Corporate governance encompasses the concept of sound business practice, which is inextricably linked to the Group’s management systems, structures, policies and culture of governance, and ensures that the Group acts towards all stakeholders in a responsible and transparent manner from an economic, social and environmental perspective.
PRINCIPLES OF CORPORATE GOVERNANCE AND STRUCTURES
The board reaffirms its commitment to sound governance. It ensures that the Group’s business is conducted in accordance with the highest standards of corporate governance, using risk management and control in accordance with local and internationally accepted corporate practice. These standards are well embedded in the Group’s system of internal controls, which have been implemented to comply with King III recommendations and the governance requirements of the Companies Act, 2008.
The board meets at least quarterly and is responsible to shareholders for setting direction through strategic objectives and key policies, and monitoring implementation through structured reporting systems.
The Company has a unitary board structure, comprising two executive directors and 10 non-executive directors (six of whom are independent non-executives as defined by King III).
The non-executive directors are drawn from diverse backgrounds and bring a wide range of experience, insight and professional skills to the board to ensure effective leadership of the Company. Generally non-executive directors have no fixed term of appointment but, in terms of the memorandum of incorporation, retire by rotation every three years and, if available, are considered for reappointment at the annual general meeting. Directors appointed to fill a vacancy on the board during the year, retire at the next annual general meeting of the Company, enabling shareholders the opportunity to confirm their appointment.
The board follows a formal and transparent process when appointing new directors. The Nominations Committee considers director succession planning and makes appropriate recommendations to the board. It evaluates skills, knowledge and experience required to implement Group strategy.
During the year under review, Cynthia Carroll served as chairman of the board as well as chief executive of Anglo American plc. The board is cognisant of the preference stated by King III for the chairman to be independent. However, the board is aware that the Code contemplates the appointment of a non-independent chairman, requiring that, in those circumstances, a lead independent non-executive director should be nominated. In the case of Amplats, Valli Moosa serves as independent deputy chairman and lead independent non-executive director, supported by five other independent non-executive directors, which provide a robust board structure to ensure good governance. Mrs Carroll subsequently announced in October 2012 that she will be stepping down from Anglo American plc as well as director and chairman of Amplats with effect from 26 April 2013.
The role of the chairman and CEO are separate. To ensure further clarity of roles, the board has adopted a Statement of Division of Responsibilities among the chairman, the lead independent non-executive director and the chief executive, which clearly sets out the responsibilities of each individual’s role. This is available on the Company’s website. This allows for a clear balance of power and authority at board of directors’ level to ensure that no one director has unfettered powers of decision-making.
The chairman is responsible for leading the board and its effectiveness. The deputy chairman and lead independent non-executive director, is available to shareholders, acts as a sounding board and confidant of the chairman and is available as an intermediary for the other directors, if necessary. The chief executive is responsible for the execution of strategy and the day-to-day business of the Company, supported by the Executive Committee (Exco) and the Operations Committee (Opsco), both of which he chairs. The functions and membership of the Exco and Opsco are set out on page 165.
If a director becomes aware that he or she has a direct or indirect interest which may be construed as being in conflict with the business of the Company he or she should notify the board at the next board meeting or submit a written declaration of interests. Directors have a continuing obligation to update their declarations of interests and recuse themselves from any discussion or decisions taken by the board should they be in conflict.
The board has a charter setting out its mission, role, duties and responsibilities, and, in particular, the following:
- Directors’ fiduciary responsibilities
- Leadership of the board
- Induction of new directors
- Evaluation of directors
- Matters reserved for the board
- Relationship between staff and external advisers
- Unrestricted access to Company records
- Board meetings and procedures
- Executive succession planning
The board and management continually review and enhance the systems of control and governance to ensure that the Group’s business is managed ethically and within prudent risk parameters, in line with internationally accepted standards of best practice. The Governance Committee, from time to time, monitors and deliberates on changes to the legislative and statutory environment, new business policies and matters of compliance. This ensures that the board is kept apprised of new developments, and monitors and supports governance and sound business practice in the organisation.
