OneSteel Annual Report 2011Corporate Governance Statement44OneSteel has been listed on theAustralian Securities Exchange (ASX)since 23 October 2000 (ASX:OST).This statement outlines the corporategovernance practices adopted by theBoard or put in place throughout thefinancial year.Board of DirectorsThe Board has adopted a Board Charter& Corporate Governance Guidelines(Guidelines).The Guidelines constitute a reference pointfor Directors, employees and shareholdersin understanding the Company’s approachto the processes, performance measures,values and ethical standards whichgovern Directors and employees. It isdesigned to facilitate an evaluation of theCompany’s framework and proceduresin the context of ensuring accountabilityand transparency.The primary role of the Board isthe protection and enhancement ofshareholder value. The Board hasresponsibility for corporate governance.It oversees the business and affairs of theCompany, establishes the strategies andfinancial objectives with managementand monitors the performance ofmanagement directly and indirectlythrough Board committees.The Board has established a frameworkfor management of the Company, includinga system of internal control and businessrisk management and appropriateethical standards.The Board reviews the Company’sperformance and considers otherimportant matters such as strategicissues and plans, major investmentand divestment decisions, diversity,human resources matters, governanceand compliance matters and receivesregular Division and corporate functionpresentations. Senior management isregularly involved in Board discussion andDirectors have opportunities, such as visitsto major operational sites, for contact witha wider group of employees.The Board embraces the need for, andcontinued maintenance of, the higheststandards of ethical conduct. TheCompany’s Code of Conduct formalisesthe obligation of Directors and employeesto act within the law and to act honestlyand ethically in all business activities.For the purposes of the properperformance of their duties relating to theCompany, Directors are entitled to obtainindependent professional advice at theCompany’s expense following pre-approvalby the Chairman. This advice is treated asadvice to the Board.Board committeesThe Board has established five committees.Each committee has a clear mandateand operating procedures and operatesprincipally in a review or advisory capacity,except in cases where particular powersare specifically conferred on the committeeby the Board. Board committees may alsobe established from time to time to dealwith matters arising.In considering the composition ofcommittees, the Board considers thenumber of Directors and the skills requiredto discharge and appropriately share theresponsibilities conferred by the Board.DirectorBoardMembershipCommittee MembershipAudit & ComplianceGovernance &NominationsHuman ResourcesOccupational Health,Safety & EnvironmentOperational RiskP J SmedleyG J PlummerR B DavisC R Galbraith, AMP G NankervisD A PritchardG J SmorgonR WarnockIndependentNon-ExecutiveChairmanManaging Director& Chief ExecutiveOfficerIndependent Non-Executive DirectorIndependent Non-Executive DirectorIndependent Non-Executive DirectorIndependent Non-Executive DirectorIndependent Non-Executive DirectorIndependent Non-Executive DirectorMember Member ChairmanMember Chairman MemberMember ChairmanChairmanMemberMember Member MemberChairman Member MemberMemberMember
Corporate GovernanceBoard composition and Non-Executive Director independenceThe Board regularly assesses theindependence of each Director. Forthis purpose an Independent Directoris a Non-Executive Director whom theBoard considers to be independent ofmanagement and free of any business orother relationship that could materiallyinterfere with the exercise of unfetteredand independent judgement.In addition to being required to conductthemselves in accordance with principlesfor Directors’ conduct and Directors’responsibilities outlined in the Guidelines,Directors must be meticulous in disclosureof any material contract or relationshipin accordance with the Corporations Act.Directors must strictly adhere to theconstraints on their participation andvoting in relation to matters in which theymay have an interest in accordance withthe Corporations Act and OneSteel policies.Each Director (or interests associated witheach Director) may be a shareholder in theCompany. Each Director may be involvedwith other companies or professionalfirms which may from time to time havedealings with OneSteel. Directors must bemeticulous in ensuring that disclosure, asrequired by law, is made of any dealingsand, where requisite, details are set out inthe Company’s Financial Report.The Board has assessed that each of theNon-Executive Directors of the Company isan Independent Director. In reaching thatdetermination, in addition to the mattersreferred to above, the Board has takeninto account:• Specific disclosures made by eachDirector• Where applicable, the related partydealings of each Director, noting thatthose dealings are not material underaccounting standards• No Director is a substantial shareholderor an officer of or otherwise associatedwith a substantial shareholder• No Non-Executive Director has