The Group has a unitary Board of 13 directors, of whom seven are independent non-executive directors, four are non-executive directors and two are executive directors. There is also one alternate non-executive director. One independent non-executive director, Dr PM Moumakwa and the alternate non-executive director, Mr PJ Neethling were appointed to the Board during the year. The Chairman of the Board,Mr JJ Durand, is not independent but, given his role as Chief Executive Officer (CEO) of Remgro Limited (which owns a majority share in RCL FOODS), the Board deemed this appointment appropriate and key to achieving the business objectives of RCL FOODS. The roles of Chairman and CEO are separate, and a clear division of responsibility exists between the two.
The Board conducts the affairs of the Group on the basis of its diverse industry knowledge and experience, and ensures that its composition is appropriate for the effective execution of its responsibilities. The Board ensures that an appropriate balance of power and authority exists so that no individual or block of individuals has unfettered decision-making powers or undue influence on the Board. To ensure good governance, and as recommended by King IV, Mr RV Smither maintains his role as lead independent director, and assumes chairmanship in instances where the Chairman is not independent or is conflicted.
Details of the directorate of the RCL FOODS Board are provided on pages 44 and 45 of the Abridged Integrated Annual Report which is available on our website at www.rclfoods.com/financial-results-and-investor-presentations-2019
Board Responsibilities and Meeting Attendance
The Board gives strategic direction to the Group, whilst retaining full and effective control over the Group and monitoring executive management in implementing plans and strategies. The roles and responsibilities of the Board are set out in a formal Board Charter, which is reviewed annually.
The complete terms of reference of the Board are detailed in the Board Charter, available on our website at www.rclfoods.com/financial-results-and-investor-presentations-2019
Directors who are unable to attend meetings tender their apologies and reasons for non-attendance in advance and provide feedback to the Chairman prior to the meeting.
ACCESS TO RECORDS AND INDEPENDENT ADVICE
Directors have unrestricted access to all Group information, records, documents and property. Non-executive directors have access to management and may meet separately with management, without the attendance of executive directors. All directors have access to the advice and services of the Company Secretary, and directors may obtain independent professional advice at the Group’s expense, should they deem this necessary.
The Board is cognisant of the duties of the Company Secretary who is accordingly empowered to properly fulfil those duties. Mr JMJ Maher is the Company Secretary and in addition to the statutory duties, he fulfils the following functions in line with the Board Charter:
- induction of directors;
- provision of guidance to the Board and individual directors on how their responsibilities should be properly discharged in the best interests of the Group;
- provision of guidance to the Board on the duties of the directors, matters of ethics and good governance; and
- acts as the primary point of contact between shareholders and the Group.
The Board assessed and was satisfied that the Company Secretary is competent and has the requisite qualifications and experience to effectively execute his duties. The Company Secretary maintains an arm’s length relationship with the Board and the directors, taking into account that the Company Secretary is not a director of the Company and is not related to any of the directors.
All independent non-executive directors are subject to an independence evaluation by the Board. The Board considers whether the director is independent in character and judgement and whether there are any relationships or circumstances which are likely to affect, or could appear to affect, the director’s independence. On the basis of the findings of this evaluation, the Board is of the opinion that Messrs NP Mageza, RV Smither, DTV Msibi, GM Steyn, Mrs MM Nhlanhla, Ms CJ Hess and Dr PM Moumakwa are independent. All other non-executive directors are not considered independent due to their being directors of either Remgro Limited or the BEE consortium, which are major shareholders in RCL FOODS. All directors are required to declare, on an annual basis, any interest in proposed transactions or arrangements with the Group. In addition, all other material interests are disclosed by directors as and when they arise.
APPOINTMENTS TO THE BOARD
The Board has adopted policies on the Promotion of Gender Diversity and Race Diversity at Board level. The process of identifying suitable candidates for appointment involves taking into consideration diversity and inclusion. The Board has considered and applied the gender and race diversity policies in making appointments to the Board in the 2019 financial year. Procedures for appointment to the Board are formal and transparent, and a matter for the Remuneration and Nominations Committee. This Committee consists of five non-executive directors and meets at least twice a year. Mr NP Mageza is the Chairman, and the other members are Messrs JJ Durand, GM Steyn and RV Smither, and Dr PM Moumakwa (appointed 1 March 2019). The Lead Independent Director of the Board serves as Chairman of the Committee for nomination matters. The CEO and Chief Human Resources Officer also attend meetings of the Remuneration and Nominations Committee as permanent invitees.
The Committee considers the Board’s composition, retirements and appointments of additional and replacement directors. Executive directors are appointed to the Board on the basis of skill, experience and level of contribution to the Group, and are responsible for the running of the business. Non-executive directors are selected on the basis of industry knowledge, professional skills and experience. On their appointment to the Board, new directors visit the Group’s businesses and meet with senior management, as appropriate, to facilitate their understanding of the Group and their fiduciary responsibilities. The Board has reviewed its required mix of skills and experience, as well as other qualities such as demographics and diversity, in order to assess its effectiveness and that of its committees and individual directors.
In accordance with the Memorandum of Incorporation, not less than one third of the directors are subject to retirement and re-election by shareholders on an annual basis. As a result of this requirement, the following directors will retire by rotation at the 2019 Annual General Meeting: Messrs M Dally, RH Field, PR Louw, JJ Durand and DTV Msibi. All retiring directors have made themselves available for re-election.
For the period under review, the Company Secretary facilitated a performance evaluation of the Board and its committees based on the requirements of King IV. These are formal evaluations, coordinated by the Remuneration and Nominations Committee, which annually assess the effectiveness of the following categories:
- Board composition and meetings;
- Board committees;
- Board information;
- Board orientation and development;
- Board functioning and processes;
- Chairman; and
- Individual evaluation
RCL FOODS is committed to achieving the highest level of corporate governance and ethical business behaviour in order to create sustainable value for its stakeholders. The directors recognise that good corporate governance is about leadership and that it is necessary to conduct the enterprise with integrity and in compliance with legislation, regulations and best practices relevant to the Group’s business. Governance in the Group extends beyond mere legislative and regulatory compliance, and the directors strive to entrench an enterprise-wide culture of good governance and ethical conduct. For RCL FOODS, corporate governance incorporates the structures, processes and practices that the Board uses to assist it in managing and directing the Group’s operations.
Board committees assist the Board in discharging its responsibilities. The role and responsibility of each Board committee is set out in formal charters defining terms of reference, duration and functions, clearly agreed upon reporting procedures and scope of authority for each committee. Committees are free to obtain independent external professional advice as and when necessary, and are subject to evaluation by the Board to ascertain their performance and effectiveness.
The complete terms of reference of the Board committees are detailed in the individual committee charters available on our website at www.rclfoods.com