Annual Report - SABMiller

SABMiller plc Annual Report 2010 Corporate governance 555. The board’s committees and theexecutive committee5.1 The executive committeeThe board delegates responsibility for determining and implementingthe group’s strategy and for managing the group to the Chief Executive,Mr Mackay, who is supported by the executive committee (excom),which he chairs. Excom members are appointed by Mr Mackay. Theother members of excom are the Chief Financial Officer, Mr Wyman;the divisional managing directors responsible for managing the group’sregional hubs (Africa, Asia, Europe and Latin America); the ManagingDirector of The South African Breweries Limited; the directors of keygroup functions (corporate affairs; marketing; and supply chain andhuman resources); and the General Counsel and Group CompanySecretary. Excom’s purpose is to support the Chief Executive in carryingout the duties delegated to him by the board and, in that context, excomco-ordinates brand and operational execution, delivers strategic plans,budgets and financial reports for the board’s consideration and, throughthe Chief Executive, reports on these matters to the board.Excom also ensures that effective internal controls are in place andfunctioning, and that there is an effective risk management processin operation throughout the group.5.2 The disclosure committeeThe disclosure committee consists of the Chairman, the ChiefExecutive, the Chief Financial Officer, the Senior Independent Directorand the Company Secretary or the Deputy Company Secretary. Thefunction of the disclosure committee, in accordance with the group’sinside information policy, is to assure compliance with the Disclosureand Transparency Rules and the Listing Rules, and to ensure that theroutes of communication between excom members, the disclosurecommittee, the General Counsel’s office, the company secretarial officeand investor relations are clear, and provide for rapid escalation to thedisclosure committee and key advisers of any decision regarding potentialinside information, so that the company is able to comply fully with itscontinuing obligations under the Disclosure and Transparency Rulesand the Listing Rules.5.3 The audit committeeDuring the year under review, the audit committee was chaired byMr Manser, who has been chairman of the committee since May 2002.Mr Manser qualified as a chartered accountant in 1964 and was madea Fellow of the Institute of Chartered Accountants in 1976. Furtherbiographical information concerning Mr Manser is set out on page 45.Lord Fellowes (who will step down from the committee upon hisretirement in July 2010), Mr Morland, Mr Devitre and Ms Doherty servedon the committee throughout the year. Mr Morland has been a memberof the committee from its first meeting on 13 April 1999. Lord Felloweswas appointed to the committee on 1 June 2001, Ms Doherty on1 April 2006 and Mr Devitre on 16 May 2007. The Chairman hasrecent and relevant financial experience, as does Ms Doherty, whowas Chief Financial Officer of Brambles Limited until November 2009and was previously Group International Finance Director of TescoPLC, and Mr Devitre, having until 31 March 2008 held the position ofChief Financial Officer of Altria. Mr Armour, who was appointed to theaudit committee on 1 May 2010, also has recent and relevant financialexperience, being the Chief Financial Officer of Reed Elsevier Groupplc, a position he has held since 1996, and of its parent companies,Reed Elsevier PLC and Reed Elsevier NV. The committee met fourtimes during the year. The external auditors, the Chief Executive, theChief Financial Officer and the Chief Internal Auditor attended eachmeeting by invitation. Other members of the management teamattended as required.The work of the committee during the year included considerationof the following matters:■ in respect of the year ended 31 March 2009: the annual financialstatements and the preliminary announcement before their submissionto the board for approval, including consideration of the group on agoing concern basis, with particular reference to balance sheet andtreasury considerations;■ the interim financial statements and interim announcement;■ the accounting treatment of the major business capability programmebeing undertaken throughout the group and of the Broad-BasedBlack Economic Empowerment transaction in South Africa;■ reports from the external auditors on the annual and interim financialstatements; approval of the audit plan and fee proposal for the 2010year end audit;■ developments in accounting standards and the group’s responses;■ the progress of the year’s internal audit programme and matters arising;■ the effectiveness of the internal audit function and the appointmentof the new Chief Internal Auditor;■ the group’s state of readiness for compliance with section 404 of theUS Sarbanes-Oxley Act (although the company is not an SEC registrantand is not required to comply with Sarbanes-Oxley standards);■ the results of the group’s bi-annual letters of representation andmanagement’s investigation and follow-up of any instances ofnon-compliance;■ the internal control environment and risk management systems andthe group’s statement on internal control systems, prior to endorsementby the board;■ material legal developments;■ the effectiveness of the external auditors and the recommendationto the board of the reappointment of PricewaterhouseCoopers LLPas the external auditors;■ the length of tenure of the audit engagement partner and whether toseek an extension of that tenure from PricewaterhouseCoopers LLP(as detailed in section 6 of this report);■ the policy on auditor independence and non-audit services; and■ its terms of reference and effectiveness.The audit committee reports its activities and makes recommendationsto the board. During the year, the audit committee discharged itsresponsibilities as they are defined in the committee’s terms of reference,and has been engaged in ensuring that appropriate standards ofgovernance, reporting and compliance are being met. The committeehas advised the board on issues relating to the application of accountingstandards as they relate to published financial information.The Chief Internal Auditor has direct access to the committee, primarilythrough its chairman. The committee has access to subsidiary companyinternal audit leadership. The reports of the divisional audit committeesare also available to the audit committee.During the year, the committee met with the external auditors andwith the Chief Internal Auditor without management being present.In addition to the review of the committee’s performance, terms ofreference and effectiveness led by the Chairman of the board, thecommittee critically reviewed its own performance during the yearby means of a questionnaire which each member of the committeecompleted independently. The committee chairman then reviewed theresponses and conducted one-to-one discussions with members ofthe committee where he felt it was necessary. The results of the selfassessmentand any action plans arising were then reported to the board.5.4 The nomination committeeDuring the year, the nomination committee was chaired by Mr Kahn.Lord Fellowes, Mr Bible, Mr Manser, Mr Morland, Mr Ramaphosa andMr Santo Domingo were members of this committee throughout theyear. Mr Manzoni, an independent non-executive director, was appointedto the committee with effect from 19 May 2010. Lord Fellowes willstep down from the committee upon his retirement in July 2010. Thecommittee is empowered to consider the composition of the boardand its committees. It is asked to consider the retirement, appointmentand replacement of directors, and is required to make appropriaterecommendations to the board.The nomination committee has continued to evaluate the balance ofskills, knowledge and experience of the board and is committed to theprogressive renewal of the board through orderly succession. Appropriatesuccession plans for the non-executive directors, for the executivedirectors and for senior management were also kept under review.Overview Business review Governance Financial statements Shareholder information