KOO sources 7 500 tons of sweetcorn per year from established farmers with decades of experience and expertise.
The Tiger Brands board of directors is committed to integrity through effective corporate governance.
Executive and senior management assist the board to ensure the group complies with the dynamic regulatory landscape in which it operates to underpin its sustainability.
The group has applied the principles of King III, and a detailed register is on our website.
The board has applied the governance principles in King III, the JSE Listings Requirements, and the requirements of the Companies Act No 71 of 2008 in the review period.
The affairs of the group have been conducted to ensure the interests of all stakeholders are safeguarded.
Tiger Brands’ code of ethics, available on our website, mandates all employees to strictly comply with relevant legal requirements and regulations. During the year, acceptable behaviours and conduct dealing with conflict of interest and bribery and corruption were formulated into separate policies to provide the necessary guidance to employees. A zero-tolerance approach towards fraud and corruption has been adopted, setting out appropriate consequences for inappropriate and wrongful behaviour, where necessary.
The board has directed and controlled the affairs of Tiger Brands in a responsible, fair and transparent manner.
The board is supported by committees that have an oversight role and ensure the activities of the company are managed in a manner that is consistent with ethical leadership and the values of Tiger Brands. The roles and responsibilities of each board committee are set out in terms of reference and reviewed annually by the board.
The governance structures in Tiger Brands ensure proper oversight of significant strategic and operational matters.
Directors have unrestricted access to all company information, and access to the advice and services of the group company secretary. Directors are also entitled to seek independent professional advice, at the company’s expense (after consulting with the chairman of the board), as required in fulfilling their duties. No director exercised this right in the period under review.
At 30 September 2016, the board comprised 13 directors, including three executive directors.
The nominations committee, in compliance with section 3.84 of the JSE Listings Requirements, ensures all appointments to the board follow a formal and transparent process as prescribed by the policy and procedures determined by the board, which are reviewed annually.
Directors are appointed, subject to re-election by shareholders at the company’s annual general meeting (AGM) and to Companies Act provisions relating to their removal.
The responsibilities of the chairman and chief executive officer have been clearly defined and are separate with a clear division of authority between various roles in the company’s corporate governance structure.
The board terms of reference show the clear division of responsibilities and authority at board level, proving that no individual director has unfettered powers of decision-making or influence over the board, which allows for participative decisions. In the board’s opinion, and as tested by the independent board effectiveness survey, there is no business or other relationship within the current structure that could materially interfere with the impartial judgement of any non-executive directors.
The board exercises full control over significant matters including strategy, finance and compliance.
Biographical details of all directors appear on pages 11 and 12.
Non-executive directors bring a diverse range of skills and experience to the board and it is their responsibility to ensure their judgement is exercised freely and independently.
The nominations committee ensures that the board’s composition reflects demographic and gender diversity and the appropriate mix of skills and expertise.
The code of ethics, board terms of reference and various Tiger Brands policies prescribe how directors should conduct themselves. This includes guidance on the vigilance required to ensure no conflicts arise between their own interests and those of Tiger Brands. Members are required to disclose all potential conflicts of interest at the start of every board and committee meeting and, once disclosure is made, the process prescribed by the Companies Act is followed. This includes recusal from that part of the meeting when a matter that is the subject of a conflict is discussed.
The directors recognise their fiduciary duty to exercise due care and skill in fulfilling their mandate as members of the board. In doing so, they ensure they act in the best interest of Tiger Brands at all times, and do not derive any profit from their fiduciary relationship with the group.
Director development will form part of the 2017 board agenda to create an evolving understanding of the business, governance and compliance environment in which the board and Tiger Brands operate. Specific time has been allocated in the board’s annual plan for this purpose.
All new directors complete a formal induction programme which includes past board meeting minutes and relevant prior-reading material, guidance on their responsibilities as well as a rigorous programme of manufacturing site visits and visits to the retail trade to enhance their understanding of Tiger Brands and the environment in which it operates.
In the review period, the board approved the strategy and budget for the 2016 financial year. Material issues on executing strategy were considered.
