CORPORATE GOVERNANCE STATEMENT
The Board is responsible for the corporate governance practices of PAYCE Consolidated Limited (the ‘Company’) and its group of entities (the ‘Group’). This statement sets out the main corporate governance practices that are currently in place.
Unless otherwise stated the Company’s governance accords with the principles and recommendations of the ASX Corporate Governance Council.
BOARD OF DIRECTORS
The Board Charter sets out the principles for the operation of the Board and has been adopted on the basis that corporate governance and good governance procedures can add to the performance of the Company, the creation of shareholder value and engender the confidence of stakeholders.
The Board is accountable to shareholders for the performance of the Company and its key responsibilities are to:
- determine and approve the corporate strategy, policy and direction of the Company with a view to maximise shareholder value and to set goals and objectives for management;
- approve all accounting policies, financial reports and material reporting by or on behalf of the Company;
- determine the Company’s dividend policy and the amount and timing of all dividends paid to shareholders;
- oversee the processes for identifying the major risks facing the Company and review that appropriate and adequate controls, monitoring and reporting mechanisms are in place;
- review the performance and effectiveness of the Company’s corporate governance policies and procedures and consider any amendments to those policies and procedures;
- approve the appointment of Directors to the Committees established by the Board;
- maintain high business standards and ethical behaviour throughout the Company;
- appoint a company secretary to manage all matters related to the Board’s functioning; and
- make available a program for inducting new directors.
Board Composition and Size
The Board currently comprises the following Board Members:
|Brian Boyd||Chairman & Managing Director|
|Roger Short||Non-Executive Director – Independent|
|Christopher Gabriel||Non-Executive Director – Independent|
The background details for each of the Company’s directors are listed on page 5 of the Company’s 30 June 2015 Financial Report.
The Chairman & Managing Director, Brian Boyd, is an integral part of the Company and has been for a significant period of time. Due to the complexity and scale of the Company’s developments, the importance of continuity and his detailed knowledge of the business, the Board considers it optimal that Mr Boyd continues in his roles of both Chairman and Managing Director.
The Board Charter provides, where required, that a lead independent non-executive director will be nominated to act as a liaison for independent non-executive directors and to confer with the Chairman on any issues raised by the independent non-executive directors in connection with the discharge by the Chairman of his responsibilities and the function and obligations of the Board and each Board Committee.
The Company’s Constitution provides that:
- the number of Directors shall be not less than 3 nor more than 10;
- one third of the Directors must retire from office at the annual general meeting each year and are eligible for re-election;
- a Director appointed to fill a casual vacancy must face election at the next Annual General Meeting;
- a quorum requires a minimum of 2 Directors.
The two Non-Executive Directors on the Board of the Company meet the independence criteria detailed in the ASX Best Practice Recommendations. In particular they:
- do not have a substantial shareholding in the Company nor are they officers of, or otherwise associated directly with a substantial shareholder of the Company;
- are not, and within the last three years have not been, an employee of the Company or any of its related entities;
- do not have material business or contractual relationships with the Company; and
- have no conflicts of interest.
Subject to the prior approval of the Chairman, Board Committees and individual Directors are entitled to seek independent professional advice at the Company’s expense for the purposes of the proper performance of their duties.
The Audit Committee was established by the Board to support and advise the Board with fulfilling its responsibilities to shareholders, employees and other stakeholders of the Company by:
- assisting the Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control relating to all matters affecting the Company’s financial performance, the audit process, and the Company’s process for monitoring compliance with laws and regulations and the code of conduct; and
- supervising the Company’s risk management practices.
The current members of the Audit Committee are:
- Roger Short; and
- Christopher Gabriel.
The Audit Committee meets as required throughout the year but not less than twice a year. The meetings are attended by the Managing Director, Chief Financial Officer and independent auditors where appropriate.
As outlined in the Audit Committee Charter, the main objectives of the Committee are to:
- ensure that the quality of financial reporting for the half year, full year and annual report is complete and reflects appropriate accounting policies and practices;
- review with management and external auditors the results of the audit;
- make informed recommendations to the Board regarding accounting policies, practices and disclosures;
- review the scope, cost and results of the independent audit and review and confirm the independence and performance of the external auditors;
- review and assess the adequacy of the Company’s accounting and internal controls;
- review with management the system for identifying, managing and monitoring the key risks of the Company, consider the overall risk management process and review its effectiveness in meeting sound corporate governance principles; and
- monitor conflicts of interest and review proposed transactions between related parties.
The Company has a Disclosure Policy to ensure that the Company complies with its disclosure obligations under the Corporations Act 2001 and the Listing Rules of the ASX Limited (ASX). The policy sets out the standards, protocols and requirements expected of all Directors and employees of the Company, and is designed with the intention of ensuring that all investors have equal and timely access to information concerning the Company.
