WELCOME TO OUR ONLINE ANNUAL REPORT 2011

Board

THE BOARD COMPRISES:
  • Two Executive Directors
  • Four Independent
    Non-executive Directors
  • Three Non-executive Directors

 

The Board

The Board of Massmart is responsible for directing the Group towards the achievement of the Massmart vision and mission. The Board is therefore accountable for the development and execution of the Group's strategy, operating performance and financial results, as well as being the custodian of the Group's corporate governance. The Board appreciates that strategy, risk, performance and sustainability are inseparable.

The Board is responsible for its own composition, the appointment of the Chairman and the Chief Executive Officer, and the constitution and composition of its Committees. The Board has a charter setting out its policies, roles and responsibilities in the execution of its mandate described above. Each Board Committee also has a charter, or terms of reference, that is formally signed off by the Board. Annually in November the Committees and Board review, and amend if necessary, the respective charters to ensure their relevance.

The role of all directors is to bring independent judgement and experience to the Board's deliberations and decisions. With effect from June 2011, the Board comprises two executive directors, four independent non-executive directors and three non-executive directors.

Annually, the Remuneration and Nominations Committee prepares and circulates 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 Committee, which then considers each director's independence.

The Committee feels that the following aspects are important in assessing a non-executive director's independence:
  • Whether the director had been employed in an executive capacity in the Group in the previous three years;
  • 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 could be compromised, or may appear to be compromised, by this length of service;
  • Whether the director is a representative of a major shareholder; and
  • READ MORE
    MASSMART AT A GLANCE Biographical details of each Board member can be found here
  • Whether the proportion of that director's shareholding in Massmart (if any) or director's fees represented a material part (10% or more) of their wealth or income.

In addition to the above, the Committee considers whether the director is independent in character and judgement and whether there are circumstances which are likely to affect, or could appear to affect, the director's judgement. Having considered the circumstances of each non-executive, the Committee believes that with effect from June 2011, four of the non-executive directors can be considered independent while the three Walmart appointees are not considered independent. Finally, the Committee believes that none of the four non-executive directors, or entities associated with or controlled by him/her, owns shares in Massmart which, relative to his/her personal wealth or income, are sufficiently material to affect his/her independence.

The Company Secretary, Mr Ilan Zwarenstein, CA (SA), 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, CEO and CFO with induction of new directors;
  • Assists the Board with director orientation, development and education;
  • Ensures that the Group complies with all legislation applicable/relevant to Massmart;
  • 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.


All directors retire by rotation every three years and, unless requested by the Board to serve a further term, retiring directors are not proposed for re-election by the shareholders. In addition, shareholders must ratify the initial appointment of each director at the first annual general meeting following that director's appointment. As a result of the requirement that all directors face compulsory retirement after three years or following their initial appointment to the Board, at the 23 November 2011 annual general meeting the following directors retire by rotation but all offer themselves for re-election: Messrs Jeffrey Davis, Doug McMillon, Grant Pattison, Chris Seabrooke and JP Suarez.

Board process and evaluation

The Board meets four times a year and on an ad hoc 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.

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 Governance Authorities (described below). In addition, the Board has delegated certain specific responsibilities to three Board Committees, described more fully below. These Committees assist the Board and directors in discharging their duties and responsibilities under King III and the Governance Authorities. 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 or Divisional Board meetings.

The Massmart Governance Authorities describe the specific levels of authority and required approvals for all major decisions at both Group and Divisional level. It clarifies which executive position, Committee or Board needs to be consulted prior to taking the decision, which body makes the decision and which bodies should thereafter be informed of the decision. Where appropriate, it now includes the Walmart position on the decision.

The Board works to a formal agenda that covers strategy, structure, operating performance, growth initiatives, sustainability, investor relations, risk and governance, and any other key activities of the Group. An annual agenda structure ensures that other areas including IT and compliance are addressed. 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. During this financial year no director felt it necessary to seek such advice. They also have direct, unfettered access to the Group's external auditors, professional advisors and to the advice and services of the Company Secretary.

Directors have unrestricted access to any executive, manager or employee in the Group. Annually in September, the Remuneration and Nominations Committee facilitates a comprehensive formal performance evaluation of the CEO, comprising a self-evaluation, 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. As noted elsewhere, there was no CEO assessment during 2011.

