OrotonGroup Corporate Governance Statement
The Corporate Governance principles that guide the operations of OrotonGroup (the “Consolidated Entity”) are detailed in this statement. OrotonGroup and the board are committed to achieving and demonstrating the highest standards of corporate governance. These standards are based on the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.
Read more ...
Principle 1 – Lay solid foundations for management and oversight
The ASX Corporate Governance Council states that a company should “establish and disclose the respective roles and responsibilities of its board and management and how their performance is monitored and evaluated."
The Board of Directors
The Board of Directors (the “Board”) is elected by the shareholders to represent the interests of all shareholders, collectively. In this regard, its primary purpose is to safeguard the financial security of OrotonGroup and to act in good faith and in a way most likely to promote the success of the Consolidated Entity for the benefit of its members as a whole.
Role and Responsibility of the Board
Although responsibility for the operation of the OrotonGroup business is delegated to key management personnel, the Board remains responsible for, amongst other things:
- The election of the Chairman from amongst its members whose primary role is to manage the affairs of the Board and to represent the Board;
- Selection, monitoring and evaluation of the Managing Director and senior executives;
- Ensuring the adequacy of the OrotonGroup risk management policies and internal compliance (including relevant systems and controls in place) to ensure that the assets of the Consolidated Entity are adequately safeguarded;
- Providing strategic guidance to the OrotonGroup through regular and careful consultation with key management personnel and ensuring appropriate resources are available to achieve strategic objectives;
- Approving and monitoring the progress of major capital expenditure, capital management, acquisitions and divestitures;
- Approving and monitoring statutory financial reporting to shareholders and also internal management reporting provided to the Board;
- Enhancing and protecting the reputation of the organisation;
- Ensuring that OrotonGroup acts responsibly and ethically in meeting all internal codes of conduct and meets all relevant legal and regulatory requirements.
Role and Responsibility of Management
The Senior Executive team is responsible for implementing the strategic objectives and operating within the risk appetite set by the board and for all other aspects of the day-to-day running of the entity. It is also responsible for providing the board with accurate, timely and clear information to enable the board to perform its responsibilities.
A written agreement setting out the terms of appointment are in existence for the Senior Executive team.
Role of the Company Secretary
The role of the Company Secretary is to:
- Provide support to the Board by monitoring Board policy and procedures;
- Be accountable directly to the Board on all matters to do with the proper functioning of the Board;
- In consultation with the Managing Director, be responsible for communications with the ASX. This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX Listing Rules and overseeing and coordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
OrotonGroup Diversity Policy Objectives
OrotonGroup believes in the value and benefit of attracting and retaining a diverse workforce and as such are committed to actively supporting diversity across all levels of the organisation. We view diversity as recognising and valuing the unique contribution people can make due to their individual background and the different skills, experiences and perspectives they bring to the team and the Group as a whole, enabling a well rounded work environment and customer experience. We recognise that individuals differ not only due to their race and gender; however they differ across various dimensions including lifestyle, educational background, physical ability, age and carer responsibility.
At OrotonGroup, we value diversity and we encourage and welcome individuals from all backgrounds to join our Group and enjoy a rewarding career with us. To support and promote this, we have several initiatives, activities and programs in place to drive diversity and inclusion, including:
- Equal Employment Opportunity Policies and Programs based on ability, performance and potential
- Awareness and education on the areas of discrimination, sexual harassment, bullying, stereotyping and unconscious bias
- Recruitment and selection practices (at all levels of the organisation) that are focused on measureable criteria, with an intent to consider a diverse range of candidates and for decisions to be based on merit, performance and potential
- Implementation and support of flexible work arrangements to enable our employees to meet family, carer and personal responsibilities
- Remuneration practices and decisions that are based on clear, measurable and fair principles at all levels of the organisation
- Decisions affecting our employees to be made factoring in individual needs and differences
- Promotion of our Group core values of passionate, creative, courageous, innovative, curious and determined, to drive an inclusive workplace culture which is fair, equitable and desirable for all our current and future employees
- Provide a safe and healthy workplace free of harassment of any kind with no tolerance for inappropriate behaviours or conduct
- 12 week paid parental leave scheme offered across the organisation, including the payment of superannuation contributions for such leave
The Board is committed to gender diversity and have directed management to ensure a culture of diversity is ingrained in the Directors, Officers and Employees of OrotonGroup via internal policies and programs set out above.
