AGM

Attendance by all Directors at Massmart’s Annual General Meeting (AGM) is strongly encouraged while attendance for Board Committee Chairpersons is compulsory.

At the May 2015 AGM the Chairman of the Board and the Nomination Committee, the Chairman of the Remuneration, Audit and Risk Committees and the Chairman of the Social and Ethics Committee were all in attendance, as were the CEO and CFO. In total, six non-executive directors attended the Annual General Meeting.

The Company’s transfer secretaries attend every general meeting of shareholders to assist with the recording of shareholders’ attendance and to tally the votes. The Chairman confirms with the meeting that votes will be counted by way of poll, i.e. all votes are counted, rather than by way of a show of hands.

Share buy-back programme

Annually the Group seeks, and obtains, the approval of the shareholders in the general meeting to repurchase Massmart shares. This authority – valid until the following year’s AGM and subject to the Listings Requirements of the JSE – allows the Group to purchase its own shares not exceeding 5% of that class of the Company’s issued share capital, at a price not greater than 10% above the preceding five-day volume-weighted average. Shareholders have been asked to renew this authority at the forthcoming May 2016 AGM.

During the year ended December 2015, no Massmart shares were purchased on the open market by Massmart or any Massmart subsidiary. The amount and timing of any future purchases will be determined by the Board and are dependent on the Board’s view on the intrinsic value of Massmart shares, the ruling market price from time to time, the Group’s cash position and future cash requirements, and prevailing market conditions.

The Massmart Employee Share Trust acquires shares from time to time on the JSE open-market to mitigate the dilution caused by the Company issuing new shares when options are exercised by participants. During the year ended December 2015, the Massmart Employee Share Trust purchased 0.9 million shares for R135.5 million which were utilised to meet vesting share options.

Share dealings

No Director, Executive or employee, nor the Massmart Employee Share Trust, may deal, directly or indirectly, in Massmart shares where that person may be aware of unpublished price-sensitive information. There are strict closed periods during which all Directors, Executives, employees and the Massmart Employee Share Trust are not allowed to deal in Massmart shares.

The periods begin one month prior to the end of each reporting date (these reporting dates being December and June) and end on the public release of the Group results. A closed period also applies from the date when Massmart issues a cautionary announcement until the date on which the cautionary is lifted, either by withdrawal or the publication of full terms.

In addition, all Directors, Executives, employees and the Massmart Employee Share Trust, and their associates as defined by the JSE, are not allowed to deal in Massmart shares in the final hour of trading on the JSE. All share dealings by a Director, Executive or employee must be authorised by the CEO or the CFO. Any dealings by the CEO are authorised by the Chairman, and dealings by the CFO are authorised by the CEO.

 

 

Corporate ethics

Massmart is committed to achieving the highest standards of ethical behaviour and continued its strong emphasis on promoting awareness of, and compliance with, Massmart’s Code of Ethical Conduct. Massmart’s Code of Ethical Conduct was revised in January 2013, to bring it in line with the Walmart Statement of Ethics, and distributed to all 36,000 Massmart employees and contractors between April and August 2013.  Where necessary, we will update and revise that code in 2016.

Massmart continues to ensure that our ethics programme is well known through employee induction programs, booklets and training and continuous communication programs to all employees.  The Massmart programme dovetails and aims to replicate global practices used in Walmart, a process that has been easy to adopt.

Massmart Ethics Lines

Massmart has an Ethics Reporting Line and Ethics Guidance Line that is independently run by Deloitte Tip-Offs Anonymous. Deloitte Tip-Offs Anonymous has been certified by the External Whistle-blowing Hotline Services Provider Standard E01.1.1.

The Ethics Reporting Line exists to assist our employees and suppliers to confidentially report workplace dishonesty, fraud, theft and other unethical behaviour.

The Ethics Guidance Line exists to assist our employees with guidance on the Code of Ethical Conduct, company policies and ethical dilemmas.

Callers have the option of:

  • providing their details,
  • remaining confidential; or
  • remaining anonymous.

Controls are in place to ensure that callers who contact the ethics lines in good faith are protected and not retaliated against.

Ethics structure and system

The Massmart Ethics Office adopted Walmart’s ethics tracking system, “IntegriLink”, to record all calls received and to track these to their logical and unbiased conclusion in a timely and professional manner. Calls are overseen by Divisional Ethics Officers (who are suitably qualified and are certified ethics officers) and, where necessary, by Massmart Forensic Services Department. Ethics Officers’ conclusions and opinions are independent and are not allowed to be interfered with.  For significant matters these are investigated in conjunction with and or with oversight by the Walmart Global Ethics Office. Group ethics is led by the Chief Ethics Officer who reports to the Chief Ethics & Compliance Officer.  The Chief Ethics and Compliance Officer is a member of the Massmart Executive Committee, reports functionally to the Massmart Risk Committee and the Social and Ethics Committee and Walmart International Compliance and administratively to the Massmart CEO.  Group ethics statistics are discussed at each of these meetings.  The Group Ethics Forum meets twice a year where the call statistics and trends are discussed.

