Creating Value Through Good Governance
Corporate governance philosophy
The group’s robust governance and compliance framework is based on the principles of accountability, transparency, ethical management and fairness, and a philosophy of sound governance is entrenched across the business.
While the board is unwavering in its adherence with legislation, regulations and codes, our commitment to good governance goes beyond compliance. The directors recognise that good governance can benefit long-term equity performance and enhance shareholder value.
We believe that governance can contribute to value creation through enhanced accountability to shareholders, more effective risk management and mitigation, equitable performance management and reward structures, greater transparency and disclosure, improved reporting to shareholders, effective leadership and decision-making, and avoiding sanction or penalties for non-compliance.
Governance processes are regularly reviewed to align with legislative and regulatory changes and to reflect changes in the business to ensure processes remain relevant.
The annual evaluation for inclusion in the JSE Socially Responsible Investment Index provides an independent assessment of companies’ corporate governance, social and environmental practices. Clicks Group qualified for inclusion in the Index for the fifth time in the 2015 financial year, meeting all the required social and governance related core indicators, which is a pleasing external endorsement of our governance standards.
The group voluntarily applies the principles of the King Code of Governance Principles 2009 (King III) and the board remains satisfied with the manner in which the group has applied the recommendations of the code. Principle 9.3 was not applied during 2015.
The governance landscape in South Africa will be further enhanced with the proposed introduction of the King IV Code of Corporate Principles in 2016, which is anticipated to be effective from 2017. There have been significant corporate governance and regulatory developments, both locally and internationally, since the introduction of King III in 2009 which will hopefully be incorporated into the new code. We welcome governance codes which facilitate value creation without adding burdensome compliance requirements on companies.
David Nurek
Independent non-executive chairman
Board diversity and independence
Clicks Group has a diverse and independent board of nine directors, comprising three salaried executive directors and six non‑executive directors.
The diversity of the directors in terms of gender, race and their professional backgrounds encourages constructive debate and ensures that the board considers the needs of a wide range of stakeholder interests.
All six non-executive directors are classified as being independent in terms of King lll. This was confirmed in the 2015 internal evaluation of the performance and independence of the non-executive directors which included a rigorous assessment of chairman, David Nurek, who has served as a non-executive director for 18 years.
There are no shareholder interests represented on the board, further confirming the independence of the board.
Director election
Regular election of directors ensures that shareholders are able to exercise their right to appoint directors they believe will add value to the company. One-third of the non-executive directors are required to retire at the AGM each year. Executive directors retire on the third-year anniversary of their appointment or most recent re-election to the board. All retiring directors are eligible for re-election. Independent non-executive directors David Nurek and Fatima Jakoet, and executive director David Kneale, are standing for re-election at the forthcoming AGM.
The board elects the chairman after the AGM each year and all members of the audit and risk committee are elected annually by shareholders.
Ongoing evaluation
Good governance is maintained through the annual evaluation undertaken by the directors of the performance of the board, the chairman, the chief executive officer, individual directors and all board committees.
The evaluation indicated that the board and its committees have discharged their responsibilities adequately. The directors believe the board contributes to value creation in the company, is well balanced and has the relevant knowledge to make a meaningful contribution to the group’s affairs.
Board and executive relationship
The roles of the chairman and chief executive are separate and clearly defined, ensuring that no director has unrestricted decision making powers. The chairman, David Nurek, leads the board and the chief executive, David Kneale, is responsible for the executive management of the group.
The board and executive management team work closely in determining the strategic objectives of the group. Authority has been delegated by the board to the chief executive and the group executive committee for the implementation of the strategy and the ongoing management of the business.
Board oversight
Specialised governance functions are delegated to committees to assist the board in meeting its oversight responsibilities. All board committees are chaired by independent non-executive directors and the composition of the committees conforms to the requirements of King lll.
These committees are as follows:
- audit and risk committee;
- remuneration and nominations committee; and
- social and ethics committee.
Board and committee meeting attendance
|
Director |
Board |
Audit and |
Remuneration |
Social and |
|
|
Number of meetings |
4 |
4 |
3 |
2 |
|
|
David Nurek |
Independent |
4+ |
3^ |
2+ |
|
|
Fatima Abrahams |
Independent |
4 |
3^^+ |
2 |
|
|
John Bester |
Independent |
4 |
4+ |
3 |
|
|
Bertina Engelbrecht |
Executive |
4 |
2 |
||
|
Michael Fleming |
Executive |
4 |
|||
|
Fatima Jakoet |
Independent |
3 |
4 |
||
|
David Kneale |
Executive |
4 |
2 |
||
|
Nkaki Matlala |
Independent |
3 |
3 |
1 |
|
|
Martin Rosen |
Independent |
4 |
3 |
||
|
Keith Warburton* |
Executive |
2/2 |
|||
|
Meeting attendance 2015 (%) |
95 |
92 |
100 |
90 |
|
|
Meeting attendance 2014 (%) |
97 |
100 |
100 |
100 |
|
|
+Chair. ^Chairs nominations agenda items. ^^Chairs remuneration agenda items. *Resigned with effect 28 January 2015. |
|||||
Ethics and values
The group strives to achieve the highest ethical standards of business practice. A set of values and a behavioural code of conduct require staff to display integrity, mutual respect and openness, and affords them the right and obligation to challenge others who are not adhering to these values. Policies have been implemented which require all employees to adhere to ethical business practices in their relationships with colleagues, suppliers, intermediaries, shareholders and investors. These policies also set stringent standards relating to the acceptance of gifts from third parties and declarations of potential conflicts of interests.
Anti-competitive conduct
Clicks Group does not engage in practices that could limit competition or that could adversely impact on customers. Robust risk management and supervisory oversight processes are in place to ensure adherence to competition law and regulations. The group occupies a market-leading position in healthcare retailing and supply in South Africa and guards the confidentiality of intellectual property, customer and supplier data, business processes and methodologies. Effective governance processes have ensured that the group has not been sanctioned for anti-competitive practices or for non-compliance with the Competition Act during the year.
The group’s corporate governance report with detailed disclosures on the functioning of the board and its committees, risk management, accountability and compliance is available to shareholders on the website.
