareholding in Reunert (if any) or director’s fees represent a material part of his/her wealth or income.

Roles and responsibilities
The roles of the chairman and the chief executive are separate. The chairman is elected by members of the board and confirmed annually after an assessment of the chairman’s performance.

The chairman conducts shareholder meetings and has no executive or management responsibilities. Directors are jointly accountable for decisions of the board. Directors have a legal obligation to act in the best interests of the company and the group, to act with due care in discharging their duties as directors, to declare and avoid conflict of interest with the company and group and to account to the company for any advantages gained in discharging their duties on behalf of the company.

The board of directors evaluated its own performance, processes and procedures at the beginning of the year. A self-assessment questionnaire was constructively used to improve the board and its subcommittee’s effectiveness, maximise its strengths and address weaknesses. The results of the assessments are used beneficially to identify improvements and formulate further training and development plans for individual directors.

Some of the key areas highlighted as part of the assessment were:
  • The board recognised that four of its experienced non-executive directors with extensive knowledge of Reunert’s technologies and markets will be lost to the company by February 2011. Incoming board members must possess equal knowledge and experience, taking into consideration the diversity of the board
  • A requirement to interface with operational management at board strategy meetings
  • Formalised transformation and remuneration reporting.

The Reunert board of directors, among other functions:
  • Provides strategic direction to the company
  • Retains full and effective control of the group
  • Monitors and evaluates the implementation of strategies, policies and management performance
  • Sets criteria and approves adoption of strategic business plans and annual budgets
  • Approves significant acquisitions and disposals
  • Determines the group’s purpose and values
  • Ensures the group complies with sound codes of business practice
  • Has unrestricted right of access to management, all company information, records, documents and property
  • Has an agreed procedure to take professional advice at the company’s expense
  • Ensures Reunert has appropriate risk management, internal control and compliance procedures in place
  • Approves the composition and terms of reference of board-appointed committees
  • Ensures a process exists to identify key business risk areas and key performance indicators
  • Guards the interests of minorities.

The board meets quarterly and at any additional time that may be required. Members of senior management may be invited to attend board meetings to facilitate communication between executive management and board members and have done so in the past year.

The board works to a formal agenda that covers strategy, structure, operating performance, growth initiatives, sustainability, investor relations, risk and governance and other key activities of the group.

Appointment and re-election of directors
Ms KW Mzondeki and Mr R van Rooyen joined the board on 1 November 2009. Messrs MJ Shaw and KS Fuller retired from the board at the annual general meeting on 2 February 2010 after reaching the mandatory retirement age for non-executive directors.

G Pretorius, chief executive since 1997, retired on 2 August 2010 and was succeeded by NC Wentzel, effective 1 August 2010.

Ms YZ Cuba will join the board on 1 January 2011.

The board charter is an integral part of the conditions of appointment of all directors. Procedures for appointments are formal and transparent and a matter for the board as a whole to consider.

In terms of the company’s articles of association, at least one-third of directors retire at the annual general meeting. Appointments are not for a fixed term and directors are re-elected by shareholders as required by rotation.

Non-executive directors retire after reaching the age of 70 at the next annual general meeting. Executive directors retire from the board at 63 years.

Mr NC Wentzel and Ms Cuba, having been elected to the board, are required to retire at the next annual general meeting but, being eligible, offer themselves for re-election.

Messrs BP Gallagher and SD Jagoe and Ms NDB Orleyn retire by rotation at the next annual general meeting. The nomination committee, at its meeting on 16 November 2010, recommended that they be re-elected and they have offered themselves for re-election.

Messrs BP Connellan and KJ Makwetla have reached retirement age and will retire from the board at the coming annual general meeting.

Details of remuneration, fees and other benefits earned by directors in the past two years are explained in the remuneration report and in note 24 of the financial statements.