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Specific responsibilities have been delegated to
the committees of the board that have access
to independent advice at the group's expense.
Audit, risk management and compliance, black
economic empowerment and transformation,
nominations and remuneration committees
assist the company's board in the discharging
of its duties and report to the board on their
activities. Each committee acts within its written
terms of reference, under which certain functions
of the board are delegated with clearly defined
purposes and membership requirements.
The performance and effectiveness of the
committees were evaluated during the annual
evaluation by the board. Chairmen of the board
committees are required to attend annual
general meetings to answer questions raised by
shareholders.
Evaluation of the board and board
committee performance
A formal self-evaluation of the board and its
committees' performance and effectiveness
was carried out during the period under
review. This exercise was conducted by
individual questionnaires completed by each
board and committee member. The group
company secretary collated the results of all the
questionnaires which were reported to the board
in November 2009 and the board concluded that
it continues to operate effectively. The exercise
has ensured that the board remains effective
and relevant to the business objectives of the
company.
The performance of individual directors is
evaluated by the nominations committee before
each occasion when a director comes up for reelection.
The performance of the Chairman is
evaluated separately by the board.
Special (unscheduled) board meetings were held
on 21 May 2009, 10 July 2009 and 5 August
2009. Ms NB Langa-Royds, Messrs J Shibambo
and JS Vilakazi could not attend the meeting on
21 May 2009 and Mr AJ Lamprecht could not
attend the meeting on 10 July 2009.
Number and selection of board members
At the date of this report, the board comprises
five executive and eight non-executive directors.
A significant number of changes were made
to the board during the year. Mr BL Sibiya was
appointed Chairman of the board on 11 November
2008. Messrs MP Malungani and JS Vilakazi were
appointed to the board on 27 February 2009,
and the new CEO, Mr P Stuiver, on 1 June 2009.
The aim is to have a board that has an appropriate
balance of skills and experience to support our
strategy and meet present requirements to
lead the company effectively. The nominations
committee is responsible for overseeing the
process for appointing new directors to the
board and it reports on its activities on page 47.
The selection and nomination of directors takes
place according to well-defined procedures and
any proposed new appointment of a director
is considered by the board as a whole, on the
recommendation of the nominations committee.
Succession planning
The nominations committee annually reviews
the board's performance, structure, size and
composition and makes recommendations to the
board on succession, training and replacements.
Director independence
In line with best practice around the globe, more
than half the board members are independent
non-executive directors. The board considered
the issue of independence at its board meeting
in November 2009 and concluded that
Ms ZJ Kganyago, Ms NB Langa-Royds and Messrs
TDA Ross, BL Sibiya, AJ Lamprecht and J Shibambo
are independent non-executive directors of PPC
as contemplated in sub-paragraph 2.4.3 of the
King Code of Corporate Practices and Conduct
and paragraph 3.84(f) of the JSE Limited's listings
requirements.
Director orientation and continuing
education
All new directors receive a comprehensive
induction. The induction is the responsibility of
the group company secretary and includes a
comprehensive information pack, an explanation
of their fiduciary duties and responsibilities,
meetings with the Chairman and executives of
the company to facilitate an understanding of the
company's affairs and operations, and director
development programmes arranged through the
Institute of Directors.
The group company secretary continually
facilitates additional training and updates for
directors on particular issues such as competition
and mining legislation etc.
In certain circumstances it may become
necessary for a non-executive director to obtain
independent professional advice in order to act in
the best interests of the company. Such a director
also has unrestricted access to the Chairman,
executive directors and group company secretary.
Where a non-executive director takes reasonable
action and costs are incurred, these are borne by
the company.
Retirement from the board and terms of
contracts
By convention, executive directors retire from the
board at 63 years of age while non-executive
directors retire at the next annual general meeting
following their 70th birthday.
In terms of the company's articles of association,
at every annual general meeting, at least one-third
of the directors retire from the board. In addition,
a director appointed by the board to fill a vacant
seat must retire from that office at the next annual
general meeting. Directors retiring in this manner
may offer themselves for election or re-election,
as the case may be, subject to recommendation
from the nominations committee.
At the forthcoming annual general meeting,
Messrs SG Helepi, MP Malungani, P Stuiver and
JS Vilakazi, having been appointed as directors
by the board during the year, are required to
retire and Mr S Abdul Kader, Ms ZJ Kganyago,
Ms NB Langa-Royds and Mr J Shibambo are
required to retire by rotation in terms of the
articles of association. All have offered themselves
for election and re-election respectively at that
meeting and the nominations committee has
recommended their re-election.
