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The Board of Massmart is responsible for directing the Group towards achieving Massmart’s vision and mission. The Board is therefore accountable for the development and execution of the Group’s strategy, operating performance and financial results, as well as being the custodian of the Group’s corporate governance. The Board appreciates that strategy, risk, performance and sustainability are inseparable

 

 

The Board is responsible for its own composition, the appointment of the Chairman and CEO, and the constitution and composition of its Committees. The Board has a charter setting out its policies, roles and responsibilities in the execution of its mandate described above. Each Board Committee also has a charter that is formally signed off by the Board. Annually, the Committees and Board review, and amend if necessary, the respective charters to ensure their relevance.

The role and appointment of Directors and the Company Secretary

The role of all Directors is to bring independent judgement and experience to the Board’s deliberations and decisions. The Board comprises two Executive Directors, four independent non-Executive Directors and three non-Executive Directors.
Annually, the Nomination Committee prepares and circulates a questionnaire aimed at gauging the independence status of each non-Executive Director. This is completed by each non-Executive Director and returned to the Committee, which then considers each Director’s independence. The Committee feels that the following aspects are important in assessing a non-Executive Director’s independence:

  • whether the Director had been employed in an executive capacity in the Group in the previous three years;
  • whether the Director had served on the Board for longer than nine years. In this case, the Committee considers whether that Director’s independence, judgement and contribution to the Board’s deliberation could be compromised, or may appear to be compromised, by this length of service;
  • whether the Director is a representative of a major shareholder; and
  • whether the proportion of that Director’s shareholding in Massmart (if any) or Director’s fees represent a material part (10% or more) of their wealth or income.

The three Walmart-appointees are not considered independent. The Committee also believes that none of the four independent non-Executive Directors, or entities associated with or controlled by them, owns shares in Massmart which, relative to their personal wealth or income, are sufficiently material to affect his/her independence.
The Board is comfortable that it meets the King III principle of having an arm’s-length relationship with the Company Secretary and confirms that the Company Secretary is not a Director of any of the main operating companies within the Group. The Company Secretary, Philip Sigsworth, CA (SA), was the Financial Director of JSE listed company, Austro Group Limited (Austro Group), prior to joining Massmart, where he also performed company secretarial work. The Board confirms that it has assessed and is happy with the qualification, competence and expertise of the Company Secretary.
The Company Secretary assists the Board in fulfilling its functions and is empowered by the Board to perform his duties. The Company Secretary, directly or indirectly:

  • assists the Chairman, CEO and CFO with the induction of new Directors;
  • assists the Board with Director orientation, development and education;
  • ensures that the Group complies with all legislation applicable/relevant to it;
  • monitors the legal and regulatory environment and communicates new legislation, and any changes to existing legislation, relevant to the Board and the Divisions; and
  • provides the Board with a central source of guidance and assistance.

At least one-third of the non-Executive Directors are required to retire every year and Massmart Executive Directors have elected to also retire on this basis. As a result, all Directors retire by rotation at least every three years and are then eligible for re-election. In addition, shareholders must ratify the initial appointment of each Director at the first Annual General Meeting following that Director’s appointment. As a result of these requirements, at the 27 May 2015 Annual General Meeting Kuseni Dlamini, Phumzile Langeni and JP Suarez retire by rotation; while Shelley Broader, Andy Clarke and Johannes van Lierop will resign, as required by the Memorandum of Incorporation. Being eligible, they all offer themselves for re-election.

Board process and evaluation

The Board meets four times a year and on an ad hoc basis should a particular issue demand its attention. In addition, the Board meets annually to formally consider and approve the strategies of the Massmart Divisions and Group.
The Board’s authority is devolved sequentially through the Massmart Executive Committee, the Divisional Boards and the Divisional Executive Committees, as formally prescribed by the Massmart Delegation of Authority (described below). In addition, the Board has delegated certain specific responsibilities to five Board Committees, described more fully below. These Committees assist the Board and Directors in discharging their duties and responsibilities under King III and the Delegation of Authority. Full transparency of the Committees’ deliberations is encouraged and the minutes of all Committee meetings are included in the formal Board papers at the ensuing Board meeting. All Directors are welcome to attend any Board Committee meeting or Divisional Board meeting.
The Massmart Delegation of Authority describes the specific levels of authority and required approvals for all major decisions at both Group and Divisional level. It clarifies which executive position, Committee or Board needs to be consulted prior to taking the decision, which body makes the decision and which bodies should thereafter be informed of the decision. Where appropriate, it now includes Walmart’s position on the decision.

The Board has also adopted a policy which describes Walmart’s access to the Massmart business. This policy is fully described on the Company’s website under FAQ.
The Board works to a formal agenda that covers strategy, structure, operating performance, growth initiatives, sustainability, investor relations, risk and governance, and any other key activities of the Group. An annual agenda structure ensures that other areas including IT and compliance are addressed. Formal Board papers are prepared for every discussion item on the meeting’s agenda and are distributed timeously to Board members.
Directors are encouraged to take independent advice, at the Company’s cost, for the proper execution of their duties and responsibilities.
Directors have unrestricted access to any Executive, manager or employee in the Group.
Annually in October, the Nomination Committee facilitates a comprehensive formal performance evaluation of the CEO, comprising a questionnaire evaluating the CEO by every non-Executive Director, and an appraisal of the CEO by each of his direct reports using a different questionnaire. The Board Chairman provides the summary and feedback of the above to the CEO, and he is encouraged to probe and debate any aspect of the evaluation with the Board. Given his appointment earlier in the year, CEO Guy Hayward did not have a performance evaluation in 2014.
At the same time, all Board members and permanent invitees complete a detailed Board self-assessment, covering the composition, duties, responsibilities, process and effectiveness of the Board. Similarly, all Board Committee members and permanent invitees complete detailed self-assessments covering the same aspects of their committees. The results of these assessments are collated by the Company Secretary and sent in summarised form to the respective Board and Committee Chairpersons for discussion and review by that Committee. The summarised results are included in the Board papers at the November meeting.
Finally, all Board members formally assess the Chairman’s performance. The Deputy Chairman provides feedback from this process to the Chairman. Assessments are approached in a constructive manner and provide valuable input that enhances the effectiveness of the Chairman, the Board and its Committees.