annual report 2009
THE MAIN BOARD OF DIRECTORS OF FOSCHINI LIMITED
The board of directors of Foschini Limited (referred to in this report as Foschini) remains fully committed to business integrity, fairness, transparency and accountability in all its activities. In support of this commitment, the board subscribes to the highest standards of corporate governance in all aspects of the business and to the ongoing development and implementation of best practices.
Foschini fully endorses the principles incorporated in the code of corporate practices and conduct outlined in the second King report (King ll), and in the listings requirements of the JSE Limited.
Foschini has, in all material respects, complied with King ll and is currently reviewing the King III draft to ensure conformance by the time of its implementation in March 2010. The application of King II continues to serve as a valuable guide to the entrenchment of strong governance principles throughout the group.
Role and composition
Foschini has a unitary board structure which, as at the date of this report, comprises three executive and eight non-executive directors. Seven of the non-executive directors are independent according to the King ll definition.
Changes in directorships during the reporting period are noted in the section headed “succession” below.
Detailed information on the directors and their credentials appear here.
As at the date of this report, the board and its committees were constituted as follows:
MAIN BOARD OF DIRECTORS |
REMUNERATION COMMITTEE |
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| D M Nurek (Chairman) | ||||||||||||||||
| Independent non-executive directors | Prof F Abrahams | |||||||||||||||
| D M Nurek (Chairman) | E Osrin* | |||||||||||||||
| E Osrin* | C J Ginsburg (consultant) | |||||||||||||||
| Prof F Abrahams | RISK COMMITTEE |
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| S E Abrahams | D M Nurek (Chairman) | |||||||||||||||
| L F Bergman | E Osrin* | |||||||||||||||
| W V Cuba | D M Polak*** | |||||||||||||||
| N H Goodwin | R Stein | |||||||||||||||
| M Lewis | A D Murray | |||||||||||||||
| K N Dhlomo** | AUDIT COMMITTEE |
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| N V Simamane** | S E Abrahams (Chairman) | |||||||||||||||
| E Osrin* | ||||||||||||||||
| Non-executive director | D M Nurek | |||||||||||||||
| D M Polak | N H Goodwin | |||||||||||||||
| W V Cuba | ||||||||||||||||
| Executive directors | D M Polak*** | |||||||||||||||
| A D Murray (CEO) | NOMINATIONS COMMITTEE |
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| R Stein (Financial Director) | D M Nurek (Chairman) | |||||||||||||||
| P S Meiring*** | E Osrin* | |||||||||||||||
| S E Abrahams | ||||||||||||||||
| A D Murray | ||||||||||||||||
|
TRANSFORMATION COMMITTEE |
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| Prof F Abrahams (chairperson) | ||||||||||||||||
| D M Nurek*** | ||||||||||||||||
| A D Murray | ||||||||||||||||
| R Stein | ||||||||||||||||
| E Osrin* | ||||||||||||||||
The non-executive directors come from diverse backgrounds in commerce and industry. Their collective experience enables them to provide sound, independent and objective judgement in decision-making that is in the best interests of the group. They are ultimately responsible for the performance of the group, its long-term sustainable growth, and the enhancement of shareholder value. They review and ratify the group’s strategy in addition to monitoring and measuring its performance and executive management against key performance indicators. They provide opinion and advice regarding the group’s financial, audit, governance and risk management controls. In order to ensure sustainable leadership they review group transformation and succession planning at senior levels, and provide input to the remuneration process.
E Osrin retired as Chairman with effect from 31 March 2009 and D M Nurek, previously Deputy Chairman, was appointed as chairman. He is an independent non-executive director. The roles of the Chairman, D M Nurek, and the Chief Executive Officer, A D Murray, are separate, with a clear division of responsibilities. Both provide leadership and guidance to the company’s board, encourage deliberation on all matters requiring the board’s attention, and obtain optimum input from the other directors. All directors exercise unfettered discretion in the fulfilment of their duties, resulting in constructive debate at meetings that continues to yield well-considered decisions.
Newly appointed non-executive directors hold office only until the next annual general meeting, at which time they retire and become eligible for re-election as directors. Each year, one-third of the existing board members are subject to retirement by rotation and are eligible for re-election as directors by the shareholders. Non-executive directors have no fixed term of employment, and the performance of all directors is subject to annual peer review.