The following changes to the board occurred during the year under review: the resignations of Godfrey Gomwe, Albertinah Kekana as independent non-executive director and the leaving of Neville Nicolau as chief executive of the Company, and the appointments of Christopher Griffith as chief executive on 1 September 2012, Khanyisile Kweyama as non-executive director on 15 October 2012 and John Vice as an additional independent non-executive director on 30 November 2012.
The board charter terms of reference of the board committees, the roles and responsibilities of the directors, as well as the Company’s Business Integrity Policy for directors and employees, are detailed and updated as necessary and are available on the Company’s website.
Evaluation of the performance of all board members and members of subcommittees is formally conducted annually. This evaluation process was conducted internally during 2012, and it assessed the board of directors and subcommittees based on a self-evaluation process and specific questions and criteria. Each director is encouraged to focus on his or her personal perception of the board as a whole, and the performance of board committees, the chief executive and the finance director.
A comprehensive report and feedback on board and committee effectiveness are delivered on the results of the assessments to assist them in becoming more effective.
A formal induction process for directors is in place. Upon appointment directors are provided with recent board and committee documentation, information on legal and governance obligations, the Company’s memorandum of incorporation and recent reports. Guidance is provided on dealing in shares, the King III Code and the Companies Act, 2008. Directors are entitled to seek independent legal advice at the cost of the Company. Educational visits are arranged to underground and opencast mines, the processing operations, projects and joint ventures. Meetings are arranged between new directors and members of Exco to explain their areas of responsibility and to develop a full understanding of the complex business and operations which constitute Amplats.
Except for the chairman, who receives a single inclusive fee, the board and board subcommittee chairmen and members are paid a flat fee per annum, as recommended by Exco, noted by the Remuneration Committee and recommended by the board of directors to shareholders for approval. This fee encompasses the responsibility of ensuring that each committee attains its core objectives in line with each committee’s terms of reference. Company executives are evaluated – and remunerated and rewarded – based on targets, key performance indicators and corporate objective weightings that include safety and sustainable development criteria. See page 172 for the detailed remuneration report.
Amplats applied the King III principles (the Code) for the period under review. In order to determine the extent of compliance with the Code, management commissioned an independent review in the third quarter 2012, which was undertaken by PricewaterhouseCoopers. The results of the review indicated substantial compliance with the Code, however, the appointment of a compliance officer and the formulation of risk appetite and tolerance levels were areas that required attention. Management continues to make firm progress in resolving these items and the intention is to finalise these issues before the second quarter of 2013.
The board is responsible to shareholders for setting economic, social and environmental direction through strategic objectives and key policies, and monitors implementation through structured reporting systems. From 1 January 2012 to the date of this report on 1 February 2013, the board comprised:
COMMITTEES OF THE BOARD
The board has established a number of standing committees, which are ultimately accountable to it. These committees assist the board by focusing on specialist areas. The board committees meet independently and provide feedback to the main board through their chairman. The roles and representation of these subcommittees are listed in the table on page 165.
In addition to the abovementioned committees of the board, several operating committees function within the Group. The Executive Committee (Exco) comprises directors of wholly owned subsidiary company Anglo Platinum Management Services Proprietary Limited, the provider of the major portion of financial, technical and administrative advisory services to the Company. Members of the Exco are detailed on pages 158 to 159 of this report and Exco usually meets on a weekly basis. The Operations Committee (Opsco) is chaired by the CEO and is constituted of the heads of all departments. Opsco meets on a monthly basis to review the operating performance of the Company.
Recommends policies and strategies; monitors implementation; deals with all executive management business; responsible for all strategic matters not expressly reserved for the board.
Chris Griffith*, Neville Nicolau5, Pieter Louw, Ben Magara
Responsible for all operational matters; co-ordinates, manages and monitors resources; regularly reviews risk to achieve the Group’s aims.
