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Corporate governance

Pick n Pay Stores Limited

Corporate governance report

Executive representation on the Board

The executive function of the Group is now performed by the executive committee, comprising Richard Brasher (CEO), Richard van Rensburg (Deputy CEO) and Bakar Jakoet (CFO), all of whom are executive directors on the Board.

Non-executive representation on the Board

Of the 6 non-executive directors on the Board during the 2013 annual financial period, 5 are independent. Hugh Herman has been appointed as LID (see note 1).

Annual assessment of independence

• The directors’ involvement with other companies;
• External directorships;
• Relationships with material suppliers and rival companies; and
• Material contracts with the Group, if any.

The assessment is undertaken by the Chairman in individual interviews. He presents his findings to each non-executive director for them to confirm, or to provide further evidence supporting their independence. If necessary, the Company Secretary will solicit external legal opinion regarding the status of a non-executive director. Following this assessment, the Chairman makes a recommendation to the Board as to independence. The Board interrogates the recommendations before a final decision is made.

All directors submit a list of their directorships and commercial interests to the Company Secretary, which are regularly updated, and distributed bi-annually to the Board. Transparency of commercial interests ensures that directors can be seen to be free from any business or other relationship that may interfere materially with their ability to act in an independent manner.

Length of service

The Board has found that length of service does not automatically preclude a director from exercising independence in decision-making. It is our experience that our long-serving non-executive directors have translated their loyalty into a pursuit of the best interests of all the stakeholders of the Company. The Company values the balance achieved between the fresh insights from new directors and the wisdom derived from the experience of the long-serving directors.

Conclusion as to independence

At the time of the last assessment, all Pick n Pay’s independent non-executive directors met the criteria for independence as established by King III, the Companies Act and the JSE Listings Requirements. The Chairman and the Board are satisfied that, although Hugh Herman and Ben van der Ross have long-running relationships with the Company, their contributions remain unbiased, objective and vigorous.

Note 4

An evaluation of the Board’s effectiveness was undertaken in March 2013. Previous evaluations were conducted in 2007, 2009 and 2011. Individual performance evaluations of directors are undertaken annually by the Chairman of the Board. The results allow the Board to determine whether or not it has delivered on its mandate. It also measures and, where possible, enhances the Board’s overall efficiency and each director’s individual contribution to the Board. If improvements are indicated, the necessary measures are implemented.

Note 5

The Board and audit committee are currently working with a qualified, independent third party to assist with developing and implementing a comprehensive combined assurance approach, to ensure the integrity of financial and non-financial data contained within the report.

Note 6

During the past annual financial period an IT services governance function was established within the IT division. The IT governance management is implementing various initiatives in order to achieve compliance with King III where feasible.

The Group aligns its practices and processes to COBIT 5, which is the latest edition of ISACA’s globally accepted framework, providing an end-to-end business view of the governance of enterprise IT.

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