There are no contracts of service between
any directors and the company or any of its
subsidiaries that are terminable at periods of
notice exceeding three months and requiring
payment of compensation with the exception of
fixed‑term contracts with Mr JE Gomersall and
Mr P Stuiver. Mr Gomersall's contract was to expire
on 31 January 2010, after the annual general
meeting and four months after his 63rd birthday.
As the company had been unbundled from
Barloworld, and was in the middle of a major
capital expenditure programme until 2010, it was
deemed to be in the company's best interests that
the services of the then chief executive officer
were secured to lead the company through
this important phase. Mr JE Gomersall however
exercised his option to take early retirement with
six months' notice, and this option was exercised
in November 2008 with effect from 30 June 2009.
The company has entered into a three-year fixedterm
contract with Mr P Stuiver which may be
extended by agreement.
Director compensation
The form and amount of director compensation
is determined by the board based on the
recommendation of the remuneration committee.
The remuneration committee conducts an
annual review of director compensation. The
executive directors (who are employees of
the company) do not receive any additional
compensation for their services as directors.
Directors who are not employees of the company
may not enter into any consulting arrangements
with the company without the prior approval of
the board and their fees are recommended by the
board and fixed by shareholders at the annual
general meeting.
The remuneration of executive directors is
determined by a disinterested quorum of the board based on the recommendations of the
remuneration committee which is also responsible
for the annual review and approval of criteria to
measure the performance of executive directors
in discharging their functions and responsibilities.
Refer to the report on page 48.
Chairman and chief executive officer
In line with King ll recommendations and the
board charter, the roles and offices of the group
CEO and Chairman of the board are strictly
separated. While non-executive directors are
not involved in the day-to-day operations of
the company, they have unfettered access to
management.
The group company secretary
The group company secretary is Mr JHDLR Snyman
and he provides the board as a whole and directors individually with detailed guidance
on discharging their responsibilities. He is a
central source of information and advice to the
board and within the company on matters of
ethics and good governance. He also ensures
that the proceedings and affairs of the board,
its committees, the company itself and, where appropriate, owners of securities in the company
are properly administered in accordance with
relevant laws. He is responsible for compliance
with the rules and listings requirements of the
JSE Limited and the Zimbabwe Stock Exchange
on which the company's securities are listed and
administers the statutory requirements of the
company and its subsidiaries in South Africa.
All directors have direct access to the group
company secretary at all times and the directors
and officers of the company must keep him
advised of all their dealings in securities of the
company.
Insider trading
The Securities Services Act regulates transactions
by directors and officers in securities issued by
the company and the company has issued a set
of guidelines and rules for its directors, officers
and employees. When any director or officer
wishes to buy, sell or take a position in securities
of the company, they must notify the group
company secretary of their intentions prior to the
transaction and record in writing immediately
after the transaction the details thereof and
deliver a detailed written record to the group
company secretary within 24 hours.
During the review period, a misunderstanding
between the Chairman and a director resulted
in delayed disclosure of a director's dealings in
securities.
Accounting and reporting
The board places strong emphasis on achieving
the highest standards of financial management,
accounting and reporting to shareholders.
Audit committee
- TDA Ross (Chairman)
- ZJ Kganyago
- J Shibambo
The committee comprises the following members:
TDA Ross (Chairman), ZJ Kganyago and J Shibambo. No
changes were made to the committee during
the period under review. The audit committee
consists of three independent non-executive
directors as required by legislation and corporate
governance best practice. Its Chairman, Mr TDA
Ross, is an independent non-executive.
As stipulated by its terms of reference, the
committee assists the board in discharging its
duties on safeguarding assets, operation of
adequate systems and control processes, and
presentation of accurate and balanced financial
statements and reports complying with all relevant
corporate governance disclosure requirements
and accounting standards, including International
Financial Reporting Standards.
