Board of directors: composition and independence
The board currently consists of the Executive Chairman (Mr Mackay); eight independent non-executive directors (including Mr Manser, the Deputy Chairman and Senior Independent Director); five non-executive directors who are not considered to be independent; and two additional executive directors (Mr Clark, the Chief Operating Officer, and Mr Wilson, the Chief Financial Officer).
At the 2012 AGM Mr Mackay became Executive Chairman and Dr Clark was appointed as an executive director and as Chief Operating Officer, with the intention that he will succeed Mr Mackay as Chief Executive at the 2013 Annual General Meeting, when Mr Mackay will become non-executive Chairman.
The size and certain aspects of the composition of the board and of the audit, nomination and corporate accountability and risk assurance committees are determined primarily by the terms of our relationship agreements with Altria Group, Inc. (Altria) and with BevCo Ltd (BevCo), a holding company of the Santo Domingo Group, both of which have been approved by the shareholders of SABMiller. The agreement with Altria limits the size of the board to a maximum of 15 directors, of whom no more than two are to be executive directors, up to three are to be non-executive directors nominated by Altria, up to two are to be non-executive directors nominated by BevCo, and up to eight are to be non-executive directors appointed by the board.
The agreement with BevCo allows BevCo to nominate up to two non-executive directors for appointment to the board.
The number of directors on the board currently exceeds the number permitted under our agreement with Altria. With the election of Dr Clark at the annual general meeting held on 26 July 2012, the board currently has three executive directors, which also exceeds the number contemplated by our agreement. Altria has given its consent to these changes in order to facilitate the progressive renewal of the board and the broadening of the diversity of background, gender and experience at board level, and to enable the board's agreed executive succession planning to be implemented. The board is grateful to Altria for its agreement to permit the maximum number of directors and executive directors allowed under the relationship agreement to be exceeded for the time being, and also for its agreement that the board should begin the process of recruiting a new independent director, on the understanding that in the absence of unforeseen circumstances, the size of the board will gradually be reduced over the next two years, to restore the number of directors to that envisaged by the agreement, while still applying the provision of the Code that at least half of the directors (excluding the Chairman) should be independent non-executive directors. Altria and BevCo have each exercised their right under their respective agreements to nominate one director for appointment to the nomination committee. Both Altria and BevCo have the right to nominate directors for appointment to the corporate accountability and risk assurance committee (CARAC), Altria has exercised this right, and Altria has exercised its right to nominate one director for appointment to the audit committee.
The board considers eight directors - Mr Armour, Ms Knox, Mr Manser, Mr Manzoni, Mr Morland, Dr Moyo, Mr Ramaphosa and Ms Weir - to be independent for the purposes of the Code. The board considers five non-executive directors not to be independent for the purposes of the Code: Mr Bible, Mr Devitre and Mr Willard, as they are nominees of Altria, the company's largest shareholder; and Mr Santo Domingo and Mr Pérez, as they are nominees of the Santo Domingo Group, the company's second largest shareholder.