The Board has established committees to assist it with fulfilling its responsibilities. Nonetheless, the Board acknowledges that the granting of authority to its committees does not detract from the Board’s responsibility to discharge its duties to the Company’s shareholders.
The committees have Terms of Reference, which are reviewed annually. They set out the committees’ roles and responsibilities, functions, scope of authority and composition. The annual review takes into account amendments to applicable legislation and developments in international best practices. Committees report to the Board at each Board meeting and make recommendations in accordance with their Terms of Reference.
The membership of the Board committees consists solely of Non-executive Directors with one exception: contrary to King II, ARM’s Executive Chairman is currently a member of the Nomination Committee and prior to August 2009, the Nomination Committee Chairman. Each committee is chaired by an Independent Non-executive Director. Attendance schedules for committee meetings held in F2009 are included in each committee report.
The Board has established the following permanent committees: Audit Committee, Investment Committee, Nomination Committee, Remuneration Committee, and Sustainable Development Committee.
The Audit Committee comprises five Independent Non-executive Directors, each of whom has extensive financial experience. In accordance with the guidelines in King II, the Chief Executive Officer attends Audit Committee meetings at the Committee’s request. The Financial Director is also an invitee at each meeting.
The Audit Committee Terms of Reference was revised in 2008 to meet the requirements of the Corporate Laws Amendment Act. Based on the Terms of Reference, a comprehensive framework is prepared to ensure that all tasks assigned to the Committee are considered at least once a year. Scheduling of the Audit Committee’s non-routine work is therefore necessary and tasks have been assigned to the Audit Committee, the external and internal auditors, and management.
The Audit Committee performs its review function over all ARM operations. To assist the Committee with its reviews, all operational subsidiaries and joint ventures have audit committees, with the exception of the new Vale/ARM joint venture, which intends to establish an audit committee in November 2009. The chairmen of the audit committees of the subsidiaries and joint ventures report into the Audit Committee, highlighting areas of concern and remedial actions taken by management. In addition, the minutes of Committee meetings as well as internal and external audit reports of all operations are submitted to the Audit Committee.
The primary objective of the Audit Committee is to assist the Board in discharging its duties relating to the safeguarding of assets; the operation of adequate systems, internal controls and control processes; and the preparation of accurate financial reports and statements in compliance with all applicable legal requirements, corporate governance and accounting standards; as well as enhancing the reliability, integrity, objectivity and fair presentation of the affairs of the Company. It also oversees financial and other risks in conjunction with the Sustainable Development Committee. In fulfilling its oversight responsibilities, the Audit Committee reviews and discusses the audited financial statements with management and the external and internal auditors.
The Audit Committee has oversight of the Company’s financial reporting process on behalf of the Board. Management has primary responsibility for the financial statements, for maintaining effective internal control over financial reporting, and for assessing the effectiveness of internal control of such reporting.
The Audit Committee, after due consideration, is of the view that the independent registered audit firm, which is responsible for expressing an opinion on the conformity of the audited financial statements with International Financial Reporting Standards (IFRS), is independent from management and the Company. The Audit Committee has recommended the re-appointment of Ernst & Young Incorporated (E&Y). At the Annual General Meeting, shareholders will be requested to re-appoint E&Y as external auditors of the Company and to confirm the appointment of Mr Michiel C Herbst as the designated individual auditor. E&Y and Mr Herbst are registered with the JSE in accordance with the JSE Listings Requirements.
The Audit Committee meets with the internal and external auditors on a regular basis to discuss the results of their examinations, their evaluation of the Company’s internal control and the overall quality of the Company’s financial reporting. The Committee also discusses the overall scope and plans for the respective audits of the Company’s internal and external auditors. A formal policy on non-audit services was adopted on 20 August 2009.