The audit committee met on:
- 28 November 2008, to consider internal
and external audit plans for the 2009
year. The committee approved these plans
and mandated the Chairman to sign the
engagement letter for external audit and
non-audit services. The committee's terms of
reference were also updated;
- 6 May 2009, to consider reports from internal
and external auditors and to review the
financial statements for the half-year ended
31 March 2009. The committee was satisfied
that the financial statements and interim
report were fairly stated and resolved that the
Chairman recommend approval by the board
on 11 May 2009;
- 16 October 2009, to consider internal and
external audit plans for the 2010 year. The
committee approved these plans; and
- 9 November 2009, to consider reports
from internal and external auditors and to
review the financial statements for the year
ended 30 September 2009. The committee
was satisfied that the financial statements
and audited preliminary report should be
recommended for approval by the board on
10 November 2009. The Deloitte principal
engagement partner responsible for the
audit was present and the committee held
discussions in the absence of management
with both internal and external auditors.
Similarly, discussions were held with
management in the absence of the internal
and external auditors.
At the board meeting on 10 November 2009, the audit committee reported on how it has carried out its
duties and reports as follows to shareholders:
Audit committee report - 2009
- TDA Ross (Chairman)
- ZJ Kganyago
- J Shibambo
We are pleased to report to you on the audit committee's (the committee) activities in 2009. The
committee executes its responsibility in compliance with the Companies Act (the act) and within
the mandate given by the PPC board as stipulated in its terms of reference.
Membership and meetings
The committee comprises solely independent non-executive
directors as required by legislation. The members are Mr Tim Ross (Chair), Ms Zibusiso Kganyago
and Mr Joe Shibambo. In accordance with its annual meeting plan, the committee has held four
meetings in 2009 and we confirm that it has discharged its oversight responsibilities within the
scope of its mandate.
External audit
The committee reviewed with the external audit firm, which is responsible
for expressing an opinion on the conformity of those audited financial statements and related
schedules with IFRS and its judgements as to the quality, not just the acceptability, of the
company's accounting principles. There is a formal procedure that governs the process whereby
the external auditors are considered to provide non-audit services. These services are set out in an
engagement letter for and approved by the committee in advance. The committee has satisfied
itself through enquiry that the external auditor is independent as defined by the act.
The committee has met with the internal and external audit firms in the absence of management,
to discuss the results of their examinations; evaluations of the company's internal control, including
internal control over financial reporting, and the overall quality of the company's financial reporting.
No matters of concern were raised during those meetings.
The committee has agreed to an audit fee for the 2009 financial year which is disclosed in note 18
to the group financial statements. We are of the view that this fee is appropriate.
In reliance on the reviews and discussions referred to above, the committee has nominated Deloitte
& Touche as the external auditors for the 2010 financial year subject to approval at the annual
general meeting. Mr Michael John Jarvis (IRBA no 342297) from the noted firm of auditors has
been nominated as the designated auditor.
Financial director review
The committee has also reviewed the performance, appropriateness
and expertise of the chief financial officer Mr Peter Esterhuysen, and confirms his suitability for
appointment as financial director in terms of the JSE listings requirements.
The annual report
In fulfilling its oversight responsibilities, the committee has reviewed and
discussed the audited financial statements and the related schedules as reported in the annual
report with company management. The committee considers that the report complies with the
act and International Financial Reporting Standards and has therefore recommended the annual
financial statements for approval by the board. These statements will be open for discussion at the
forthcoming annual general meeting.
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The board has determined that the audit committee, which has no executive powers, has satisfied its
responsibilities for the period under review in compliance with its terms of reference.
Risk management and compliance
committee
- J Shibambo (Chairman)
-
TDA Ross
-
JS Vilakazi
To comply with best practice and following
the committee's recommendations, the board
has decided that this committee should
comprise exclusively non-executive directors.
The committee now comprises the following
members: J Shibambo (Chairman), TDA Ross
and JS Vilakazi (appointed during the year). The
following members resigned during the year:
RH Dent, O Fenn, JE Gomersall and MJ Shaw. The
Chairman of the committee, Mr J Shibambo, is an
independent non-executive director.
As stipulated by the committee's terms of
reference, the committee assists the board in
discharging its duties with respect to recognising
all material risks to which the group is exposed
and ensuring the requisite risk management
culture, practices, policies, resources and systems
are in place and functioning effectively, and
that controls are in place to provide reasonable
assurance that the company is in compliance
with those laws and regulations to which it is
subject. During 2009, this committee reviewed
high-level risk areas and their potential impact on
the business. Further details on page 51.
The board has determined that the risk
management and compliance committee,
which has no executive powers, has satisfied its
responsibilities for the period under review in
accordance with its terms of reference.
Black economic empowerment (BEE) and
transformation committee
- NB Langa-Royds (Chairman)
-
J Shibambo,
-
AJ Lamprecht
-
MP Malungani.