The board approved the interim and year-end financial results and the 2016 integrated annual report and is satisfied it has discharged its duties in terms of the Companies Act, the JSE Listings Requirements and its terms of reference.
During the year under review, the board, through the nominations committee, conducted an independence assessment of directors in office for longer than nine years and were satisfied that they retained their independence.
The nominations committee also reviewed the skill set of the board to ensure that it reflects the required capability to deliver the long-term objectives of the group. It was decided that the composition of the board would be amended in FY17.
Accountability and responsibility
Delegation of authority
Tiger Brands’ delegation of authority policy, which is reviewed annually, provides an approval framework to ensure the company is optimally managed in a decentralised environment. The board delegates the power to run the day-to-day affairs of the company to the chief executive officer, who in turn delegates some of these powers in line with this framework.
The chairman is an independent non-executive director who is principally responsible for the effective operation of the board.
Chief executive officer
The chief executive officer reports to the board. He is responsible for overseeing execution of the strategic direction of the company as approved by the board.
These committees assist the board in the discharging of its duties. Ultimate accountability and responsibility rests with the board, which does not abdicate any of its responsibilities to the committees.
The committees report to the board on material aspects of their remit as dictated by their annual work plans. Despite delegating certain functions to its committees, the board remains ultimately accountable for the proper execution of these matters.
There is an appropriate balance of power and authority on the board. There is a closed-session agenda item at the end of every board meeting which non-executive directors can use to discuss issues with the chairman and other directors.
The 2016 external evaluation included an effectiveness assessment of the board itself, an appraisal of its committees and the chairman, and a peer-to-peer evaluation. The evaluations found no significant matters or material concerns on the board or committee performance. The results indicated that core board processes were working well and the board was well balanced. The directors believe board meetings were well organised and efficiently run, and that all relevant aspects of the company’s business were effectively dealt with by the board and its committees. In the spirit of continuous improvement, the board is developing an action plan to align to certain enrichment recommendations from the survey.
The nominations committee informally reviews all directors standing for re-election at the AGM well in advance and this is reported to the board. After considering the performance of all directors standing for election at the AGM in February 2017, the board supports their re-election.
Dealing in securities
In line with the JSE Listings Requirements, Tiger Brands has adopted a policy that sets out the procedure directors must follow before they, or any of their associates, deal in the company’s securities.
Directors and the company secretary must obtain prior written authorisation from the chairman to deal in company securities. This has been extended to employees who are exposed to price-sensitive information. Tiger Brands employees, who are share scheme participants, are restricted from trading in securities during the company’s closed periods.
The social, ethics and transformation committee convenes three times per year and reports directly to the board. Its remit includes human capital, the extent of the company’s transformation, ethical, safety, health and environmental policies and practices. The committee report is on pages 90 and 91.
Tiger Brands acknowledges the importance of complying with the regulatory framework affecting its operations, and its associated accountability to all stakeholders. Given the quantum of regulatory promulgations and amendments, legislative compliance was a key area of focus in the review period. The approach to governance emanates from the Tiger Brands code of ethics and values detailed on page 54.
The compliance function has scaled up to screen the external environment to identify applicable legislation, inform business of material and pertinent regulatory changes and requirements, and facilitate controls that will ensure compliance.
For increased effectiveness, the legal compliance function collaborates with other risk assurance providers and legal firms where necessary. In implementing the governance framework, a risk-based approach is adopted. In addition, Tiger Brands complies with all mandatory industry codes. In terms of non-mandatory industry codes, Tiger Brands adopts those that enhance good governance and effectiveness.
Board and committee structure
The board has delegated specific functions to committees to assist it in meeting its oversight responsibilities. Every committee has terms of reference and an annual work plan, which is reviewed annually, and the directors confirm that all committees have functioned in line with these terms of reference during the year. All board committees are chaired by independent non-executive directors.
