Approach to governance >

The Reunert board of directors and group management are firmly committed to sound corporate governance. Reunert subscribes to a set of values that amongst others foster integrity, respect, honesty and openness. The ethos of the group includes personal accountability and individual empowerment. In line with this, the board and management endorse the principles of fairness, responsibility, accountability and transparency as set out in the King Report on Corporate Governance in South Africa of March 2002 (King code).

Reunert strives to comply fully with the recommendations of this report, including the code of corporate practice and conduct, and motivates its staff to conduct business activities with integrity. The board is satisfied that the group, in all material respects, has complied with the provisions and the spirit of the King code and that the group is in compliance with all the required JSE codes. The group endeavours to incorporate into its actions the best possible mutual interests of all stakeholders, including investors, employees, suppliers, customers and the communities in which it operates.

Board, directors and committees >

Composition of the board
The Reunert board currently consists of 13 directors with the majority being independent non-executive directors as defined in the King code. Board members duly consider diversity and the appropriate balance of executive, non-executive and independent directors when making or recommending appointments to the board. The directors bring a wide range of experience, wisdom and professional skills to the board.

There are four executive directors. The majority of the non-executive directors are deemed independent irrespective of the time they have served on this board. The board has three black non-executive directors of whom one is a woman. Ms Thandi Orleyn represents the group’s black economic empowerment partner, Peotona.

Brief résumés for each director appear on pages 22 and 23 of this report.

Declaration of interests >

Several non-executive directors hold directorships in other listed companies. Full details of these directorships are listed on pages 22 and 23.

When there appears to be a conflict of interest, the director concerned will recuse him/herself from discussions at board or board committee meetings when the relevant matter is tabled.

Board charter >

• demarcation of the roles, functions, responsibilities and powers of the board;
• terms of reference of the various board committees;
• matters reserved for decisions by the board; and
• policies and practices of the board on matters such as corporate governance, board meetings and documentation, disclosure of conflicts of interest and trading by directors in the securities of the company.

Roles and responsibilities >

The roles of the chairman and the chief executive are separate. The chairman is elected by members of the board. The chairman chairs shareholder meetings and has no executive or management responsibilities.

The board, on the recommendation of the nomination committee, appoints the chief executive. In addition, the board, on the recommendation of the remuneration committee, determines the duration and terms of this appointment and compensation.

Non-executive directors are not appointed under service contracts and their remuneration is not tied to the group’s financial performance. There is a clear division of board responsibilities and no one individual has unfettered powers of decision-making.

Directors are jointly accountable for decisions of the board. Directors have a legal obligation to act in the best interests of the company and the group, to act with due care in discharging their duties as directors, to avoid conflicts of interest with the company and the group, but, to declare any conflicts that may arise and to account to the company for any advantages gained in discharging their duties on behalf of the company.

The board of directors has evaluated its own performance, including that of the chairman and the chief executive, last year. Such an assessment will be completed periodically.

• retains full and effective control of the group;
• monitors and evaluates the implementation of strategies, policies and management performance;
• sets criteria and approves business plans;
• determines the group’s purpose and values;
• ensures the group complies with sound codes of business practice;
• has unrestricted right of access to all company information, records, documents and property;
• ensures a process exists to identify key business risk areas and key performance indicators; and
• guards the interests of minorities.

The board meets quarterly and at any additional times that may be required. Members of senior management can be invited to attend board meetings to facilitate communication between executive management and non-executive board members.

Appointment and re-election of directors >

Directors are subject to retirement by rotation and re-election by shareholders at an annual general meeting at least once every three years under the company’s articles of association. The board charter is an integral part of the conditions of appointment of all directors. Procedures for appointments are formal and transparent and a matter for the board as a whole.

Non-executive directors retire after reaching the age of 70 at the next annual general meeting. Executive directors retire from the board at 63 years of age at the next annual general meeting.

Messrs TJ Motsohi and TS Munday, having been elected to the board during the year, are required to retire at the next annual general meeting, but being eligible, offer themselves for re-election. Messrs KS Fuller, DJ Rawlinson and Dr JC van der Horst retire by rotation at the next annual general meeting. The nomination committee, at its meeting held on 24 November 2008, has recommended that they be re-elected and they have offered themselves for re-election. The chairman, Mr Martin Shaw, has reached the usual retirement age of 70. However, at the request of the board, Mr Shaw has made himself available to be re-elected at the annual general meeting for another year.

Details of remuneration, fees or other benefits earned by directors in the past year are given in note 28 to the annual financial statements.

Board committees >

In terms of the articles of association, the board has the power to appoint board committees and to delegate powers to these committees. The board has four subcommittees: the audit and risk committee; the remuneration committee; the nomination committee; and the group executive and risk management committee. Minutes are kept of all committee meetings. These committees can, at their own discretion, seek independent, outside professional advice when necessary. All committees have charters approved by the Reunert board. The committees are directly responsible to the board.

Audit and risk committee >

KS Fuller (chairman), BP Connellan and SD Jagoe.

Messrs G Pretorius and DJ Rawlinson resigned from the audit and risk committee on 25 August 2008, in line with the requirements of the Corporate Laws Amendment Act, No 24 of 2006 (promulgated on 14 December 2007) which provides that an audit committee must consist only of independent non-executive directors. The chief executive and financial director attend these meetings by invitation.

The audit and risk committee, chaired by an independent nonexecutive director and, effective 25 August 2008, comprises only independent non-executive directors. The committee meets at least twice a year and reviews the group’s internal and external audit reports and agrees on the scope of audits. The committee operates in terms of its charter and reviews audit, accounting and financial reporting issues and ensures an effective internal control environment in the group. The committee reports biannually to the board on the effectiveness of risk controls and management within the group.

The audit and risk committee has satisfied itself of the appropriateness of the expertise and experience of the financial director.

• implementing quality corporate governance policies;
• assessing the effectiveness of systems of internal control and acting on any identified areas of concern;
• monitoring the financial reporting cycle;
• recommending the appointment of an independent registered auditor;
• determining the terms of engagement and approving fees for external audit and non-audit work appointments;
• supervision of the effective operation of the internal audit function;
• overseeing the operation of the risk management function that incorporates insurance, security, occupational health and safety, and environmental issues.

Remuneration committee >

SD Jagoe (chairman), TS Munday, MJ Shaw and JC van der Horst.

Mr Munday was appointed to this committee at the meeting in August and attended his first meeting
in October.