At the same time, all Board members complete a detailed Board self-assessment, covering the composition, duties, responsibilities, process and effectiveness of the Board. Similarly, all Board Committee members 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 Chairpersons for a formal written response. The summarised results together with the Chairpersons' written responses are included in the Board papers at the November meeting. As noted elsewhere, no self-assessments were performed during 2011.

Finally, all Board members formally assess the Chairman's performance and the Deputy Chairman provides the feedback. These assessments are approached in a constructive manner and provide valuable input that enhances the effectiveness of the Chairman, the Board and its Committees. As noted elsewhere, none of these assessments were performed during 2011.


READ MORE
CORPORATE GOVERNANCE
Greater detail on each Committee's terms of reference, activities and meetings held during the financial year are shown here

Board and Committee attendance

  Status/Position Board AGM Audit and Risk Remuneration
and Nominations
Social and Ethics
BOARD MEMBERS          
MJ Lamberti Independent Non-executive 4/4c 1/1 2/4i 1/3c  
CS Seabrooke Independent Non-executive 3/4 1/1 4/4 2/3  
MD Brand1 Independent Non-executive 3/3 0/1 - - 2/2
JA Davis2 Non-executive   1/1 - - - -
KD Dlamini1 Independent Non-executive 1/3 0/1 - 1/2 -
NN Gwagwa Independent Non-executive 4/4 0/1 - - -
GRC Hayward Executive   4/4 1/1 4/4i 3/3i -
JC Hodkinson1 Independent Non-executive 3/3 0/1 - - -
P Langeni Independent Non-executive 4/4 0/1 3/4 - 2/2c
IN Matthews1 Independent Non-executive 3/3 1/1 4/4c 2/2 -
P Maw1 Independent Non-executive 3/3 0/1 4/4 - -
CD McMillon2 Non-executive   1/1 - - 1/1 -
DNM Mokhobo1 Independent Non-executive 3/3 1/1 - 2/2 -
GM Pattison Executive   4/4 1/1 3/4i 2/3i -
MJ Rubin1 Independent Non-executive 3/3 0/1 - - -
JP Suarez2 Non-executive   1/1 - - - -
MANAGEMENT              
N Gray Chief Audit Executive   - - 3/4i - -
B Leroni Corporate Affairs Executive - - - - 2/2i
P Maphoshe Human Capital Executive   - - - - 2/2i
EXTERNAL              
Prof D de Jongh Independent permanent invitee - - - - 2/2
               
c  Chairperson of Committee
i   Invitee
1  Resigned from the Board on 20 June 2011
2  Appointed to the Board on 20 June 2011


Board Committees

  Composition Scheduled
meetings
Further reading Responsibility
AUDIT AND RISK
COMMITTEE
Chris Seabrooke
Lulu Gwagwa
Phumzile Langeni
Four times

during the year.

More information on the activities and responsibility of the Audit and Risk Committee can be found here.
CORPORATE GOVERNANCE
  • Overseeing the effectiveness of the Group's internal control system.
  • Reviewing the scope and effectiveness of the external and internal audit functions.
  • Ensuring that adequate accounting records have been maintained.
  • Ensuring the appropriate accounting policies have been adopted and consistently applied.
  • Reviewing and reporting on compliance with the King III Report.
  • Testing that the Group's going-concern assertion remains appropriate.
  • Overseeing the quality and integrity of the annual financial statements.
  • To oversee the Group's risk management programme as contemplated in King III.
         
REMUNERATION AND NOMINATIONS COMMITTEE
Mark Lamberti
Chris Seabrooke Doug McMillon

 
Three times during the year. More information

on the activities and responsibility of the Remuneration and Nominations Committee can be found here.
CORPORATE GOVERNANCE

  • Designing, monitoring and communicating the Group's remuneration policies.
  • Considering and approving executive remuneration including short- and long-term incentives.
  • The assessment, recruitment and nomination of new non-executive directors.
         
SOCIAL AND ETHICS COMMITTEE
Phumzile Langeni
Grant Pattison
JP Suarez  
Twice during

the year.

More information on the activities and responsibility of the Social and Ethics Committee can be

found here.
CORPORATE GOVERNANCE

  • Assist the Group with its responsibility towards sustainability with respect to practices that are consistent with good corporate citizenship.
  • Assess the Company's standing in terms of the United Nations Global Compact Principles.
  • Consider the Company's standing with regards to the OECD recommendations concerning corruption, the contribution to development within our communities, labour and employment, and the environment and health and public safety.