In terms of mining legislation passed in South
Africa, including the Minerals and Petroleum
Resources Development Act, the broad-based
socio-economic charter for the mining industry
(the mining charter) was developed. The goal
of the charter is to create a non-racial mining
industry in South Africa. To assess the progress
of mining companies to reach defined socioeconomic
goals, a mining scorecard has been
developed. As the PPC group has quarrying
operations governed by this act, it has to comply
with the act even though the group is not a mining
company per se and its quarrying operations are
a minor part of its overall operations.
The BEE and transformation committee assists
the board in adopting a holistic approach to
transformation and complying with all relevant
legislation and charters in this regard.
The committee had five scheduled meetings
during the period under review:
- 26 February 2009, the dividend flow to BEE
trusts was noted and Mr Abdul Kader reported
on the implementation and administration of
the BEE trusts.
- 11 May 2009, the members of the allocation
committee (the committee proposing
participation in the benefits of the BEE trusts)
were appointed and funding of the trusts
discussed in detail. The PPC BBBEE scorecard
as at March 2009 was discussed and an
improvement from level 7 to level 4 was
noted
- 11 August 2009, the committee considered
the BEE strategic plan and it was decided to
progress from a scorecard rating of 4 to a
rating of 3. Employment equity targets would
be the focus for improvement.
- 6 November 2009, the committee considered
an update on the activities of the BEE trusts
and the Ntsika fund and also discussed BEE
procurement. The improvement of the BBBEE
scorecard from level 4 to level 3 was noted.
The board has determined that the BEE and
transformation committee has satisfied its
responsibilities for the period under review in
compliance with its terms of reference.
Nominations committee
- BL Sibiya (Chairman)
-
J Shibambo,
-
NB Langa-Royds
-
AJ Lamprecht.
During the period under review
Mr BL Sibiya was appointed as Chairman of the
committee in accordance with the JSE listings
requirements.
The nominations committee is composed
entirely of independent non-executive directors
and makes recommendations to the board on
the composition of the board and the balance
between executive and non-executive directors.
Skill, experience and diversity are taken into
account in this process. The committee is
responsible for identifying and nominating
candidates for the approval of the board as
additional directors or to fill any board vacancies
when they arise, in terms of a policy detailing the
procedures for such appointments and which
requires these to be formal and transparent. It
also advises the board on succession planning,
especially in respect of the Chairman of the board
and chief executive officer.
During the period under review, the committee
met for the following scheduled meetings:
During the period under review, the committee
met for the following scheduled meetings:
- 26 January 2009, progress with appointing a
new CEO was discussed.
- 6 November 2009, the independence of
directors was discussed, the report on the
board performance noted and director rotation
and succession was discussed.
Remuneration committee
- NB Langa-Royds (Chairman),
-
J Shibambo and
-
JS Vilakazi
This committee is composed entirely of
independent non-executive directors. It is
mandated, within agreed terms of reference,
to deal with remuneration policy in general
and to approve the salaries and benefits of
executive directors and senior management.
The committee also advises on non-executive
directors' fees, and fees for those directors who
are members of board committees, for onward
recommendation to shareholders at the annual
general meeting.
The company's philosophy is to set remuneration
that is appropriate, taking into account levels of
responsibility and the need to attract, motivate
and retain directors, executives and individuals of
high calibre.
Basic guaranteed packages are normally reviewed
once a year and take into account external
market practices and conditions as well as the
achievement of targeted individual performance.
Annual salary increases are not guaranteed.
The committee appointed Pricewaterhouse-
Coopers to provide advice and recommendations
as corporate governance requirements for
executive remuneration have become more
onerous.
In terms of the company's approved long-term
incentive scheme, share appreciation rights were
approved by the board on the recommendation
of the remuneration committee and granted
on 25 September 2009. Exercise is subject
for executive directors and certain senior
management, to fulfilment of the following
performance condition: cumulative headline
earnings per ordinary share over the two
financial years following the financial year ending
September 2009 exceeding 2% real growth per
annum. If the performance condition is not met for
the two financial years, retesting is subsequently
permitted for the third, fourth or fifth financial
years, with the rights being forfeited thereafter
if the performance condition has not been met.
The remuneration committee may waive, amend
or replace the performance conditions if events
cause the committee to reconsider reasonably that a changed performance condition would be
a fairer measure of performance. Rights may not
be exercised during a closed period, and must
be exercised before the tenth anniversary of the
grant date, failing which they will lapse.