everbeen employed by OneSteel or anyof its subsidiaries• No Director has a contract withOneSteel (other than as a Director), or isassociated with, a supplier, professionaladviser, consultant to or customerof OneSteel, that is material underapplicable accounting standards.The Board does not consider that term ofservice should be considered as a factoraffecting the question of independence.The Board considers that a fixed maximumtenure is not in the Company’s interests.Instead, it considers that a Director shouldnot seek re–election if they or the Boardconsiders it is not appropriate to do so.Matters considered by the Board mayinclude renewal and succession, size,experience and skill mix, diversity andperformance.A key responsibility of the Board’sGovernance & Nominations Committee(G&NC) is to consider and makerecommendations to the Board in relationto Board composition. The aim of theDirectors is to create a Board which hasthe appropriate mix and depth of skills,experience and attributes to discharge itsresponsibilities to the highest standard andwhich, in discharging those responsibilities,vigorously and constructively challengesand motivates the Company’s executivesto achieve outstanding performance in theinterests of all stakeholders.In considering the appointment orrecommendation for appointment ofDirectors, attributes and matters whichare taken into account include diversityin its widest sense, outstanding careerperformance, impeccable values, capacityto contribute constructively to a team,willingness and capacity to devote thetime and effort required, capacity tocontribute strongly to the assessment andoversight of risk and risk management,capacity to contribute to the developmentand implementation of strategy andthe Company’s policies and a strongappreciation of the responsibilitiesof the Company to its shareholders,employees, the communities in whichit operates, its suppliers, customersand other stakeholders. Where theG&NC considers it appropriate, externalprofessional consultants are engaged toassist in identifying suitable candidates forappointment to the Board.Refer to pages 42-43 for the period ofoffice held by each Director and to pages42-43 for the experience and qualificationsof each Director and the CompanySecretary.Performance evaluationIn each reporting period, the performanceof the Board and each committee inmeeting shareholder and stakeholderexpectations is evaluated under thedirection of the Chairman. In addition, theChairman discusses individual Directorcontributions with each Director face–to–face annually.Senior management is subject to an annualperformance evaluation process whichinvolves the assessment of performanceagainst specific and measurable qualitativeand quantitative performance criteria. Anannual performance evaluation for seniormanagement has been undertaken duringthe reporting period in accordance withthis process.Remuneration and diversityThe Human Resources Committee reviewsand makes recommendations to the Boardin respect of remuneration.Details concerning diversity matters are setout on page 34.The remuneration of Key ManagementPersonnel is set out in the RemunerationReport on pages 50 to 59.Risk managementOneSteel is committed to managing riskto protect our people, the environment,Company assets and our reputation as wellas to realise opportunities.OneSteel’s risk-based system of internalcontrol assists it to operate effectively andefficiently, achieve business objectives,ensure reliable reporting and comply withapplicable laws and regulations.Management implements this by designingand establishing a system for identifying,assessing, monitoring and managingmaterial business risk throughout theCompany including the Company’sinternal compliance and control systems.Management is expected to:• Design and implement a systemof ongoing risk reviews capable ofresponding promptly to new and evolvingrisks• Monitor the effectiveness of thesystem of risks and internal controlsmanagement• Provide an annual assurance to theBoard regarding the extent of itscompliance.Management regularly reports to the Boardon the effectiveness of the management ofOneSteel’s material business risks.A description of the Company’s riskmanagement system and the nature of therisks are outlined in the Finance and RiskManagement section on pages 38–39.The Managing Director & Chief ExecutiveOfficer (MD & CEO) and Chief FinancialOfficer (CFO) are required to provide andhave provided assurance via a writtenstatement to the Board in accordance withs295A of the Corporations Act.The Board notes that, due to its nature,internal control assurance from theMD & CEO and the CFO can only bereasonable rather than absolute. Thisis due to factors such as the need forjudgement, the use of testing on a samplebasis, the inherent limitations in internalcontrol and the fact that much of theevidence available is persuasive ratherthan conclusive and therefore cannot,and cannot be designed to, reveal allweaknesses in control procedures.In response to this, an internal controlcertificate is completed by each divisionChief Executive and corporatefunctional head and their respectivefinance managers to support theassurance provided.45
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