4.2 Operation of the board
The board sets the strategic objectives of the group, determines
investment policies, agrees on performance criteria and delegates
to management the detailed planning and implementation of those
objectives and policies in accordance with appropriate risk parameters.
The board monitors compliance with policies and achievement against
objectives by holding management accountable for its activities
through monthly and quarterly performance reporting and budget
updates. In addition, the board receives regular presentations, on
a rotational basis, from the divisional managing directors as well as
from directors of key group functions (marketing; corporate affairs;
supply chain and human resources; and legal) enabling it to explore
specific issues and developments in greater detail.
Board and committee meetings are held in an atmosphere of
intellectual honesty of purpose, integrity and mutual respect,
requiring reporting of the highest standard by management and
direct, robust and constructive challenge and debate among
board and committee members.
4.3 Matters reserved for the board
There is a schedule of matters which are dealt with exclusively by the
board. These include approval of financial statements; the group’s
business strategy; the annual capital expenditure plan; major capital
projects; major changes to the group’s management and control
structure; material investments or disposals; risk management
strategy; social and environmental policy; and treasury policies.
The board governs through clearly mandated board committees,
accompanied by monitoring and reporting systems. Each standing
board committee has specific written terms of reference issued by
the board and adopted in committee. The terms of reference of the
audit, remuneration and nomination committees are available on
the company’s website or, on request, from the Company Secretary.
All committee chairmen report orally on the proceedings of their
committees at the next meeting of the board, and the minutes of
the meetings of all board committees are included in the papers
distributed to board members in advance of the next board meeting.
4.4 Conflicts of interest
From 1 October 2008, directors have been required to avoid a
situation where they have, or can have, a direct or indirect interest
that conflicts, or possibly may conflict, with the company’s interests.
As permitted by the Companies Act 2006, the articles of association
of the company were amended at the 2008 Annual General Meeting
to allow the board to authorise potential conflicts of interest that
may arise and to impose such limits or conditions as it thinks fit.
Procedures have been put in place for the disclosure by directors of
any such conflicts and for the appropriate authorisation to be sought
if a conflict arises. These procedures have been operating effectively.
4.5 The roles of executive and non-executive directors
The executive directors are responsible for proposing strategy and
for making and implementing operational decisions. Non-executive
directors complement the skills and experience of the executive
directors, bring an independent judgement and contribute to the
formulation of strategy, policy and decision making through their
knowledge and experience of other businesses and sectors.
4.6 Information and training
The board and its committees are supplied with full and timely
information, including detailed financial information, to enable
directors to discharge their responsibilities. All directors have access
to the advice of the Company Secretary. Independent professional
advice is also available to directors in appropriate circumstances,
at the company’s expense, and the committees have been provided
with sufficient resources to undertake their duties. None of the
directors has sought independent external advice through the
company. The Company Secretary is responsible for advising the
board, through the Chairman, on matters of corporate governance.
Following the appointment of new directors to the board, directors
are briefed on the duties they owe as directors to the company and
tailored induction programmes are arranged which involve industry-specific
training and include visits to the group’s businesses and
meetings with senior management, as appropriate. New directors are
briefed on internal controls at business unit level and are advised of
the legal and other duties they have as directors of a listed company
as well as on relevant company policies and governance-related
matters. The company arranges for major shareholders to have the
opportunity to meet new appointees. The company is also committed
to the continuing development of directors in order that they may build
on their expertise and develop an ever more detailed understanding
of the business and the markets in which group companies operate.
Members of board committees are encouraged to attend internal
and external briefings and courses on aspects of their respective
committee specialities and regular updates on relevant legal, regulatory,
corporate governance and technical developments are presented to
committee members and, as appropriate, to the board.
4.7 Outside appointments
Non-executive directors may serve on a number of outside boards
provided that they continue to demonstrate the requisite commitment
to discharge effectively their duties to SABMiller. The nomination
committee keeps the extent of directors’ other interests under review
to ensure that the effectiveness of the board is not compromised.
The board is satisfied that the Chairman and each of the non-executive
directors commit sufficient time to the fulfilment of their duties as
Chairman and directors of the company, respectively.
The board believes, in principle, in the benefit of executive directors
and members of the executive committee accepting non-executive
directorships of other companies in order to widen their experience
and knowledge for the benefit of the company. Accordingly, executive
directors and members of the executive committee are permitted to
accept external non-executive board appointments, subject to the
agreement of the board, and are allowed to retain any fees received
from such appointments.
Mr Mackay is a non-executive director of Reckitt Benckiser Group plc
and is the Senior Independent Director and a member of the
remuneration committee of that company. He is also a member of the
board of Philip Morris International Inc. and serves on its compensation
and leadership development, finance and product innovation and
regulatory affairs committees. Fees earned by Mr Mackay from his
appointments are set out in the remuneration report.
The board is satisfied that these duties do not impinge on
Mr Mackay’s commitment and ability to discharge fully his duties
to the company, and that his service on the boards of two global
consumer product companies which operate in many of the
developed and emerging markets in which the company also has
businesses gives Mr Mackay additional insight and knowledge which
enhance his ability to fulfil his duties as Chief Executive of the company.
Mr Mackay is currently the only executive director or member of the
executive committee serving on the board of another public company.
4.8 Chairman, Chief Executive and Senior Independent
Director
The roles of Chairman and Chief Executive are separate with
responsibilities divided between them. This separation of
responsibilities is formalised in their respective letters of appointment,
approved by the board. There were no significant changes to the
Chairman’s external commitments during the year.