The board met eight times at scheduled meetings in FY16. It met once every quarter and held a strategy meeting in July to approve the strategic direction of the company. It also met to approve the budget and held two extraordinary meetings during the year. Details of attendance at board and committee meetings are shown below:
|Number of meetings||8||4||4||4||3||3||6|
|LC Mac Dougall2||4/4||2/2||2/2||2/2||–||1/1||1/1|
|1||Resigned effective 31 December 2015.|
|2||Appointed 10 May 2016.|
|3||Resigned effective 31 July 2016.|
Appointment and resignation of directors
Peter Matlare resigned as chief executive officer, effective 31 December 2015, after eight years. Lawrence Mac Dougall joined Tiger Brands as chief executive officer, effective 10 May 2016. Olufunke (Funke) Ighodaro resigned as chief financial officer on 31 July 2016, and Noel Doyle was appointed in that capacity on the same date. Noel has been chief operating officer of the company since 13 July 2015 and served as an interim chief executive officer from 1 January to 9 May 2016.
The committee’s report is on pages 87 to 89.
Risk and sustainability committee
The risk and sustainability committee assists the board in fulfilling its governance (from a risk and control perspective), compliance and risk management responsibilities. The committee is responsible for ensuring that all significant risks are identified, evaluated and effectively managed, and that there is adequate oversight of Tiger Brands’ own risk assessment and internal processes. Compliance with relevant laws and regulations is integral to the group’s risk management process and monitored continuously. The committee operates against terms of reference and an annual work plan, which is reviewed by the board each year.
The functions of the risk and sustainability committee includes assisting the board in ensuring that:
- The company has implemented an effective policy and plan for risk management that will enhance its ability to achieve its strategic objectives
- The maturity and effectiveness of risk management processes and activities are continuously monitored, maintained and improved
- The overall risk profile and significant risks Tiger Brands faces are monitored and reviewed and the response to address key risks is appropriately defined and resolved by management
- Disclosure on risk is comprehensive, timely and relevant.
The committee is satisfied it has fulfilled its responsibility as per its terms of reference and has adequately reported to the audit committee in the financial year. It is satisfied of the adequacy of governance, compliance and risk management structures and processes in place at Tiger Brands.
The risk management report can be found starting on page 102.
This committee comprises only non-executive directors. The chief executive officer and certain members of management attend meetings by invitation but excuse themselves at the appropriate times.
The committee is responsible for the development and implementation of the group’s remuneration philosophy, among others. The total reward of executives is designed to ensure a substantial portion depends on performance; both company and individual performance. Reaching appropriate individual and group targets governs the eligibility of executives for annual performance bonuses and the vesting of their long-term incentive awards.
The committee is responsible for and has the authority to consider and make recommendations on specific matters, including:
- Determining and approving the general remuneration policy to be tabled at each AGM for a non-binding advisory vote by shareholders
- Preparing an annual remuneration report for inclusion in the company’s integrated annual report
- Developing the remuneration strategy for executive directors and members of the executive committee
- Developing short-term incentive plans for board approval. It sets annual targets, monitors progress towards targets and reviews the incentive plans regularly to ensure a strong link with performance is maintained
- Developing long-term incentive schemes for board approval. It sets individual and group performance hurdles, as well as guidelines for annual allocations. It regularly reviews the structure of these schemes
- Developing, monitoring and testing appropriate performance drivers for short-term and long-term incentives
- Individual remuneration packages for executive directors and executive committee members including incentive schemes and increases to ensure these are appropriate
- Remuneration of non-executive directors of the board and its committees. Proposals are made to the board for final approval by shareholders at the AGM
- Succession planning
- Human capital imperatives.
The committee is satisfied it has fulfilled its responsibilities in line with its terms of reference for the year. As per King III recommendations, the company’s remuneration policy will be tabled to shareholders for a non-binding advisory vote at the AGM. This vote enables shareholders to express their views on remuneration policies and their implementation.
The remuneration report can be found on pages 92 to 101.
The nominations committee considers board succession and recommends candidates for vacancies based on skill, experience and the need to ensure diversity and balance in the board’s composition. The committee comprises only non-executive directors and is chaired by the chairman of the board. The chief executive officer attends meetings by invitation. The committee is satisfied it has fulfilled its responsibilities in line with its terms of reference for the review period.