Chris Griffith*, Neville Nicolau5, Pieter Louw, Ben Magara
Monitors adequacy of financial controls and reporting; reviews audit plans and adherence to these by external and internal auditors; ascertains the reliability of the audit; ensures financial reporting complies with IFRS and the Companies Act; reviews and makes recommendations on all financial matters; recommends auditors to the board; monitors the Company’s appetite for risk and concomitant controls.
Richard Dunne*, Sonja Sebotsa12, Valli Moosa, John Vice9
Reviews quality of corporate governance and makes recommendations to the board; advises directors and management on the Companies Act, JSE Listings Requirements, King III Code and other governing legislation.
Valli Moosa*, Richard Dunne, Godfrey Gomwe1, Bongani Khumalo
Considers suitable nominations for appointments to the board and succession planning, and makes appropriate recommendations based on qualifications and experience.
Cynthia Carroll*, Richard Dunne, Valli Moosa, Tom Wixley³
Establishes the overall principles of remuneration and determines the remuneration of executive directors and executive heads; considers, reviews and approves Group policy on executive remuneration and communicates this to the stakeholders in the annual report.
Wendy Lucas-Bull*, Tom Wixley*³, Richard Dunne, Brian Beamish8
Safety & Sustainable Development Committee
Develops framework, policies and guidelines for S&SD management, and ensures implementation; monitors Group compliance with relevant legislation. Evaluates material sustainable development impacts in light of the precautionary principle and advises the board accordingly. It has a reporting line into the SE&T and Audit committees and directly into the board.
Dorian Emmett*, Brian Beamish, Richard Dunne, Bongani Khumalo
Social, Ethics & Transformation Committee
Monitors and develops the Company’s compliance with the Companies Act, 2008, and goals with respect to the 10 principles set out in the UN Global Compact Principles as well as the OECD recommendations on corruption, the Employment Equity Act, the Broad-based Black Economic Empowerment Act, good corporate citizenship, labour and employment.
Wendy Lucas-Bull*, Richard Dunne, Dorian Emmett
1 Resigned 15 October 2012. 6 Appointed 1 September 2012. 11 Appointed 29 October 2012.
2 Resigned 25 September 2012. 7 Resigned 10 December 2012. 12 Resigned 1 February 2013.
3 Retired 30 March 2012. 8 Appointed 25 April 2012. 13 Appointed 1 January 2013.
4 Appointed 15 October 2012. 9 Appointed 30 November 2012. 14 Appointed 30 October 2012.
5 Left 19 July 2012. 10 Resigned 31 December 2012.
KEY GOVERNANCE POLICIES
Key governance policies
A number of governance policies are enforced within Amplats and its subsidiary companies. These comprise, but are not confined to, the declaration of business interests, the declaration of gifts, gratuities and hospitality, anti-insider trading, confidentiality, anti-competitive behaviour, authority limits and various other general operational policies and procedures.
Business principles and business integrity code
Ethics are practised at Amplats by promoting leadership and inculcating a culture of integrity; by the observance of directors’ fiduciary duties and responsibilities; by avoiding conflicts of interest and acting in the best interests of the organisation; by encouraging whistle-blowing; and by promoting the values and principles set out in our codes of conduct.
During 2012, Group-wide training was continued to ensure that employees and suppliers were made aware of the requirements of the business integrity code and how they are expected to conduct themselves.
Authority policy manual
Amplats has a detailed Authority Policy Manual in place, which is updated on a regular basis. Its objectives are to delegate transactional and contractual authority from the board to Amplats staff and officials at various levels. This provides effective and practical directives and guidelines for minimising or eliminating the Company’s possible exposure to risk emanating from the unauthorised actions of its officials.
It also ensures that Amplats staff and officials fully understand demarcated authorisation limits, and strictly adhere to them.
In addition, all directors, prescribed officers and key personnel attended training on the Companies Act, 2008.