The respective portion of men and women across the organisation are disclosed below.
OrotonGroup Diversity Facts as at 2016
OrotonGroup remains proud of our strong female participation rates across the organisation as a whole and specifically in senior executive and management positions. We remain focused on increasing representation at the senior management and board level. As a measure of gender diversity, the following table discloses the organisation figures as at 30 July 2016:
|Positions||% of women||% of men|
|Senior Executives *||67||33|
*includes direct reports of the CEO
**includes all employees in a management position across retail and head office
These achievements in diversity have meant the Board has not considered it necessary to set specific and measureable objectives.
Selection, Appointment process and Re-election of directors
With guidance from the People and Organisation Committee and, where necessary, external consultants, the Board is responsible for identifying candidates with appropriate skills, experience, expertise and diversity in order to discharge its mandate effectively and to maintain the necessary mix of expertise on the Board. This includes undertaking appropriate checks before Directors are appointed, and providing information to security holders prior to re-election of any Directors. All material information on the directors are contained in the Directors’ Report and under Principle 2 of this statement. The Board has decided a separate Nomination Committee is unnecessary.
All Directors are individually briefed on appointment, on their rights and the duties they owe as Directors to the Company in accordance with the OrotonGroup Constitution, Board charters and policies, the Corporations Act (2001) and the listing Rules of the Australian Stock Exchange. Terms of appointment are included in a written agreement for each Director.
Director and Management Performance Evaluation
Performance reviews of the Board and its subcommittees and Senior Executives are undertaken on a periodic basis. The Board and the People and Organisation Committee have implemented a process to:
- Evaluate the performance of the Board, committees, individual Directors and key executives;
- The Chairman assesses the performance of individual Directors;
- The Chairman in consultation with the CEO assesses the performance of key executives;
- The composition of each subcommittee is reviewed. This exercise takes into consideration each Director’s competency, skills, experience and expertise.
The last assessment of the Board and Senior Executive performance was conducted by the Board during the financial year.
Where necessary, OrotonGroup will provide the required resources to assist Directors and Senior Management in improving their performance.
The People and Organisation Committee are involved in the performance review of key management. The Charter, referred to in the People and Organisation Committee section of this Corporate Governance Statement, outlines their responsibility in this area.
Principle 2 – Structure the Board to add value
The ASX Corporate Governance Council states that a company should “have a board of an appropriate size, composition, skills and commitment to enable it to discharge its duties effectively.”
The members of the Board and details regarding their appointment, removal, term of office, attendance at Board meetings and other Committee meetings, skills and experience are detailed in the Directors’ Report section of this Annual Report.
Guidance on the composition of the Board states that:
- The Board should be comprised of not less than three Directors (and not more than ten in accordance with the current Constitution of OrotonGroup);
- The Board should be comprised of Directors with a broad range of expertise and proven ability to make a contribution to strategy and policy, and be able to participate fully in the oversight and guidance of management;
- The term of any appointment is subject to continuing shareholder approval;
Details of the Board’s approach to selection and re-appointment of directors is included under Principle 1 above.
Following the receipt of Mr Weiss’ intention to resign, the Board undertook a review of its skills and expertise mix and was satisfied with the current mix of the Board.
The Board is committed to continuously assess the appropriateness of the mix of its skills. The table below provides a summary overview of the key skills and experience of the Board on a collective basis.
|Skill/Experience/Knowledge/Expertise||Number of Directors|
|Leadership (including Executive and Non-Executive roles in listed and Non-listed Companies)||5|
|Governance including membership or Chair of Audit, Risk Management, Remuneration and Nomination Committee's of listed and Non-listed companies||5|
|International experience or knowledge or expertise in Asia region and global markets||4|
|Strategy experience or Knowledge or Expertise in: 1) Retail 2) Growth and Business diversification 3) Mergers, Acquisitions 4) Strategic Development and implementation||5|
|Possessing experience, expertise, knowledge in the broad aspects of business acumen incorporating the following:|
|Financial, Risk, Workplace Health and Safety||5|
|Ecommerce and Marketing||4|
|Production and Distribution||4|
|HR, Remuneration, Diversity and Corporate Social Responsibility||5|
The Board of OrotonGroup:
The Board of OrotonGroup is comprised of four Non-Executive Directors and one Executive Director (including the Chairman). The following table shows the detail of the recent election of each of the Directors of OrotonGroup.
