Governing structures and committees
The board has established six standing committees with delegated authority from the board. Each board committee is chaired by an independent non-executive director. Divisional board and sub-committees include independent non-executive individuals to further strengthen oversight.
The committee is responsible for assessing the independence of non-executive directors and to drive board diversity. It identifies and evaluates suitable candidates for appointment to the board to ensure that the board is balanced and able to fulfil its function as recommended by King IV. The committee also recommends to the board the re-appointment of directors and succession planning for directors including the chief executive and senior management. In FY2020 the focus was on monitoring the chief executive succession process, the appointment of new non-executive directors, enhancement of board committees' composition and equitable distribution of committee work. The focus for FY2021 will be on the appointment of new non-executive directors, with particular focus on the audit committee given the tenure of the committee chair, providing support to the newly appointed chief executive, amongst others.
The committee's main objective is to assist the board in fulfilling its oversight responsibilities, in particular evaluating the adequacy and efficiency of accounting policies, internal controls and financial and corporate reporting processes. In addition, the committee assesses the effectiveness of the internal auditors and the independence and effectiveness of the external auditors. In FY2020, the committee reported that: PwC and the individual audit partner, the designated external auditor, are accredited and independent; it considered all key audit matters and is comfortable that they have been adequately addressed and disclosed; there were no reportable irregularities; is of the view that the arrangements in place for combined assurance are adequate and are achieving the objective of an effective, integrated approach across the disciplines of risk management, compliance and audit; the internal audit function is very strong and the chief financial officer and finance team are competent; and recommended the AFS to the board.
The committee identifies material risks to which the Group is exposed and ensures that the requisite risk management culture, policies, and systems are implemented and functioning effectively. The committee is also responsible for the governance of IT. Cyber security, IT infrastructure and system availability, business continuity and health and safety protocols were focus areas for FY2020. These as well as the implementation of POPI requirements will continue to be focus areas in FY2021.
Key Group risks relate to the challenging macro environment, increased regulation and cyber assaults as well as disruptions and challenges brought about by COVID, amongst others. More detail can be found on Material focus areas, risks and opportunities.
The committee is empowered by the board to assess and approve the broad remuneration strategy for the Group, the operation of the short-term and long-term incentives for executives across the Group and sets short-term and long-term remuneration for the executive directors and members of the executive committee. Work done in FY2020 included the re-aligning of the two long-term incentive schemes to achieve internal equity, a comprehensive remuneration benchmark exercise for the incoming chief executive and careful consideration of the rules, criteria, targets and allocations for performance-related pay schemes in the very uncertain and volatile trading environment to balance the interests of all stakeholders. In FY2021 the committee will continue to promote the Group's strategic objectives through fair and transparent remuneration. Please refer to the detailed remuneration report on the Annual Environmental, Social and Governance Report (ESG Report).
Social and ethics committee
The committee's responsibilities are in line with legislated requirements and codes of best practice. It monitors the Group's compliance in relation to social and economic development, good corporate citizenship, environment, occupational health and public safety, labour and employment as well as the Group's code of ethics and sustainable business practices. The major focus in FY2020 was on activities relating to transformation, B-BBEE, employment equity, the prevention and treatment interventions rolled-out across the Group to manage health and safety as well as the initiatives to support our employees' livelihoods during the pandemic. The focus for FY2021 will continue to be on transformation, employment equity, ethics, sustainability and empowerment of our employees.
The ESG Report provides a comprehensive report back.
The role of the committee is to review potential mergers, acquisitions, investment and other corporate transactions in line with the Group's levels of authority. The key focus area in FY2020 included the consideration and evaluation of proposed investments, disinvestments and expansion opportunities – amongst others, PHS, Eqstra, Adcock and MIAL. In FY2021 the focus will continue to be on the Group's longterm growth strategy and creating the platform to access new markets.