The Chairman is available to consult with shareholders throughout
the year and, in the month prior to the annual general meeting, he
also invites major shareholders to meet with him to deal with any
issues. The board is kept informed of the views of shareholders
through regular updates from the Chairman, the Company Secretary
and the executive directors, as well as through the inclusion in the
board papers of reports on commentaries of, and exchanges with,
shareholders and investor bodies.
The Senior Independent Director is Lord Fellowes. Lord Fellowes is
chairman of CARAC, and also serves on the audit, remuneration and
nomination committees. He is therefore well placed to influence the
governance of the company and to meet his responsibilities as Senior
Independent Director. Lord Fellowes serves as an additional contact
point for shareholders should they feel that their concerns are not
being addressed through the normal channels. Lord Fellowes is
also available to fellow non-executive directors, either individually or
collectively, to discuss any matters of concern in a forum that does
not include executive directors or the management of the company.
In the year under review, the Chairman hosted a meeting of the
non-executive directors without the executive directors present.
Lord Fellowes has, in addition, held a meeting of non-executive
directors without the presence of the Chairman at which, among
other things, the performance of the Chairman was discussed.
4.9 Board, committee and director performance evaluation
A formal evaluation of the performance and effectiveness of the
board and of the audit, remuneration, nomination and corporate
accountability and risk assurance committees is carried out each
year, led by the Chairman, with input from the Senior Independent
Director and in consultation with other directors and the Company
Secretary. The process was this year facilitated by completion by
each director of a detailed questionnaire examining the effectiveness
and operation of the board and its committees. Dr Moyo was not
included in this process, which had been completed before she
joined the board.
The performance of the Chief Executive is reviewed by the
remuneration committee and this review is shared with and
considered by the board. The performance of the Chief Financial Officer is reviewed by the Chief Executive and the remuneration
committee, and reported on to the board by the remuneration
committee. Each non-executive director’s performance is evaluated
by the Chairman, in consultation with the Senior Independent
Director, who in turn consults with the executive directors and the
Company Secretary. The Chairman’s performance is evaluated
against the same criteria by the Senior Independent Director, the
non-executive directors and the Company Secretary, taking into
account the views of the executive directors.
In considering the contribution of individual directors for the year
under review, performance was assessed against the company’s
selected criteria of strategy, expertise in their field, ethics and
governance factors, commitment, profile, knowledge of the industry
and team contribution, culminating in an overall contribution rating.
The Chairman was satisfied that the performance criteria used
adequately covered all of the appraisal factors suggested by the
Higgs Report, with the exception of ‘Attendance and preparation’.
He was satisfied all directors attained a high level of attendance and
preparation. A rating scale of ‘Poor’, ‘Below Average’, ‘Average’,
‘Above Average’ and ‘Fully Satisfactory’ was used in assessing
directors’ performance against the criteria. The performance and
contribution of each director was assessed as either ‘Above Average’
or ‘Fully Satisfactory’, while recognising the importance of the
different roles played by individual directors in bringing a balanced
overall view to the board. In reviewing the performance of the board
and its committees, the Chairman and the Senior Independent
Director were aligned in their conclusion that, measured against
the principal duties expected of it, the board (including by extension
its standing and ad hoc sub-committees) continued to operate
effectively and to meet in full its obligations to support management,
to monitor performance across a wide area, and to maintain its
strategic oversight.
In a meeting of the Chairman, the Senior Independent Director, the
committee chairmen and the Company Secretary, the results of the
performance and effectiveness evaluations conducted in respect of
the board, each of the directors, the Chairman, the Senior
Independent Director and each of the board’s four standing
committees were reviewed. Regarding the board committees,
each of the committee chairmen expressed their views regarding
the operation of his committee against its terms of reference and
the performance and effectiveness of that committee. These
views were discussed in an open and constructive manner with
recommendations arising from the discussions being brought
forward to the board and the respective committees. It was agreed
that the minor matters which had been identified through the director
questionnaire process as requiring further consideration would be
addressed. The conclusion of this meeting was that the board was
balanced and operated effectively and that the board committees
discharged their duties under which their respective terms of
reference operated effectively. Each of the directors and the
Chairman had been assessed to be performing at least satisfactorily
and continued to demonstrate commitment to their respective roles
and to devote sufficient time to the fulfilment of their duties.
The results of the performance and effectiveness assessment
process as outlined above were reviewed in full and approved
by the board.
At the forthcoming annual general meeting four directors,
Mr Bible, Ms Doherty, Mr Pérez and Mr Santo Domingo are required
to seek re-election in accordance with the company’s articles of
association, having served for three years since their last election.
As previously mentioned, the Chairman, Lord Fellowes, Mr Morland
and Mr Ramaphosa have each served continuously on the board
for more than nine years and, accordingly, offer themselves for
re-election annually.
The Chairman confirms that each of the directors offering themselves
for re-election continues to perform effectively and to demonstrate
commitment to their role. In addition, the Chairman confirms that
in relation to each of the directors who will have served for over
nine years, the board is satisfied with their performance and has
determined that the length of their service does not compromise
their independence. Lord Fellowes, as Senior Independent Director,
confirms that the Chairman continues to perform effectively and to
demonstrate commitment to his role.
Biographical details of Dr Moyo, who is standing for election, and of
the directors who are standing for re-election, are included in Board of directors.
4.10 Retirement of directors
New directors are subject to election at the first annual general
meeting following their appointment, and directors are subject
to retirement and re-election by shareholders every three years.
The reappointment of non-executive directors is not automatic.
The board has determined that non-executive directors who have
served for nine years will be asked to stand for re-election annually,
provided that the board remains satisfied both with the director’s
performance and that nine years’ continuous service does not
compromise the director’s continuing independence.
4.11 The Company Secretary
The Company Secretary acts as secretary to the board and
its committees and he attended all meetings during the year
under review.