appointed to OrotonGroup Ltd
|Term in office||Non-executive||Independent||Last elected||Seeking election or re-election in 2016|
|John P Schmoll (Non-Executive Chairman)||2005||11 years||Yes||Yes||2014||Yes|
|Mark Newman||2013||3 years||No||No||Not Required||No|
|Ross B Lane||1993||23 years||Yes||No||2013||Yes|
|J Will Vicars||2001||15 years||Yes||No||2015||No|
Chairman of the Board
The Non Executive Chairman is responsible for the management of the affairs of the Board and represents the Board in periods between Board Meetings. The Non-Executive Chairman of the Board is an Independent Director, and is elected by the Board.
Term of office
The Directors believe that limits on tenure may cause loss of experience and expertise that are important contributors to the efficient working of the Board. As a consequence, the Board does not support arbitrary limits on tenure and regards nominations for re-election as not being automatic but is based on the needs of OrotonGroup.
The Constitution sets out the rules to which OrotonGroup must adhere and which include rules as to the nomination, appointment and re-election of Directors. Historically one third of the Directors (excluding the Managing Director) retire and stand for re-election each year at the Annual General Meeting. Directors appointed during the year by the Board stand for re-election at the next Annual General Meeting.
OrotonGroup acknowledges that the ASX Corporate Governance Council’s best practice recommendation 2.4 require the majority of the Board to be independent. In assessing the criteria for independence the board has adopted specific principles in relation to Directors’ independence. These state that when determining independence, a Director must be a Non-Executive and the Board should consider whether the Director:
- Is a substantial shareholder of the Consolidated Entity or an officer of, or otherwise associated directly with, a substantial shareholder of the company;
- Is or has been employed in an executive capacity by the Consolidated Entity within three years before commencing to serve on the board;
- Within the last three years has been a principal of a material professional adviser or a material consultant to the Consolidated Entity member, or an employee materially associated with the service provided;
- Is a material supplier or customer of the Consolidated Entity, or an officer of or otherwise associated directly or indirectly with a material supplier or customer;
- Has a material contractual relationship with the Consolidated Entity other than as a Director;
- Is free from any business or other relationship which could, or could reasonably be perceived to materially interfere with the Director’s independent exercise of their judgement.
Materiality for these purposes is determined on both quantitative and qualitative bases. An amount of over 5% of annual turnover of the company or Consolidated Entity or 5% of the individual Directors’ net worth is considered material for these purposes. In addition, a transaction of any amount or a relationship is deemed material if knowledge of it may impact the shareholders’ understanding of the Director’s performance.
Independent Directors of OrotonGroup are those not involved in the day to day management of the company and are free from any real or reasonably perceived business or other relationship that could materially interfere with the exercise of their unfettered and independent judgement.
In accordance with the definition of independence and the materiality thresholds above, it is the Board’s view that Mr John P Schmoll and Ms Maria Martin are both independent Directors, free from any business or any other relationship that could materially interfere with, or could reasonably be perceived to interfere with, the independent exercise of the Directors’ judgement and each is able to fulfil the role of an independent Director for the purposes of the ASX recommendation.
Maria Martin was a partner of PwC until March 2013. PwC has been the audit firm for OrotonGroup since 2000, although Maria was never involved in the audit of OrotonGroup. The Board is of the opinion that this former relationship does not compromise Maria’s independence, as it does not meet the definition of a material business relationship as defined above. In addition the Board has considered the length of time since Maria was a partner of PwC.
The following Directors are not independent:
- Mr Ross B Lane (Non-Executive Director) due to substantial shareholdings;
- Mr J Will Vicars (Non-Executive Director) due to substantial shareholdings;
- Mr Mark Newman (Chief Executive Officer and Managing Director) due to role in OrotonGroup Limited.
Regardless of whether directors are defined as independent, all Directors are expected to bring independent views and judgement to Board deliberations. The Board regularly assesses the independence of each Director.
Majority independence and commitment of Board
Currently, three of the five Directors are not independent and therefore the Group is not compliant with recommendation 2.4. These interests have been disclosed in the Directors’ Report.
