Corporate governance report

Pick n Pay Stores Limited

 

The Board of directors and senior management are committed to the highest standards of corporate governance and take pride in our high moral and ethical business standards. The Group is committed to sound and transparent business practices. The Board is committed to complying, in all material respects, with the principles contained in the King Code of Corporate Practices and Conduct (King III), as well as to the additional requirements for good corporate governance stipulated in the JSE SRI Index. We have performed a thorough review of the implications of King III, and where appropriate, the corporate governance structure has been amended to comply with King III, which became effective on 1 March 2010. An overview of the Group’s corporate governance framework is provided below including a section at the end dealing with the aspects of King III still under review.

A more comprehensive review – with details of all Board and committee charters, and roles and responsibilities of the Chairman, CEO and management – is available in the investor relations section of our website (www.picknpay-ir.co.za).

This report applies to Pick n Pay Stores Limited and where applicable to Pick n Pay Holdings Limited.

GROUP GOVERNANCE STRUCTURE

The Group has a flat organisational structure and overall responsibility lies with the Pick n Pay Stores Limited Board. The CEO is responsible for the day-to-day operations of the Group and to assist him in discharging his responsibility there is a Group Executive board. The Group Executive is chaired by the CEO (Gareth Ackerman has stepped in as acting CEO until a suitable replacement for Nick Badminton has been found) and consists of 10 key management personnel representing the core segments of the business. The main function of the Group Executive is to align each core segment of the business with the overall Group strategy.

 

 

Group Executive

Key business component represented:
  • Customer
  • Marketing and sustainability
  • Merchandise
  • Supply chain and information services
  • Operations
  • Franchise
  • Group enterprises
  • Finance
  • Human resources
  • Transformation (which is integrated across all business components)

 

THE BOARD 

The Board would ordinarily comprise eight non-executive directors and four executive directors. However, we appointed Richard van Rensburg as deputy CEO on 1 October 2011 to take responsibility for the implementation of our transformation strategy. In addition, on the resignation of our outgoing CEO, Nick Badminton, effective 29 February 2012, our Chairman, Gareth Ackerman, assumed an interim executive role in the business as executive Chairman and acting CEO. Gareth will perform this executive role until the CEO position is filled. As such, we currently have six non-executive directors and five executive directors.

The Board is responsible for selecting a qualified management team, approving corporate strategy, monitoring and assessing performance, and acting as a source for management in matters of planning and policy. The Board is responsible for setting the governance policies and practices for the Group, and for appointing the Chairman and CEO, whose roles are traditionally separate. The Board meets four times a year to monitor the performance of the Group, its executive directors and senior management.

The Board performs an annual self-assessment of its performance and the results thereof are made available to the external auditors. The Board has a responsibility to ensure that internal controls over operations and finance have been implemented, are continuously monitored and are functioning effectively. The Board is not aware of any issue that would suggest that internal controls have had a material breakdown during the financial year concerned.

Appointment of directors

New appointments to the Board are considered by the Board as a whole, on the recommendation of the nominations committee. When appointing a director, the Board considers the findings of the nominations committee in terms of the directors’ ability to lead, requisite knowledge, relevant experience and independence. It is important that the appointment ensures the necessary balance of power (majority of directors to be independent non-executives) and also introduces new skills and expertise to supplement and or replace existing skills and experience of Board members.

Background and reference checks are performed by the nominations committee before the nomination of a director. The qualifications and experience of directors are presented here. Directors serve three-year terms after which they are required to retire at the AGM but may offer themselves for re-election. At the end of each three-year term the director is evaluated by the Chairman and will only be put forward for re-election by mutual consent of the Chairman and the respective director.

The appointment of all directors to the Board requires shareholder approval at the AGM. On appointment to the Board a new director is required to retire and offer themselves for re-election to the Board by shareholders at the first AGM following their appointment.

Independence of non-executive directors

With the implementation of King III, all non-executive directors classified as independent will undergo an annual evaluation of their independence based on the guidelines provided by King III. Directors serving terms greater than nine years will undergo a rigorous review of their independence.

The majority of non-executive directors are independent in terms of King III. Gareth Ackerman (although temporarily performing an executive role) and David Robins are not considered independent by virtue of their relationship with the Group’s ultimate controlling shareholder. The remaining non-executive directors are considered independent. The Board has considered the independence of Messrs Hugh Herman and Ben van der Ross in light of their years of service and is satisfied that their independence remains intact.

directors’ ATTENDANCE AT BOARD MEETINGS

Director  

14 & 15 April 
2011 

10 June 
2011 

17 & 18 
October 
2011 

22 February 
2012 

AGM 
10 June 
2011 

 

Gareth Ackerman
(Chairman)

 
 

Nick Badminton
(CEO – resigned 29 February 2012)

 
 

Richard van Rensburg
(non-executive director until
30 September 2011;
appointed deputy CEO – 1 October 2011)

 
 

Dennis Cope
(CFO – retired 29 April 2011)

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— 

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— 

 
 

Bakar Jakoet
(CFO – appointed 29 April 2011)

 
 

Suzanne Ackerman-Berman 

 
 

Jonathan Ackerman 

 
 

Hugh Herman 

 
 

Dave Robins 

 
 

Ben van der Ross 

 
 

Jeff van Rooyen 

 
 

Alex Mathole 

 

Lorato Phalatse 

P = Present