Call trends

The Massmart Ethics Office continues to see an increase in overall contacts year over year likely attributable to ongoing training and communication efforts.  While historically many contacts have been anonymous in nature, we are starting to see more confidence in the channel with more reporters be willing to disclose contact details.

Ethics surveys

In 2013, Walmart Global Ethics partnered with Corporate Executive Board (CEB) to administer a 21-item integrity survey to a statistically significant global sample of employees deployed to all businesses. Massmart tailored the CEB questions to be part of an engagement survey. This survey involved ascertaining the involvement and ownership that drives an employee to make a valuable contribution for the betterment and success of Massmart. Our philosophy is that when the engagement is high, the employee is much better able to respect, add value, and seek opportunities to go above what the job requires. This, we believe, impacts the culture and success of Massmart.  The results of the 2013 survey were released in 2014 and responded to and employees will be surveyed again in mid-2016.

Suppliers and service providers

Massmart regularly communicates its ethical and responsible sourcing standards to suppliers and service providers, and attempts to ensure that they comply with these standards as well as all legal requirements in all the countries where we operate including laws and regulations relating to corrupt activities. Suppliers and service providers are invited to make use of the ethics lines, Massmart’s formal trading agreements detail ethical practices that suppliers are expected to uphold, and supplier ethics messages are distributed in supplier communications and training.

Legal and regulatory compliance

Monitoring and managing legal and regulatory risks has always been a fundamental tenet of our business model. King III requires that an effective compliance framework should include, among other features, formalized control processes with clear responsibilities and reporting channels. To ensure compliance with King III in an increasingly regulated market, the Group has sharpened its focus in this area by expanding and realigning certain functional legal and regulatory areas.  In addition, there are certain legal obligations required of a subsidiary of a United States Company that apply.

Massmart follows the generally accepted practices of risk management in its legal and compliance endeavors.  This encompasses a multi-pronged approach where:

  • The compliance and regulatory teams monitor and scan the environment to understand and respond to trends and legislation that may impact us;
  • Dependent upon the subject the legal or compliance team recommends and prepares processes to comply with legislation and to manage or mitigate risks;
  • The operational businesses of Massmart (the Massmart divisions) implement, manage and control these processes;
  • The compliance function monitors and improves on the effectiveness of the intended processes; and lastly,
  • The Massmart internal audit function independently assesses whether assurance can be placed on the functions inventing, implementing, managing, controlling and monitoring these processes.

The mentioned practices align key resources on the dual objectives of (i) providing legal/regulatory subject matter expertise to the Massmart Divisions and (ii) ensuring that each division assesses and manages those legal/regulatory risks that the Group identifies.

With support from the Group, the Finance Directors in each Division continue to ensure that legal/regulatory risks are appropriately assessed and managed and this is overseen at a Subsidiary Board level and ultimately through the Massmart Risk Committee.

Ethics and Compliance across the Group is exercised as follows under the direction of the Chief Ethics and Compliance Officer:

  • Formal risk assessments are completed and responded to;
  • Massmart has adopted the global ethics and compliance practices of Walmart; any global process is applied in Massmart.
  • A team of 45+ African based compliance experts are employed across anti-corruption and 14 different compliance areas (such as; food safety, health and safety, licenses and permits, anti-trust, and so on).
  • The compliance functions make use of external expert 3rd party service providers, and participate in a number of external conversations and formal meetings with key subject matter experts within government bodies, supplier bodies and consumer groups;
  • The compliance functions, through the Chief Ethics and Compliance Officer reports administratively to the CEO, and functionally to the Risk Committee, the Social and Ethics Committee and Walmart International Compliance.

Pending legislation or recently enacted laws that may have a potentially material impact on the Group continue to include:

  • Labour and Employment legislation
  • Protection of Personal Information Act; and
  • Various regulations relating to food safety and product safety, most significantly the Consumer Protection Act.

Extraterritorial laws now relevant to Massmart via our subsidiary association with Walmart that may have a material impact on the Group include:

  • The U.S. Foreign Corrupt Practices Act;
  • Sarbanes Oxley;
  • Dodd-Frank; and
  • Various trade sanctums relevant to subsidiaries of US companies.