Notwithstanding this, the board supports the comments made by the ASX Implementation Review Group (“IRG”) that:
“Other board structures which do not include a majority of independent Directors may also provide an acceptable level of objectivity. The IRG does not believe that an individual Director will necessarily be unwilling or unable to safeguard shareholders’ interests or will necessarily lack objectivity or independence of mind, simply because they are not deemed to be ‘independent’. Safeguarding shareholder interests is a fundamental duty of all Directors.”
In respect of the Board of OrotonGroup:
- Non-Executive Directors spend approximately 30 days each year on Board business and activities including, Board and Committee meetings, visits to operations and meeting employees, customers, business associates and other stakeholders;
- The Chairman regularly meets with the Managing Director to review key issues and performance trends affecting the business of OrotonGroup;
- The number of meetings of the company’s board of Directors and of each board committee held during the year ended 30 July 2016, and the number of meetings attended by each Director is disclosed in the Directors’ report;
- The commitments of non-executive Directors are considered by the nomination committee prior to the Directors’ appointment to the board of the company and are reviewed each year as part of the annual performance assessment;
- The Chair of the two Board committees, being the Audit Committee and the People and Organisation Committee, is an independent non-executive Director.
- Each Board meeting includes some discussion of issues by the Non Executive Directors without the Executive Director
Newly appointed Directors undergo a practical induction in the form of meetings with the Chairman, the Board, the CEO and senior management and are provided with relevant Company information.
Conflict of Interest
In accordance with the Corporations Act 2001 (Clth) and OrotonGroup’s Constitution, Directors must keep the Board advised on an ongoing basis, of any interest that could potentially conflict with those of OrotonGroup. Where the Board believes that a significant conflict exists, the Director concerned does not receive the relevant Board papers and is not present at the meeting while the item is considered.
Access to information
Management supplies the Board with information that enables them to effectively and efficiently fulfill their responsibilities. The Board has access to OrotonGroup’s Company Secretary and independent professional advice.
Independent Professional Advice
Each Director has the right to seek independent professional advice at the expense of OrotonGroup. Prior written approval of the Chairman is required, which will not be unreasonably withheld. All Directors are made aware of the professional advice sought and obtained.
The Board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of complex issues. Current committees of the board are:
- The People and Organisation Committee (as detailed below);
- The Audit Committee (the details of this committee are discussed in Principle 4- Safeguard Integrity in Corporate Reporting).
Minutes of committee meetings are tabled at the subsequent board meeting for review and approval.
People and Organisation Committee
The People and Organisation Committee provide additional support for the human resources strategy of OrotonGroup. It assists the Board by ensuring that the appropriate people, people related strategies, policies and procedures are in place to support OrotonGroup’s vision and values, and its strategic and financial goals.
People and Organisation Committee Charter
The Charter ensures that OrotonGroup:
- Has an appropriate human resources strategy that is aligned to the overall business strategy and which supports OrotonGroup’s vision and values;
- Has remuneration policies and practices that are observed, and that enable OrotonGroup to attract and retain people at all levels who will create value for shareholders;
- Fairly and responsibly rewards Directors, management and staff, taking into consideration the performance of OrotonGroup, the creation of value for shareholders, the performance of the individual and the external remuneration environment;
- Plans and implements the development and succession of Board members, management and staff.
The Committee seeks advice and guidance, as appropriate, from the Managing Director. It may also seek advice from external experts, as appropriate.
Members of the People and Organisation Committee:
- Maria Martin – Independent Non-Executive Director and Chair of the People and Organisation Committee
- John P Schmoll - Independent Non-Executive Chairman of the Board;
- Ross B Lane - Non-Executive Director;
Sam Weiss was a member of the People and Organisation Committee until his resignation on 27 November 2015. In addition, Will J Vicars was a member of the People and Organisation Committee until 30 August 2016 when he resigned from the People and Organisation Committee, to ensure there was a majority of independent directors on the Committee.
Details of membership, member qualifications and attendance are contained in the Directors’ Report.
As a consequence of the above changes in membership of the People and Organisation Committee during the period, the People and Organisation Committee did not have a majority of independent Directors for the full year ended 30 July 2016 and therefore the Group was not compliant with recommendation 8.1. Regardless of whether Directors are defined as independent, all Directors are expected to bring independent views and judgement to People and Organisation Committee deliberations.
Notwithstanding this, the situation has now been addressed and the People and Organisation Committee now has a majority of independent Directors.
Principle 3 – Act ethically and responsibly
The ASX Corporate Governance Council states that a company should “act ethically and responsibly”.Read more ...