Board composition

The role of all Directors is to bring independent judgement and experience to the Board’s deliberations and decisions. At the time of this report, the Board comprises two Executive Directors, five independent non-Executive Directors and two non-Executive Directors.

The Board’s diversity is one of Massmart’s strengths. From global retail experience to race, gender, business experience and length of service, Massmart’s Board is well-positioned to add value to the business. During the reporting period, the Board adopted a gender equality and diversity policy to guide its future appointment of Directors in accordance with the amended JSE Listings Requirements on the promotion of gender diversity (paragraph 3.84(k)). The Board is committed to proactively monitoring the Company’s performance in meeting the standards outlined in this policy which will include an annual review of the objectives set by the Board, and its progress in achieving them.

The role and duties of the non-Executive Chairman are separated from those of the Chief Executive Officer and are clearly defined.

Director independence

Annually, the Nomination Committee facilitates 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 Nomination Committee, which then considers each Director’s independence. The Nomination Committee feels that the following aspects are important in assessing each non-Executive Director’s independence:

  • whether the Director had been employed in an Executive capacity in the Group during the preceding three financial years;
  • whether the Director had been the designated external auditor or a member of the audit team of an external audit firm responsible for performing the statutory audit for Massmart;
  • 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, when assessed objectively from the perspective of a reasonable and informed third party, could be unduly influenced or 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 two Walmart-appointees are not considered independent. The Committee also believes that none of the five 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.

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, if eligible and available, their names are submitted for re-election by the shareholders at the AGM. In addition, shareholders must ratify the initial appointment of each Director at the first AGM following that Director’s appointment. As a result of these requirements, at the 25 May 2017 AGM, Lulu Gwagwa, Phumzile Langeni, JP Suarez and Johannes van Lierop retire by rotation. Being eligible, they all offer themselves for re-election.

 

Board process and evaluation

The Board meets four times a year and on an adhoc 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.

During the year, the Board focused on strategy; structure; operational and financial performance; corporate citizenship, stakeholder engagement; ethics and compliance; risk; governance; and any other key activities of the Group. 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.

When considering vacancies, the Board, by and through its nominating process, shall consider its target of appointing 40% of women to open independent non-Executive Director positions but not less than two in number; and/or request from its majority shareholder, Walmart, to consider recommending and supporting appointments of women to the Board. In the event that at any time the Board does not constitute at least two female Directors, then the Board will endeavour to make an appointment of a woman from its independent non-Executive Directors within 12 months.

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 Chairmen 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.

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. In addition, the Board has delegated certain specific responsibilities to five Board Committees, described, described here (Link to board committees). These Committees assist the Board and Directors in discharging their duties and responsibilities pursuant to 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 Board has also adopted a policy which describes Walmart’s access to the Massmart business. A summary of this policy is published on the Company’s website under FAQ.

Our Executive Committee

The Executive Committee is chaired by the CEO (Guy Hayward) and comprises the CFO (Johannes van Lierop), the Group Human Capital Executive (Jane Bruyns), the Chief Ethics and Compliance Officer (Norman Gray), the Group Financial Services Executive (Gerhard Hayes), the Group Supply Chain & Logistics Executive (Richard Inskip) who joined the Group in January 2017, the Group Corporate Affairs Executive (Brian Leroni), the five Divisional Chief Executives (Neville Dunn, Doug Jones, Kevin Vyvyan-Day, Llewellyn Walters and Albert Voogd), Group Legal Executive, General Counsel and Company Secretary (Joe Ralebepa, who joined the Group in November 2016 and has replaced Mike Spivey) and the Group Commercial Executive (Llewellyn Steeneveldt).

The CEO and CFO are the most senior Executive decision-making Executives in the Group. With the help of the Committee they deliberate, take decisions or make recommendations on all matters of strategy and operations. Within the parameters described by the Board-approved Delegation of Authority, the decisions or recommendations are sometimes referred to the Board or its relevant Committee for final approval, while in other cases the power to take decisions is delegated to the CEO and CFO. The Executive Committee assists the CEO and CFO with specific responsibilities, inter alia:

  • monitoring and measuring the structures, trends and performance of markets and competition;
  • strategic planning;
  • defining, configuring, financing and structuring the Group’s portfolio of assets;
  • shaping and approving the competitive strategies, growth and operating plans and budgets of the Divisions and functional departments;
  • measuring, monitoring and taking proactive corrective action on Divisional performance;
  • ensuring adequate risk management, internal controls, governance, compliance and ethical behaviour throughout the Group; and
  • shaping and approving succession plans and senior executive management appointments.

 

Our Company Secretary

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. Based on the outcome of a formal assessment of the Company Secretary, which was completed by the Chairman of the Board, the CEO, the CFO and the Chairman of the Audit Committee, the Board confirms that it has assessed and is happy with the qualification, competence and expertise of the Company Secretary, the role which was until September 2016 held by Philip Sigsworth who was succeeded by Joe Ralebepa in November 2016. For the interim period between September 2016 and October 2016, Julie Wilford competently served as Company Secretary.

The Company Secretary assists the Board in fulfilling its functions and is empowered by the Board to perform her or 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.

Board composition