Systems, compliance and enforcement
Compliance with and enforcement of the Companies Act, 2008, JSE Listings Requirements, legislation governing the mining industry and the Company’s governance policies are monitored and tracked through internal monitoring and reporting systems, reviews, and internal and external audits.
No requests for information were lodged with the Company in terms of the Promotion of Access to Information Act, 2000, in 2012.
GOVERNANCE AND OUR JOINT-VENTURE PARTNERS
GOVERNANCE AND OUR JOINT-VENTURE PARTNERS
Non-managed joint ventures and associates are governed by monthly steering and management committee meetings and quarterly joint-venture Executive Committee meetings at which Amplats has representation. The agreements make provision for the management committees to constitute subcommittees to monitor areas such as employment equity, resource management, planning, production, safety, health, environment, audit, social development, community engagement and remuneration. The joint-venture governance process is included in the Sustainable Development Report.
In terms of section 3.84(i) of the JSE Listings Requirements the board must consider and satisfy itself, on an annual basis, on the competence, qualifications and experience of the company secretary.
Prior to the appointment of both Sarita Martin as company secretary and then Kevin Lester as acting company secretary, the board satisfied itself of this requirement.
GOVERNANCE OF RISK
GOVERNANCE OF RISK
The board of directors of Amplats has specific responsibility over risk management in the Group. The board has delegated this function to the Audit Committee, which regularly reviews significant risks and also the mitigating strategies designed to manage these risks. The Audit Committee subsequently reports to the board on material changes in the Group’s risk profile. The risk-management process is facilitated by Anglo American Business Assurance Services (ABAS). However, overall accountability and responsibility for risk management rest with Amplats’ board of directors, senior management team and other officers.
The Group’s integrated risk management (IRM) methodology is based on ISO 31000 and is performed at four main levels:
- The strategic level (markets and the global economy)
- The organisational level (entities)
- The operational level (safe, profitable platinum)
- The technical level
The diagram above illustrates the overall risk-management process undertaken at each level of the Group. The framework presented in the opposite table provides an overview of the levels at which risk assessments take place, culminating in the Executive Risk Summary at Group level.
Considerations of risk appetite and risk tolerance are inherent in all business decisions within Amplats. Senior management has, however, initiated a process to formally define risk appetite and tolerance levels for the Group. A proposal is under development and will be submitted to Amplats’ board of directors in 2013. Risk appetite and tolerance
Once approved, a formal risk appetite and tolerance statement will be included in the Group’s risk management framework.
Assurance on the risk-management process
Assurance on the Group’s risk-management process is ongoing.
It is obtained primarily through the following:
- Risk-based internal audits. This entails incorporating identified risks into the individual audits that form part of the annual internal audit coverage plan.
- Risk registers and associated action plans. These are maintained at each operation by dedicated risk co-ordinators who use Cura management software to facilitate ownership of, and accountability for, risk management at an operational level.
- The annual review conducted by ABAS on the risk-management processes in the Group.
Amplats’ key risks and their mitigation strategies
Potential root cause of risks
Current mitigating strategies
1. Global economic conditions
Continuation of global financial market uncertainty.
2. Market concerns regarding security of PGM supply
Events/developments that could result in supply uncertainty for platinum group metals (PGMs).
3. Social unrest
Deterioration in the social context of the operations, community protest and blockades.
4. Inability to sustain safety performance improvements
Current improvements in safety are eroded.
5. Employee health impairment
Possible long-term impacts on employee health, with associated liabilities.
6. Inability to achieve and sustain cost efficiencies
Inability to sustain the cost efficiencies created through asset optimisation, labour-strength
7. Inadequate capital replacement and expansion
Capital replacement and expansion projects cannot adequately sustain the business.
8. Power-supply constraints
Potential electricity shortages.
9. Water-supply constraints
Potential water shortages.
10. Unfavourable policy changes in South Africa
Changes to Government policy in South Africa impact the business.
11. Loss of economic value in Zimbabwe
Threat to Zimbabwean assets.