The Company Secretary, in conjunction with the Managing Director, is responsible for overseeing the implementation and operation of the Policy and is responsible for reviewing information reported by the Directors or employees and determining with the Managing Director whether any such information is required to be disclosed to the ASX, making ASX announcements and issuing media releases and other written public statements on behalf of the Company. This policy has been amended to reflect the recent update of the ASX Continuous Disclosure Guidelines.
REMUNERATION AND PERFORMANCE
Due to the structure and size of the Company the Board has not established a Remuneration Committee. In consultation with the Managing Director the Board is responsible for determining remuneration benchmarks, performance objectives and approving remuneration arrangements.
Board Remuneration and Performance Review
Non-Executive Directors are remunerated by way of fees and superannuation contributions only. The Non-Executive Directors do not receive options or bonus payments and are not provided with retirement benefits, other than superannuation.
The performance of the Board is reviewed to ensure that individual directors and the Board are collectively fulfilling their duties detailed above. The review takes into account the attendance at and involvement in Board Meetings, their performance and other matters identified by the Board.
Executive Remuneration and Performance Review
Executive remuneration comprises a balance of fixed and incentive pay, which varies with the seniority and complexity of the role and is benchmarked against relevant market practice.
The Remuneration Report is detailed in the 2015 Financial Report.
The Board (with the assistance of the Managing Director) annually assesses the performance of executives having regard to both the individual performance targets and the Company’s performance targets.
The Board has implemented a Code of Conduct that applies to all directors, officers and employees of the Company whether on a full time, part-time, casual, temporary or contract basis.
The Code of Conduct covers the following principles which are to be applied at all times:
- Conflicts of interest;
- Corporate opportunities;
- Responsibilities to stakeholders;
- Trading in securities;
- Protection and proper use of the Company’s assets;
- Compliance with laws and regulations; and
- Encouraging the reporting of unlawful or unethical behaviour.
The Board is committed to workplace diversity, in particular gender diversity, and has adopted a Diversity Policy that includes, but is not limited to, gender, age, ethnicity and cultural background. The Company recognises the benefits arising from employee and Board diversity, including a broader pool of high quality employees, higher employee retention and benefits arising from contributions of people with diverse backgrounds, experiences and perspectives.
Owing to the small number of Board members and employees and low staff turnover the Company does not set specific representation targets but does take diversity into account when hiring and promotion opportunities arise. The Board comprises three members and there are 37 employees.
SECURITIES TRADING POLICY
The Company has a Securities Trading Policy that details the legal duties placed upon the Directors, Officers and employees of the Company in respect of their dealings in the shares of the Company.
BUSINESS RISK MANAGEMENT
The Board ultimately determines the Company’s risk profile and, with the assistance of the Audit Committee, is responsible for overseeing and approving risk management strategies and policies, internal compliance and controls.
The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management which provides regular reporting to the Audit Committee.
The Managing Director and Chief Financial Officer report in writing to the Board for half-year and year‑end reporting periods that:
- the Company’s financial statements present a true and fair view of the Company’s financial condition and operational results and are in accordance with relevant accounting standards; and
- the Company’s risk management, internal compliance & control systems are operating efficiently and effectively.
COMMUNICATION WITH SHAREHOLDERS
Information is communicated to shareholders, either by post or electronically, through:
- the Annual Report and Interim Report;
- disclosures made to the Australian Securities Exchange; and
- occasional letters from the Chairman and Managing Director to inform shareholders of key matters of interest.
The Company encourages shareholders and independent auditor to attend and participate in the Annual General Meeting and any General Meetings of the Company. Details of any proposed meetings will be provided to shareholders and independent auditor well in advance of the relevant dates.
ASX CORPORATE GOVERNANCE PRINCIPLES AND RECOMMENDATIONS
The Company does not currently comply with the following ASX Corporate Governance Principles and Recommendations:
2.1 The Board should establish a Nomination Committee
|Having regard to the number of members currently comprising the Company’s Board, the Directors do not consider it necessary to establish a Nomination Committee as they currently perform these functions. Although this is inconsistent with the recommendation, the recommendation itself recognises that a Nomination Committee does not provide the same efficiencies for smaller boards.|
2.5 Chairperson should be an independent director and should be separate from the Managing Director
|The Chairman and Managing Director, Brian Boyd, is an integral part of the Company, and has been for a significant period of time. Due to the complexity and scale of the Company’s developments, the importance of continuity and his detailed knowledge of the business, the Board considers it optimal that Mr Boyd continues in his roles of both Chairman and Managing Director.|
8.1 The Board should establish a Remuneration Committee
|Having regard to the number of members currently comprising the Company’s Board, the Directors do not consider it necessary to establish a Remuneration Committee. The Board, in consultation with the Managing Director is responsible for the determination of remuneration and the assessment of performance.
Although this is inconsistent with the recommendation, the recommendation itself recognises that a Remuneration Committee does not provide the same efficiencies for smaller boards.
Further information relating to the Company’s corporate governance practices and policies can be obtained from the Company’s Registered Office.