corporate governance - woolworths holdings limited

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oard of directors board structure and responsibilities The group has a unitary board structure with seven independent non-executive directors and three executive directors. The board provides strategic direction and leadership and focuses on enhancement of shareholder value and the long-term sustainability of the group. The board has established a number of committees that assist it in fulfilling its stated objectives. The role of each committee and its responsibilities are set out in formal terms of reference, which are reviewed annually to ensure that they remain relevant. The chairman of each of the committees is an independent non-executive or the chairman of the board who is also classified as an independent non-executive director. board responsibilities The primary responsibilities of the board are set out in terms of a board charter, and ensure: ■ that the company has a clear strategic direction and as part of this process reviews the progress made by the executive management against pre-agreed plans and budgets; ■ that provision is made for succession at senior levels and that the group has a strong and motivated pool of talent; ■ that our people subscribe to the values, which have always been fundamental to our culture; ■ there are appropriate policies and processes to ensure the integrity of the company's risk management and internal controls; ■ compliance with all relevant laws, regulations, and accounting principles; ■ that the company acts responsibly to all our stakeholders including customers, employees, suppliers, franchisees, shareholders, government and the communities; ■ the delegation of responsibilities to its committees and the determination of the terms of reference for such committees; and ■ evaluation of its committees. There is a formal delegation of authority, which sets out the categories of business decisions, which require approval by the board and/or by one of its committees. Compliance with this delegation of authority is the responsibility of the board and is monitored by the Group secretary and the corporate governance department. chairman and chief executive officer No individual has unfettered powers of decision-making.The responsibilities of the Chairman and the Chief executive officer are clearly separate. Buddy Hawton is an independent non-executive Chairman who is responsible for providing overall leadership of the board and ensuring that the board remains efficient and focused. The Chief executive officer, Simon Susman, is responsible for formulating and recommending strategies and policies to the board, and ensuring their implementation once approved. The Chairman, in conjunction with the nominations committee, assesses the performance of the Chief executive officer. board effectiveness The board through its nominations committee regularly reviews its size, required mix of skills, experience and other qualities. The board is comprised of local and international directors, who bring a blend of knowledge, skills, objectivity and a wide range of experience and commitment. A strong contingent of independent non-executive directors ensures that independent thought is brought to bear on the board decisions. The board structure and integrity of the individual directors ensures that no one individual or group dominates the decision-making process. In the 2005 financial year the board underwent an independent formal evaluation process, the results of which have been incorporated into procedures adopted by the board. The next evaluation is scheduled for the 2007 financial year. board structure unitary board Chairman: Buddy Hawton independent non-executive Six independent non-executive directors Three executive directors Risk committee Chairman: Mike Leeming and Members: two independent non-executive directors, three executive directors Audit committee Chairman: Mike Leeming and Members: two independent non-executive directors Remuneration committee Chairman: Buddy Hawton and Members: three independent non-executive directors Nominations committee Chairman: Buddy Hawton and Members: three independent non-executive directors Transformation committee Chairman: Chris Nissen and Members: three independent non-executive directors, one executive director 19
directors An induction programme has been designed and is adjusted to meet the specific requirements of all new directors. The directors are provided with all the necessary documentation to familiarise them with issues affecting the board. In addition, they participate in an attachment programme with all the relevant executives, and undertake site visits to stores, suppliers and distribution centres to assist their understanding of the broad dynamics of the business. The Group secretary manages the formal induction programme. The board recognises that understanding the business is an ongoing process and as such, the Chairman of the board and the Group secretary ensure an appropriate quarterly programme is in place to update non-executive directors on key new business issues, initiatives and an update on operations and performance. In compliance with the second King Report an independent director must not be a representative of a shareholder with the ability to control or materially influence management and/or the board; not have been employed by the company in an executive role in the last three years; not have been an advisor to the company other than in the capacity as a director of the company; not be a material supplier, customer or have a material contractual relationship with the company; and be free of any relationship that could be seen to materially interfere with the independence of that person. All seven of the independent directors comply with these requirements. To uphold their independence and integrity, directors disclose all material interests on a regular basis and advise of any changes that may give rise to a potential conflict of interest and do not participate in any discussions and decisions on matters in which they may have a conflict of interest. The non-executive directors have unrestricted access to all company information, records, documents and property. Non-executive directors have access to management and may meet separately with management without the attendance of executive directors. Each quarter the non-executive directors meet together in a forum that does not include the executive directors or senior executives. The directors may at the expense of the company seek professional advice on matters concerning the affairs of the group. A policy has been formulated which contains guidelines on this matter. In accordance with the articles of association of the holding company, a third of the directors, are subject to retirement by rotation and reelection by shareholders each year. Directors who have held office for three years since their appointment or last election, are required to retire by rotation. The curriculum vitae of the directors standing for re-election are contained in the notice of the annual general meeting. board meetings The board meets at least four times a year. Additional meetings are held whenever deemed necessary. Further meetings were held in November, February and May and were devoted to strategic planning. In addition, regular teleconference meetings were held. Board meetings are scheduled well in advance and management ensures that board members are provided with all the relevant information and facts to enable the board to reach objective and well informed decisions. Board documentation is provided timeously to directors. The details of individual attendance at board and committee meetings are set out on page 31. group secretary The board is cognisant of the duties of the Group secretary and has created an environment in which the Group secretary is properly supported to fulfill those duties. The Group secretary plays a significant role in the following: ■ induction of new directors; ■ tabling to the board, relevant information on regulatory and legislative changes; ■ guidance to directors individually and collectively on their duties and responsibilities to the company; ■ providing guidance and advice to the board on matters of ethics and good governance; and ■ providing the communication link with investors, shareholders and with the company’s share registrars. The Group secretary acts as secretary for the committees of the board. The directors have unlimited access to the advice and services of the Group secretary. board committees During the 2005 financial year members of the risk, audit, nominations and remuneration committees evaluated their effectiveness through a self-assessment process conducted by means of a questionnaire. The committees’ composition and structure, procedures, terms of reference, effectiveness and leadership were analysed. The results of the analysis were used to further improve the effectiveness of the committees’ functioning. Committee evaluations have been planned for the 2007 financial year. The Chief executive officer attends all the committee meetings of which he is not a member by invitation. This demonstrates the commitment to corporate governance within the group. The committees have unreserved access to company information, any resources required to fulfill their responsibilities and are able to obtain professional advice, at the expense of the group, where necessary. 20
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corporate governance - woolworths holdings limited

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