The Board is responsible for its own composition, and the constitution and composition of its sub-Committees (on recommendation by the Nominations Committee). The Board has a charter setting out its policies, roles and responsibilities in the execution of its mandate. Each Board sub-Committee also has a charter that is formally approved by the Board. Annually, the Board and its sub-Committees review, and amend if necessary, the respective charters to ensure their relevance and consistency with King IV and all other applicable legislative and regulatory requirements.
The Board (on recommendation by the Nominations Committee) is responsible for the selection and appointment of the Chairman, the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), other Board members and other senior executives of major subsidiaries, and ensures that adequate succession planning is in place for these roles. The Board, through its Nominations Committee, periodically reviews the robustness of succession planning for both Executive and non-Executive Directors and takes into account Massmart’s Executive Committee recommendations on talent retention and succession of senior executives of major subsidiaries.
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 comprised two Executive Directors, four independent non-Executive Directors and three non-Executive Directors.
The Board’s diversity is one of Massmart’s strengths. With combined experience ranging from global retail and commercial experience to race, gender, business and finance 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 race diversity policy to guide its future appointment of Directors in accordance with the amended JSE Listings Requirements (paragraph 3.84(j)) on the promotion of race diversity. The Board, through its Nominations Committee, 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 and targets set by the Board, and its progress in achieving them. The Board is satisfied that its composition reflects the appropriate mix of knowledge, skills, experience, diversity and independence. The gender and race diversity profile of the Board, as at the date of this report, is outlined on the right.
Annually, the Nominations Committee, assisted by the Company Secretary, facilitates the completion of a questionnaire aimed at gauging the independence of each non-Executive Director. This is completed by each non-Executive Director and returned to the Nominations Committee, which facilitates through its Chairman, the consideration by the Board of each Director’s independence having regard to the guiding principles and recommended practices set out in King IV. The Nominations Committee believes 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 three Walmart-appointees are not considered independent. The Committee 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 each Director’s personal wealth or income, are sufficiently material to affect their independence. A rigorous review of the independence and performance of independent non-Executive Directors serving longer than nine years is undertaken by the Nominations Committee and its outcomes are reported to the Board. Following this independence review, and on the recommendation of the Nominations Committee, the Board is satisfied that there are no relationships or circumstances likely to affect, or which may appear to affect, the judgement of Mr Kuseni Dlamini, Mr Chris Seabrooke, Dr Lulu Gwagwa and Ms Phumzile Langeni.
Director appointment and rotation
At least one-third of the Directors are required to retire every year. 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 ensuing 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 24 May 2018 AGM, Ms Susan Muigai and Mr Roger Burnley are nominated for election having been appointed during the reporting period and Mr Chris Seabrooke and Mr Guy Hayward retire by rotation. Being eligible, they all offer themselves for election or re-election, as applicable. The Board confirms its support for the election or re-election of each Director.
In filling vacant positions, the Board proactively seeks and appoints qualified previously disadvantaged individuals, in particular, African, Coloured and Indian (ACI) men and women and those with disabilities, who reflect a diverse range of skills and backgrounds that represents the South African community to the greatest extent practical, including specifically gender, race and ethnic diversity.
When considering vacancies, the Board, by and through its nominating process, shall consider and shall be guided by the following:
- The target of having women represent 40% of 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 accordance with provisions of the Massmart gender diversity policy. 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.
- The target of appointing up to 50% ACI candidates to open Executive and non-Executive independent Director positions, provided that the Board shall endeavour to maintain at any time not less than three in number of ACI Directors on the Board in accordance with the provisions of the race diversity policy. For the avoidance of doubt the above-mentioned target shall exclude all of Walmart appointee non-Executive Directors on the Board; and/or where appropriate request Walmart to consider supporting recommendations for nomination and appointment of ACI candidates to the Board. In the event that the Board does not constitute at least three ACI Directors at any time, then the Board will endeavour to make an appointment of an ACI candidate to its list of independent non-Executive Directors within a period of 12 months.
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 inclusivity, ethics, compliance, risk, governance, material matters, transformation, succession planning, and other key activities of the Group.
Annually in October, the Nominations Committee facilitates a comprehensive self-assessment process, covering the composition, duties, responsibilities, process and effectiveness of the Board, its sub-Committees, Directors and governance procedures. The assessment process includes an appraisal of the Chairman of the Board, Committee members, permanent invitees, CEO and CFO.
Assessments are approached in a constructive manner and provide valuable input that enhances the effectiveness of the Chairman, the Board and its Committees. Although no significant matters of concern were noted, the Board and its sub-Committees identify outcomes arising from the annual self-assessments and these serve as focus areas for the ensuing year.
Leadership roles and functions
The role of the Chairman is distinct and separate from that of the CEO and the separation of responsibilities is designed to ensure that no single person has unfettered decision-making powers and that appropriate balances of power and authority exist on the Board.
In accordance with the Board charter and as recommended by King IV, the Deputy Chairman of the Board, Mr Chris Seabrooke, who is an independent non-Executive Director, serves as the lead independent non-Executive Director.
The Board’s authority is devolved sequentially through the Massmart Executive Committee, the Divisional boards and the Divisional executive committees, and is formally prescribed by the Massmart Delegation of Authority framework. In addition, the Board has delegated certain specific responsibilities to five Board Committees, described on the Board Committees page. The Board is satisfied that the Delegation of Authority framework contributes to role clarity and the effective exercise of authority and responsibilities within the broader Group.
The Board has also adopted a stakeholder engagement protocol, which describes guidelines and scope of Walmart’s access to the Massmart business. A summary of this protocol is published under FAQ.
Our Company Secretary
The Board is comfortable that it meets the King IV principle of having an arm’s length relationship with the Company Secretary and confirms that the Company Secretary is not involved in any executive capacity on 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 satisfied with the qualifications, competence and expertise of the Company Secretary, the role which is held by Mr Joe Ralebepa. The Board is further satisfied that there were arrangements in place for accessing the Company Secretary, which included, personal interface, electronic communication platforms and at quarterly Board and Committee meetings.
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, the Nominations Committee, the CEO and CFO with the induction of new Directors;
- Assists the Board with Director orientation, ongoing 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 Massmart Divisions; and
- Provides the Board with a central source of guidance and assistance.