In accordance with the JSE Listings Requirements, the Company has a Financial Director, Mr Michael (Mike) Arnold, who was appointed to the Board with effect from 1 August 2009 to replace Mr Frank Abbott who has retired as Financial Director, but remains a Non-executive Director of the Company. The Audit Committee is satisfied that the Financial Director and finance function are adequately resourced and that Mr Arnold has the necessary experience to discharge his responsibilities.
The Management Risk Committee reports to the Audit Committee and its report is included on page 122 of the Corporate Governance report.
During the year under review, the Audit Committee’s performance and effectiveness were evaluated with the assistance of an independent external advisor. As a result of that evaluation, the Board is satisfied that the Audit Committee has complied with its Terms of Reference.
The Audit Committee acts as a forum for communication between the Board, management and the external and internal auditors. It is required to meet at least three times a year. Five meetings were held during the 2009 financial year.
| Aug-08 | Sep-08 | Feb-09 | Mar-09 | May-09 | |
|---|---|---|---|---|---|
| M W King (Chairman) | √ | √ | √ | √ | √ |
| Dr M M M Bakane-Tuoane | √ | √ | √ | √ | a |
| A K Maditsi | √ | √ | √ | √ | √ |
| J R McAlpine | √ | √ | √ | √ | √ |
| Dr R V Simelane | √ | √ | √ | √ | √ |
a = apologies
The Investment Committee’s purpose is to consider investments proposed by management, including projects, acquisitions and disposals of assets, and to make such recommendations to the Board as it considers appropriate. The Investment Committee also reviews the results attained on completion of each project.
During the year under review, the Investment Committee’s performance and effectiveness were evaluated with the assistance of an independent external advisor. As a result of that evaluation, the Board determined that the Investment Committee’s performance would be enhanced by the appointment of an additional committee member, which the Board implemented in August 2009.
The Investment Committee meets when considered necessary. Four meetings were held during the 2009 financial year.
| Aug-08 | Oct-08 | Nov-08 | May-09 | |
|---|---|---|---|---|
| A K Maditsi (Chairman)* | √ | √ | √ | √ |
| M W King | √ | √ | √ | √ |
| R P Menell** | √ | n/a | n/a | n/a |
| Z B Swanepoel*** | √ | √ | a | √ |
| * | a = apologies |
| * | Retired as Committee Chairman in August 2009. |
| ** | Retired on 28 November 2008. |
| *** | Appointed as Committee Chairman in August 2009. |
The Nomination Committee reviews the structure, composition and size of the Board and recommends appointments to the Board and its committees. The Terms of Reference provide for the Committee to monitor succession planning for the Chairman and the Chief Executive Officer as well as the overall personnel needs of ARM’s business.
The Nomination Committee is responsible for developing the criteria used to select Directors. The Nomination Committee is also responsible for designing the orientation programme for newly appointed Directors on their role and responsibilities.
Meetings are convened as and when necessary. Although no Nomination Committee meetings were held during the 2009 financial year, the nominations of Messrs Arnold and Botha on 1 August 2009 and the committee chairmanship and membership nominations made in August 2009 were considered by Nomination Committee members and approved by round-robin resolutions for recommendation to the Board.
During the year under review, the Nomination Committee’s performance and effectiveness were evaluated, with the assistance of an independent external advisor. As a result of that evaluation, the Board determined that the Nomination Committee’s performance would be enhanced by appointing an Independent Non-executive Director as the Nomination Committee Chairman, which the Board implemented in August 2009.
The Remuneration Committee’s purpose is, inter alia, to determine specific remuneration packages for each of the Executive Directors within the remuneration framework approved by the Board and to determine any criteria necessary to measure the performance of Executive Directors in performing their roles and discharging their responsibilities. The Remuneration Committee also considers and recommends to the Board the fees to be paid to Non-executive Directors. The fees proposed, as confirmed by the Board, are submitted to shareholders at the Annual General Meeting for approval prior to implementation.
During the year under review, the Remuneration Committee’s performance and effectiveness were evaluated, with the assistance of an independent external adviser. As a result of that evaluation, the Board determined that the Remuneration Committee’s performance would be enhanced by the appointment of an additional committee member, and therefore the Board appointed another Independent Non-executive Director to the Remuneration Committee in August 2009.
