Annual Report - AWB Limited

When assessing the independence of a director, the Board willconsider the following matters:(a) whether the director is a substantial shareholder of thecompany or is a director or officer of a substantial shareholderof the company(b) whether the director has been employed by the company inany capacity in the last three years(c) whether, within the last three years, the director has been adirector, officer or employee of a body which has providedprofessional services to the company where the fees paid tothat body by the company have exceeded $100,000 in any oneof the last three years(d) whether the director (or an immediate family member ofthe director) is a material supplier to, or customer of thecompany, or is an officer of a body that is a material supplierto or customer of the company. For the purposes of this clausea material supplier is one where the Company accounts formore that 20% of the supplier’s annual consolidated revenue.A material customer is one where the customer accounts formore than 5% of the company’s consolidated revenue in anyone year(e) whether the director (or an immediate family member of thedirector) has any material contractual relationship with thecompany or any of its subsidiaries. (A material contractualrelationship is one where the total value of the contractexceeds $1,000,000.)Failure to meet one of the above matters will not automaticallymean that the director is not independent. Instead the Board willconsider all relevant facts and circumstances when making itsdecision.The Board periodically assesses the independence of each director.Having regard to the above, the Board has determined that atthe date of this report all of its non-executive directors wereindependent.The Board has procedures in place to manage actual, potential orperceived conflicts of interests. In particular, directors are obligedto make disclosures of material personal interests in accordancewith legal requirements and Board policy in relation to particulardecisions being considered by the Board and generally. Thisincludes director interests and any business or other relationshipswhich could, or could reasonably be perceived to, materiallyinterfere with the director’s ability to act in the best interests ofthe company.Independent decision makingPeriodically the non-executive directors confer withoutmanagement present.To facilitate independent decision making, directors are entitledto any information they need or require and, subject to priorapproval by the Chairman (which is not to be unreasonablywithheld), may seek independent legal advice at the company’sexpense on any issue submitted to the Board. Any such legaladvice is then provided to all directors.Recommendation 2.2 - The chairperson should be anindependent director.AWB practiceAt the date of this statement, the Board considers that theChairman is an independent director (refer to independencestatement on page 26).Role of the ChairmanThe Chairman’s role is pivotal in the effective corporategovernance of AWB, in terms of both performance andconformance. The Chairman is responsible for ensuring thatthe Board functions effectively and provides leadership tooversee the operation of AWB.The Chairman is also responsible for ensuring that appropriateBoard procedures and structures are in place, so that relevantissues are considered by the Board properly and in a timelymanner. Outside the Board, the Chairman is responsible for publicrepresentation of AWB and for managing the relationship betweenthe Board members and between Board and management.A comprehensive document detailing the procedures to beundertaken in the role as Chairman is articulated in an annexureto AWB’s Corporate Governance Manual.Recommendation 2.3 - The roles of chairperson and chiefexecutive officer should not be exercised by the same individual.AWB practiceThe roles of the Chairman and the Chief Executive Officer are notexercised by the same individual.Recommendation 2.4 - The board should establish a nominationcommittee.AWB practiceThe Board has a Nomination Committee. In February 2007, theBoard restructured its committees and approved the establishmentof a combined Nomination & Remuneration Committee to replacethe previously separate Nomination Committee and RemunerationCommittee.The committee’s charter requires that the committee consist onlyof non-executive directors, and be composed of at least threemembers including the chair of the AWB Limited Board.Selection processThe Nomination & Remuneration Committee charter is availableon the Corporate Governance section of AWB’s website. Alsoavailable on the website is a description of the procedure for theselection and appointment of new directors to the Board, whichincludes the policy of the Nomination & Remuneration Committeefor the appointment of directors.Director competencies and commitmentThe Board, with the assistance of the Nomination & RemunerationCommittee, undertakes an annual review of the required mixof skills, experience and other qualities, including the corecompetencies and commitment which the non-executive directorsshould bring to the Board in order for AWB Limited to functioncompetently and efficiently. During the reporting period, thiswww.awb.com.au 27