We are wholly responsible for the formulation, development and effective implementation of Group strategy and delegate operational strategy implementation and general executive management of the business to the Group’s Executive Directors and Executive Committee. This is achieved through the direction provided by the application of the Board Charter, Memorandum of Incorporation, its respective letters’ of appointment and application of King IV.

We are wholly responsible for the formulation, development and effective implementation of Group strategy and delegate operational strategy implementation and general executive management of the business to the Group’s Executive Directors and Executive Committee. This is achieved through the direction provided by the application of the Board Charter, Memorandum of Incorporation, its respective letters’ of appointment and application of King IV.

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 comprised of two Executive Directors, five Independent Non-Executive Directors and three Non-Independent Non-Executive Directors, and as such reflects an appropriate balance with a majority of Independent Non-Executive Directors.

Underpinned by objectivity and impartiality, our diversity serves as a source of our leadership strength. With combined experience ranging from global retail and commercial experience to cultural and gender diversity, business experience and length of service, we are well positioned to add value to the business. We continue to meet and exceed our gender equality target of appointing 40% of women to Independent Non-Executive Director positions and every effort will be made to maintain this. Further to this, we also maintained the race diversity target of appointing 50% African, Coloured and Indian (ACI) candidates to open Executive and Non-Executive Director positions. We are satisfied that our composition reflects the appropriate mix of knowledge, skills, experience, diversity and independence.

Our Board composition is outlined in the infographic below.

 

Director changes

The following Director changes took place during the year:

In February 2019, CFO Johannes (Hans) Van Lierop indicated that he was not available to extend his tenure with Massmart for personal reasons after the formal conclusion of his South African work visa in February 2020.

On 30 April 2019, shareholders were informed that Mohammed Abdool-Samad would succeed Hans as Chief Financial Officer and Executive Director effective 1 August 2019.

On 6 May 2019, the Board announced that after almost twenty years in the business, the past five of which have been as Chief Executive Officer, Guy Hayward had informed the Board of his decision to step down from his role before the end of 2019.

On 23 May 2019, Mitch Slape’s appointment as Chief Executive Officer was announced, effective 1 September 2020.

On 27 May 2019 the appointment of Phumzile Langeni as Lead Independent Director was announced, with effect from 23 May 2019.

On 5 September 2019 it was announced that Mohammed Abdool-Samad was appointed a member of the Risk Committee, effective 1 August 2019, and Mitch Slape a member of the Risk and Social and Ethics Committees, effective 1 September 2019. The Board further announced the resignation of the Group’s General Counsel and Company secretary Joseph Ralebepa, effective 31 December 2019.

On 30 December 2019, the appointment of Nicole Morgan as the Interim Company Secretary, effective 1 January 2020, was announced.

On 25 February 2020, the following changes were announced: Enrique Ostalé resigned from the Board, Remuneration and Nominations Committee; JP Suarez was appointed to the Remuneration and Nominations Committees; and Charles Redfield was nominated for appointment as a Non-Executive Director of the Board, effective 25 February 2020.

On 6 March 2020, Phumzile Langeni’s resignation from the Risk and Audit committees to focus on her other Massmart Board and committee duties was announced, with effect from 21 May 2020.

Director independence

We are a unitary Board with a majority of Non-Executive Directors. The majority of the Non-Executive Directors are independent. The three Walmart-appointees are not considered independent. Our Lead Independent Director, Phumzile Langeni, chairs the Board meeting when a conflict of interest arises and/or when the Chairman, Kuseni Dlamini is unable to chair the meeting.

Annually, the Nominations Committee considers the independence of the Board members against the criteria set out in King IV and in line with its recommendations. In assessing each Non-Executive Director’s independence, the review considers the following aspects:

  • 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 is a representative of a major shareholder
  • Whether the Director participates in a share incentive scheme offered by the Company
  • Whether the Director is a significant or ongoing professional advisor to Massmart, other than as a member of the Board
  • Whether the Director is a significant supplier and/or customer to Massmart
  • 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
  • Whether the Director is a significant provider of financial capital, or ongoing funding to the Company; or is an officer, employee or representative of such provider of financial capital or funding
  • Whether the Director is an executive manager of another company which is a related party to the Company
  • Whether the Director is entitled to remuneration contingent on the performance of the Company.

In addition, we rigorously review Non-Executive Directors with tenure periods exceeding nine years. In this case, the Committee considers whether that Director’s independence, judgement and contribution to our 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. Lulu Gwagwa and Phumzile Langeni have both served for periods longer than nine years. Following the rigorous annual review, we conclude that both these Directors continue to be independent in character, judgement and contribution to our deliberation, particularly with reference to the aforementioned criteria which emanate from King IV.