Three meetings were held during the 2009 financial year.
| Jul-08 | Aug-08 | Nov-08 | |
|---|---|---|---|
| Dr M M M Bakane-Tuoane (Chairman) | √ | √ | √ |
| J R McAlpine | √ | √ | √ |
| Z B Swanepoel | √ | √ | √ |
The Sustainable Development Committee’s objectives, which are set out in its Terms of Reference, revised in May 2008, are to achieve and maintain world-class performance standards in safety, health (occupational), the environment, HIV & AIDS and social investment, as well as to enable historically disadvantaged South Africans (HDSAs) to enter the mining industry as prescribed by the Minerals and Petroleum Resources Development Act and to ensure compliance with the Scorecard issued by Government. The attainment of these objectives requires the Sustainable Development Committee to advise the Board on policy issues, the efficacy of ARM’s management systems for its sustainable development programmes and progress towards set goals and compliance with statutory, regulatory and charter requirements.
The Sustainable Development Committee Terms of Reference provide that the committee must have four members. Currently, the committee has three members and the appointment of an additional committee member is under consideration by the Board.
Four meetings were held during the 2009 financial year.
| Aug-08 | Nov-08 | Feb-09 | May-09 | |
|---|---|---|---|---|
| Dr R V Simelane (Chairman) | √ | √ | √ | √ |
| Dr M M M Bakane-Tuoane | √ | √ | √ | a |
| M V Sisulu* | a | a | a | a |
| Z B Swanepoel | √ | √ | a | √ |
| av | = apologies |
| * | Resigned on 7 August 2009. |
Following Board meetings, the Non-executive Directors meet without management. Issues of importance to the Company are considered. The meetings are chaired by the lead Independent Non-executive Director, Dr MMM Bakane-Tuoane.
The Board has the right to appoint and authorise special ad hoc committees, comprising the appropriate Board members, to perform specific tasks as required.
The Management Risk Committee, a management sub-committee of the Audit Committee, assists the Audit Committee in discharging its duties relating to risk matters by implementing, co-ordinating and monitoring a risk management programme to ensure that broader strategic and significant business risks are identified and quantified with attendant controls and management assurance.
The Management Risk Committee is chaired by the Chief Executive Officer and its membership includes the Financial Director, the chief executives of the operations, the Leader: Risk Manager and the Group Manager: Safety, Health and Environment. The chair of the Management Risk Committee and the Leader: Risk Manager attend Audit Committee meetings and report on the activities of the subcommittee. The Chief Executive Officer and the Chairman of the Audit Committee report on risk matters to the Board. The Leader: Risk Management attends Board meetings to respond to any matters raised by the Directors. The Management Risk Committee met four times in the 2009 financial year.
A table of ARM’s principal risks and uncertainties is available, and additional information on ARM’s risk management programme is provided below.
The Steering Committee is charged with implementation of approved corporate strategy and other operational matters. The Steering Committee is chaired by the Chief Executive Officer and its membership includes Executive Directors and senior management. It meets quarterly, or more often as circumstances warrant. The Steering Committee members are available under the About us section of this website
The Treasury Committee meets monthly, and if required more frequently, under the chairmanship of the Financial Director. The committee membership includes the ARM Finance Executive: Operations and the ARM Finance Executive: Corporate. Representatives of Andisa Treasury Solutions (Proprietary) Limited (Andisa), to whom the treasury function is outsourced, attend meetings by invitation. The Treasury Committee reviews operational cash flows, currency and interest rate exposures as well as funding issues within the Company. While not performing an executive or decisive role in the deliberations, Andisa implements decisions taken when required. Advice is also sought from other advisors on an ongoing basis.
Sustainable development report 2009 (PDF - 1.9MB)
Sustainable development report 2008 (PDF - 1.9MB)
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