A formal induction programme for new directors is in place with the objective of maximising their understanding of the group and enabling them immediately to provide input and make well-informed decisions.
Board meetings
The board typically meets quarterly in Cape Town, and further meetings are held at short notice when necessary.
The board and its committees are timeously supplied with comprehensive information to enable them to undertake meaningful discussion and effectively discharge their duties. All directors have unrestricted access to the company secretary and all company records as well as to independent professional advice at the company’s expense in appropriate circumstances.
Board evaluations
An annual evaluation of the board is undertaken by the Chairman by means of a questionnaire sent to all board members. The results are collated by the Chairman and feedback is provided to the full board. These are minuted and available for scrutiny by the external auditors.
This annual evaluation is comprehensive, encompassing all aspects of the board’s responsibilities. It covers both individual member contributions and the effectiveness of the board as a whole. The results of the executive and non-executive directors are separately tabulated, in order to gauge any areas of difference in perception.
The areas identified for improvement in last year’s report have been addressed.
The nominations committee is responsible for assessing the composition and effectiveness of all of the board committees. Where shortfalls are identified, appropriate action is taken to rectify them.
Directors’ shareholdings
The direct and indirect holdings, share options, and transactions of the directors of Foschini at 31 March 2009 are set out in note 13.5.
Non-executive directors do not participate in the share incentive schemes, with the exception of Mr D M Polak who obtained options whilst still an executive of the company.
Personal share dealings
The board complies with the requirements of the JSE Limited in relation to restrictions on the trading of Foschini’s shares by directors and employees during the defined closed periods. Restrictions may also be placed on share dealings at other times if the group is involved in corporate activity or sensitive negotiations. The company secretary notifies all directors and employees prior to the commencement of the closed trading periods of the prohibitions contained in the Insider Trading Act relating to share dealings whilst in possession of price-sensitive information.
Details of directors’ share dealings are disclosed to the listings division of the JSE Limited and communicated through its electronic news service, SENS. These dealings are also disclosed at board meetings. There is a process in place in terms of the requirements of the JSE Limited for directors to obtain prior clearance before dealing in the company’s shares. All transactions are conducted at the ruling market price on the JSE Limited.
Succession
As is required by its charter, the nominations committee recommended the following changes to directorships during the reporting period. These changes, which were approved by the main board, are aligned to the group’s succession planning, which is designed to ensure sustainable leadership.
Main Board:
K N Dhlomo and N V Simamane were appointed as independent non-executive directors with effect from 23 February 2009.
P S Meiring was appointed as an executive director with effect from 1 April 2009.
During the year the following directors retired/resigned:
L F Bergman resigned as an independent non-executive director with effect from 14 April 2008.
N H Goodwin retired as an independent non-executive director with effect from 3 September 2008.
E Osrin retired as Chairman and independent non-executive director with effect from 31 March 2009.
Directors’ interests
The directors had no interest in contracts as contemplated in section 234 of the Companies Act.
Board attendance
The attendance of the directors at board meetings and board committee meetings for the financial year was as follows:
| Audit | Remuneration | Risk | Nominations | Transformation | ||
| Board | Committee | Committee | Committee | Committee | Committee | |
| Number of meetings | 4 | 3 | 5 | 4 | 2 | 3 |
| Directors’ Attendance | ||||||
| E Osrin | 4 | 3 | 4 | 3 | 2 | 2 |
| D M Nurek | 4 | 3 | 5 | 4 | 2 | |
| F Abrahams | 4 | 4 | 3 | |||
| S E Abrahams | 4 | 3 | 1 | |||
| L F Bergman | 1 | |||||
| W V Cuba | 4 | 3*** | ||||
| N H Goodwin | 2 | 1 | ||||
| M Lewis | 4 | |||||
| D M Polak | 4 | |||||
| R Stein | 4 | 3* | 3 | 3 | ||
| A D Murray | 4 | 3* | 5* | 4 | 2 | 2** |
| * by invitation | ** appointed 1 January 2008 | *** appointed 26 May 2008 |
| resigned with effect from 14 April 2008 | retired with effect from 3 September 2008 | retired with effect from 31 March 2009 |
