There are usually six scheduled board meetings a year; additional board meetings are held to consider particular projects where necessary.
The Corporate Governance report, published as part of the annual report, sets out individual directors’ attendance at board and committee meetings and at the annual general meeting.
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, members of the executive committee (the executive directors, the divisional managing directors and the directors of key group functions: corporate affairs; marketing; supply chain and human resources; and legal) make regular presentations to the board, enabling directors 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.
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; sustainability and environmental policies; 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 our website. 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 all board members in advance of the next board meeting.
Conflicts of interest
The directors are required to avoid situations where they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the company’s interests. In accordance with the Companies Act 2006, the articles of association of the company allow the board to authorise potential conflicts of interest that may arise and to impose such limits or conditions as it thinks fit. Procedures are in place for the disclosure by directors of any potential conflicts and for the appropriate authorisation to be sought if a conflict arises.
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 independent judgement and contribute to the formulation of strategy, policy and decision-making through their knowledge and experience of other businesses and sectors.
Information and training
The Company Secretary is responsible for advising the board, through the Chairman, on matters of corporate governance. The board and its committees are supplied with full and timely information, including detailed financial information, to enable directors to discharge their responsibilities, and the committees are provided with sufficient resources to undertake their duties. 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. 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 is 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 specialisms and regular updates on relevant legal, regulatory, corporate governance and technical developments are presented to committee members at each meeting and, as appropriate, to the full board.
Non-executive directors may serve on a number of other boards provided that they continue to demonstrate the requisite commitment to discharge effectively their duties to SABMiller. The Chairman and the nomination committee keep under review the extent of directors’ other interests to ensure that the effectiveness of the board is not compromised by the extent of external commitments. The board is satisfied that the Chairman and each of the non-executive directors commit sufficient time to their duties as Chairman and directors of the company, respectively. The board believes, in principle, in the benefit to the company 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, subject to the agreement of the board, executive directors and members of the executive committee are permitted to accept external non-executive board appointments and 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 its remuneration committee. He is also a member of the board of Philip Morris International Inc. and serves on three of its committees: compensation and leadership development, finance, and product innovation and regulatory affairs. 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, continues to give Mr Mackay valuable additional insights and knowledge which enhance his ability to fulfil his duties as Chief Executive of the company.
Executive Chairman, Chief Operating Officer and Senior Independent Director
The roles of Executive Chairman and Chief Operating Officer are separate with responsibilities divided between them, as formalised in their respective letters of appointment, approved by the board.
As noted in the Composition Section, Mr Mackay was appointed as Executive Chairman and Dr Clark was appointed as Chief Operating Officer, at the annual general meeting on 26 July 2012. It is intended that at the annual general meeting in 2013, Mr Mackay will become Non-Executive Chairman, and Dr Clark will become the Chief Executive in his place. Job specifications for the Executive Chairman and the Chief Operating Officer, setting out clearly their respective authorities and responsibilities, have been agreed by the board, and the directors are confident that Mr Mackay and Dr Clark will continue to work closely and effectively together, both during the transitional year and thereafter. Any risk of an over-concentration of decision making powers in one person will be mitigated by the formal appointment of Mr Manser, the Senior Independent Director, as Deputy Chairman, by the fact that the interim appointment of Mr Mackay as Executive Chairman is for a pre-determined and limited period of one year, and by the proposed appointment of Dr Clark as a third executive director. It is also the board's intention now to begin the process of recruiting a new independent non-executive director, with the expectation that in due course he or she could become the Senior Independent Director in succession to Mr Manser. Mr Manser chairs or serves on all four main committees of the board, and is therefore well placed to influence the governance of the company and to meet his responsibilities as Deputy Chairman and Senior Independent Director. He serves as an additional contact point for shareholders, and 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 other members of the management team. 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 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, investor bodies and analysts. In the past year, the Chairman hosted a meeting of the non-executive directors without the executive directors being present. The Senior Independent Director also 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.
Board, committee and director performance evaluation
A formal and rigorous evaluation of the performance and effectiveness of the board and its principal 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 performance of the Executive Chairman is reviewed by the remuneration committee and this review is shared with and considered by the board. The performance of the Chief Operating Officer and Chief Financial Officer is reviewed by the Executive Chairman and the remuneration committee, and reported on to the board by the remuneration committee. Each non-executive director’s performance is evaluated by the Executive Chairman, in consultation with the Senior Independent Director, who in turn consults with the other 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.
Retirement of directors
The company's articles of association require that 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. However, the board has determined that for the time being all directors will stand for re election annually. Independent non-executive directors who have served for nine years will only be asked to stand for re-election if the board remains satisfied both with the director’s performance and that nine years’ continuous service.
The Company Secretary
The Company Secretary acts as secretary to the board and its committees.