Governance structures and processes are reviewed regularly and adapted to accommodate internal developments and reflect national and international best practice to the extent considered in the best interests of the company. The board believes that, for the period under review, the company has applied the recommendations of the code of governance principles contained in the King Report on Governance for South Africa, 2009 (King III), the provisions of the Companies Act of 1973, the Corporate Laws Amendment Act (No 24 of 2006) and the new Companies Act (No 71 of 2008) which came into effect on 1 May 2011. Deviations from the King III governance principles are explained throughout the report.
The board considers corporate governance a priority that requires more attention than merely establishing the steps to be taken to demonstrate compliance with codes, legal, regulatory or listings requirements. The board has therefore carefully considered the extent to which the implementation of new corporate governance concepts will be in the best interests of the company. The audit committee and the board continue to review and benchmark the company’s governance structures and processes to ensure the directors and the board exercise effective leadership, based on an ethical foundation and the principles of responsible corporate citizenship and sustainability. Harmony is committed to achieving high standards of business integrity and ethics across all its activities. Issues of governance will continue to receive the consideration and attention of the board and its committees in the year ahead.
Board of directors
Harmony is governed by a unitary board which, at 30 June 2011, comprised 15 members, nine of whom were independent non-executive directors (determined on the basis of both King III and the Sarbanes-Oxley Act in the United States) and three of whom were executive directors.
Given that Harmony is a South African company, we understand the need for transformation at the highest levels. Two non-executive directors are women, and eight directors are drawn from groups considered to be historically disadvantaged South Africans (HDSAs).
At 30 June 2011, the members of Harmony’s board of directors were:
Non-independent non-executive chairman
Patrice Motsepe (reappointed on 12 August 2011 in terms of King III)
Lead independent non-executive director
Fikile De Buck (reappointed on 12 August 2011 in terms of King III)
Executive directors
Graham Briggs (chief executive officer
Hannes Meyer (financial director)
Harry Ephraim ’Mashego’ Mashego (executive director)
Independent non-executive directors
Joaquim Chissano
Ken Dicks
Cathie Markus
Mavuso Msimang
Modise Motloba
David Noko
Simo Lushaba
Cedric Savage
Dr Cheick Diarra resigned as independent non-executive director on 31 May 2011 and John Wetton was appointed as independent non-executive director post year end on 1 July 2011.
Non-independent non-executive directors
Frank Abbott
André Wilkens
Board purpose and function
The board is guided in its actions by the board charter (www.harmony.co.za) which is reviewed annually. The charters of the board and its committees have been revised to align these with the wording and concepts of King III. The charters are reviewed annually.
The board charter requires that directors exercise leadership, enterprise, integrity and good judgement, accountability, responsibility, due care and transparency. The charter serves as a guide to members on the board’s:
- Purpose and role
- Responsibilities and authority
- Composition
- Meetings
- Self-assessment.
The board provides strategic direction to the company at quarterly board meetings and by delegating authority to board committees. It reviews and directs the company’s strategic objectives, annual budget and plans. The board also guides and reviews Harmony’s non-financial performance.
A number of duties, responsibilities and personal liabilities are imposed on Harmony’s directors under both common and statutory law, not only in South Africa, but also in the United States, Australia, PNG and the United Kingdom.
Board appointments and resignations
In considering new appointments to the board, Harmony considers skills, experience, gender and racial composition and believes it has achieved an acceptable balance of members. The company is satisfied that non-executive and independent directors are of sufficient calibre, experience and number for their views to carry significant weight in the board’s decisions. While the nomination committee makes recommendations on appointments to the board, consideration of such appointments is undertaken by the board as a whole in accordance with its charter.
David Noko and Mavuso Msimang were appointed to the board on 26 March 2011 and John Wetton was appointed on 1 July 2011. Dr Cheick Diarra resigned as a director on 31 May 2011.
Board meetings
Five board meetings were held during the period under review and a strategy session was held on 26 March 2011. The board charter requires that at least one board meeting be held every quarter. Attendance at these meetings is reflected below. Resolutions requiring urgent decisions were passed by means of round-robin resolutions and confirmed at the next board meeting.
| PT Motsepe |
5 |
| GP Briggs |
5 |
| HO Meyer |
5 |
| F Abbott |
5 |
| HE Mashego |
5 |
| JA Chissano |
5 |
| FFT De Buck |
5 |
| CM Diarra1 |
0 |
| KV Dicks |
5 |
| DS Lushaba |
5 |
| CE Markus |
5 |
| MJ Motloba |
4 |
| CML Savage |
5 |
| AJ Wilkens |
5 |
| M Msimang2 |
1 |
| DC Noko2 |
1 |
1 Resigned on 31 May 2011.
2 Appointed as members on 26 March 2011.
Chairman and lead independent director
Following the board’s annual self-assessment, Patrice Motsepe was re-elected chairman of the board in August 2011 for a 12-month period as recommended by King III. The roles of chairman and chief executive officer are separate and distinct as required by King III. The chairman is not considered independent. The board is, however, of the view that the value added by Patrice Motsepe as chairman is significant, and that the board as a whole is predominantly independent in nature.
Fikile De Buck was reappointed lead independent non-executive director in August 2011, given the fact that the chairman is not independent. This appointment is in line with the requirements of King III to assist the board in managing any actual or perceived conflicts of interest.
Board induction and training
On appointment and as part of the company’s board induction programme, new directors are briefed by the company secretary and given comprehensive company information packs including committee charters, articles of association, code of ethics, delegation of authority and a copy of the JSE listings requirements and Companies Act, 2008.
New directors are invited to meet with management at head office for a tour of the business and informal introductory meetings with various management teams.
Articles of interest and updates on corporate governance are frequently sent to the board to keep directors informed. Specific training sessions are arranged when requested by directors. The board has initiated a programme of identifying specific training needs of directors to actively address these. Board members are also invited to attend underground visits at the mines.
Access to management and operations, and independent advice
Each director has unrestricted access to the advice and services of senior management. All non-executive directors are able to visit Harmony’s operations at any time and attend management meetings at their discretion. Board members have unrestricted access to company and subsidiary information, records, documents and property. If required by a board member, independent professional advice may be obtained at the company’s expense.
Delegation of authority
The board delegates authority for certain matters to specified board committees, as well as the executive directors. These matters are monitored and evaluated by the board at each meeting.
Board self-assessment
In terms of its charter, the board is required to conduct an annual self-assessment of the performance of the board as a whole, board committees, individual directors and the chairman.
These assessments are based on several factors, including expertise, enquiring attitude, objectivity and independence, judgement, understanding of Harmony’s business, understanding and commitment to the board’s duties and responsibilities, willingness to devote the time needed to prepare for and participate in committee deliberations, timely responses and attendance at meetings.
Harmony supports the principles and practices of sound governance. As part of this philosophy, KPMG was again appointed to assist with the annual board self-assessment. The 2011 self-assessment questions and statements considered the recommendations of King III, as well as feedback received from the board during the previous year’s assessment process. Final questionnaires were approved by the chairman before distribution to board members. The questionnaires were completed by each board member. A full report based on the findings of this evaluation was circulated to the board and improvements will be made where necessary. |