A restricted share scheme is in place with
the objective of retaining the services of key
employees who are critical to the future of the
group. The scheme is a notional scheme in that
participants will not be entitled to acquire actual
shares in the capital of the company, but the
scheme will enable a participant who has been
granted restricted share units to receive a future
cash amount subject to the conditions of this
scheme and calculated with reference to a share
in the capital of the company.
The grants are based on multiples of basic salary
used in companies operating in similar industries.
The terms governing future long-term incentive
awards are likely to be substantially similar to
the 2009 award, with annual grant values set
each year in line with market benchmarks for
long-term incentives, although the remuneration
committee may change certain aspects such as
the vesting period, lapse period and performance
conditions at its discretion to ensure new awards
are in line with market trends, and remain fair
and motivating long-term rewards.
All rights immediately lapse if a participant resigns
or is dismissed for disciplinary reasons. In the case
of retirement, a participant's rights will be subject
to the same conditions as if he/she had continued
to be an employee. In the case of retrenchment,
or termination of employment due to ill health,
disability or any other circumstances which the
committee may consider appropriate, a participant
must exercise vested rights within three months.
The committee also has absolute discretion to
allow a portion of the unvested rights to vest.
In the case of transactions involving restructuring
of the company, variations in share capital, capital
distributions and similar events, the committee
will take such action as it considers appropriate
to protect the interests of participants. In the
event of a reconstruction or takeover leading to
a change of control, the committee is obliged to
deem as vested a portion of the rights of executive
participants pro rata to the performance period
lapsed, if, in their reasonable opinion, they
consider that the performance conditions have
been substantially met.
The company will periodically recommend to
the remuneration committee which employees it
intends to incentivise by making grants of share
appreciation rights or restricted share units, the
quantum of the awards to be made, vesting
dates and nature of performance conditions. The
committee, after review and due consideration,
will recommend such allocations as it deems fit
to the board for approval.
The company continues to review the balance
between the fixed and variable components of
its remuneration with the aim of increasing,
subject to company and individual performance,
the variable component. The proposed change
is motivated by the need to sustain superior
performance and increase shareholder value in
the long term.
The CEO, Mr P Stuiver, attends committee
meetings ex officio. He does not participate in
discussions on his own remuneration, which is
set by the committee.
In respect of each director, details are given in
note 31 to the group annual financial statements
on salary, bonus, retirement and medical aid
contributions, gains from Barloworld share options
exercised or ceded and other benefits. Details of
directors' shareholdings are also disclosed.
Non-executive directors are remunerated for
their membership of the board of PPC and
its committees. These fees are benchmarked
annually against companies of similar size and
complexity and take into account the increasing
level of responsibilities and risks associated with
directorships. Executive directors of PPC are not
entitled to fees.
Shareholders are referred to note 39 on page 148
regarding the share option allocation to some of
the non-executive directors in terms of the BBBEE
transaction.
During the period under review, the committee
met five times for the following scheduled
meetings:
- 26 February 2009, the formulae for the
annual gain share and management bonuses
were considered and approved, the financial
performance targets for 2009 were considered
and approved, and the personal objectives of
the executives for 2009 noted.
- 11 May 2009, the annual meeting programme
for the committee was considered and
approved and the committee discussed
remuneration trends and market developments.
- 11 August 2009, the committee discussed
plans to retain key employees and allocations
in terms of the long-term incentive plan of the
company.
- 25 September 2009, Mr Stuiver presented
the management restructuring plan and
implications for remuneration at executive
level were considered by the committee,
allocations in terms of the long-term incentive
plan were approved and amendment of the
restricted share scheme rules proposed.
- 6 November 2009, the committee considered
inter alia the report on the CEO's performance
and proposed board fees for 2010.
The board has determined that the remuneration
committee has satisfied its responsibilities for the
period under review in compliance with its terms
of reference.
Company results communications
Earnings press release - Earnings press
releases will be released on the Stock Exchange
News Service (SENS) and posted on the
corporate website as soon as possible, prior to
the start of any discussions or meetings on the
results.
Earnings presentation - Any earnings presentations
will be posted on the PPC website at
the time of the presentation. There may also be
a live broadcast on a South African television
business channel and the event will be recorded
and subsequently posted on the PPC website.
These broadcasts are to assist with fair and
timely disclosure to all investors and to act as a
record of events.
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