Director appointment and rotation

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 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 21 May 2020 AGM, Mitchell Slape, Mohammed Abdool-Samad and Charles Redfield are nominated for election having been appointed during the reporting period; and Lulu Gwagwa and Phumzile Langeni, who retire by rotation offer themselves for re-election. Being eligible, they all offer themselves for election or re-election, as applicable. We confirm our support for the election and re-election of each respective Director and record that save for Mitchell Slape, Mohammed Abdool-Samad and Charles Redfield who joined the Board on 1 September, 1 August and 25 February 2020, respectively, Lulu Gwagwa and Phumzile Langeni were evaluated as effective in their performance during the reporting period. The evaluation is a formal annual process conducted by the Group Company Secretary.

In filling vacant positions, we proactively seek and appoint qualified previously disadvantaged individuals, in particular, African, Coloured and Indian (ACI) men and women, and men and women 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, we, by and through our nominating process, consider and are guided by the following:

  • The 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 accordance with provisions of the gender diversity policy. In the event that we do not constitute at least two female Directors, then we will endeavour to make an appointment of a woman from our Independent Non-Executive Directors within 12 months. These targets are driven primarily by the our diversity policies and during the reporting period, the targets prescribed in the policies have been met
  • The target of appointing up to 50% ACI candidates to open Executive and Independent Non-Executive Director positions, provided that we 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 nominee Non-Executive Directors on the Board, and where necessary we shall request Walmart to consider supporting recommendations for the nomination and appointment of ACI candidates to the Board. In the event that we does not constitute at least three ACI Directors at any time, we will endeavour to make an appointment of an ACI candidate to our list of Independent Non-Executive Directors within a period of 12 months. Pleasingly the prescribed targets were met during the reporting period.

Board process and evaluation

We convene four times a year and on an ad-hoc basis should a particular issue demand our attention. In addition, we meet annually to formally consider and approve the strategy of the Massmart Divisions and Group.

Annually in October, the Nominations Committee facilitates a comprehensive Board self-assessment, covering our composition, duties, responsibilities, process and our effectiveness, our sub-Committees, Directors and governance procedures. The assessment process includes an appraisal of our Chairman, Committee members, permanent invitees, CEO and CFO.

The Group Company Secretary conducts and annual evaluation on the performance and effectiveness of the Chairman, the Board, its sub-committees and individual members. This is done through a formal internal evaluation process.  During 2019, an external service provider also conducted a formal evaluation of the Board’s effectiveness with the aim of identifying opportunities for improvement. The review considered the balance of skills, expertise and competencies of the Board.

Assessments are approached in a constructive manner and provide valuable input that enhance the effectiveness of our Chairman, our Committees and ourselves. Although no significant matters of concern were noted, we, along with our 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 our 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 our Board Charter, and as recommended by King IV, the Deputy Chairman of the Board, Phumzile Langeni, who is an Independent Non-Executive Director, serves as the Lead Independent Non-Executive Director.

We actively delegate our authority to the five sub-committees and the Executive Committee in accordance with the scope and mandate prescribed in committee respective Charters. We enable cross membership between the Board and its sub-committees, which in turn requires coordinated timing of meetings; and avoidance or duplication or fragmented functioning in so far as possible and consequently, the Board achieves effective collaboration. There is a balanced distribution of power in respect of membership across committees, so that no individual has the ability to dominate decision-making, and no undue reliance is placed on any individual. Additionally, the Board and committee Charters confer on each Committee specific matters relevant to that Committee and work is allocated accordingly. We delegate our authority to the Massmart Executive Committee through our Delegation of Authority, which we review annually to ensure we are satisfied with it.

Our Company Secretary

During the period, Joe Ralebepa, the Group’s Company Secretary since November 2016, announced his resignation effective 31 December 2019. On 30 December 2019, Nicole Morgan was announced as the Group’s Interim Company Secretary. Nicole is an admitted attorney of the High Court with approximately 8 years of corporate law and company secretarial experience, having served in various capacities in listed corporates including, as Group Assistant Company Secretary at Massmart since May 2017.

The Board is comfortable that it meets the King IV principle of having an arm’s length relationship with the Interim Company Secretary, and confirms that the Interim Company Secretary is not involved in any executive capacity in any of the main operating companies within the Group. The Board confirms that it has assessed and is satisfied that Nicole has the requisite knowledge and experience to fulfil the role of Interim Company Secretary. We are further satisfied that there were arrangements in place for accessing the Interim Company Secretary, which include, personal interface, electronic communication platforms and at quarterly Board and Committee meetings, and that these arrangements were effective.

The Company Secretary assists us in fulfilling our functions and is empowered by us to perform her duties. The Company Secretary, directly or indirectly:

  • Assists the Chairman, the Nominations Committee, the CEO and CFO with the induction of new Directors
  • Assists us 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 us and the Divisions
  • Provides us with a central source of guidance and assistance.