Governance
Corporate Governance is part of the framework through which a company is directed and managed. Strong corporate governance aids effective management and decision making. St Barbara is committed to maintaining and, where possible, improving its corporate governance systems.
During the 2010 fiscal year the Company assessed its practices against the ASX Corporate Governance Principles and Recommendations and where necessary made appropriate modifications to ensure that it is in conformance with them. St Barbara’s position with respect to each of the relevant ASX Recommendations is described below and where the Company was not in conformance with them this is explained.
Principle 1
Lay solid foundations for management and oversight
The role of the Board is to act in the best interests of shareholders, consider and approve the Company’s strategic direction, provide guidance to, and oversight of, Management and foster a culture of good governance.. In performing its role, the Board at all times will endeavour to act:
- in a manner designed to create and continue to build value for shareholders;
- in recognition of its overriding responsibility to act honestly, fairly and ethically in serving the interests of the Company, its shareholders, employees, and other stakeholders;
- in accordance with the duties and obligations imposed upon Directors by the Company's Constitution and applicable law.
The specific responsibilities of the Board are described in the Board Charter.
Executive manager evaluation
The Board has established a Remuneration Committee, which provides recommendations and direction for the Company’s remuneration practices. The Committee ensures that a significant proportion of each executive’s remuneration is linked to his or her performance through short and long-term incentives and the Company’s performance relative to its peers. Performance reviews are conducted at least annually and were undertaken during the 2010 financial year. The performance of the Managing Director and CEO and his direct reports is assessed against agreed key performance indicators with results for him and the senior executives to be approved by the Board.
Principle 2
Structure the Board to add value
Independence
It is Board policy that a majority of non-executive Directors, including the Chairman, should be independent and free of any relationship that may conflict with the interests of the Company.
The Board defines ‘independence’ in accordance with the ASX Recommendations. Each of the current non-executive Directors is independent. The Chairman is an independent non-Executive Director. The Managing Director and Chief Executive Officer, is the only executive on the Board.
In order to ensure that any personal, professional or other conflict of interest of a Director in a matter is made known,, each Director has contracted with the Company to disclose any relationship, duty or interest held that may give rise to such a conflict. Directors who have declared a potential or real conflict of interest on a particular issue may be excluded from all relevant Board deliberations and are excluded from voting on that issue.
Composition and Nomination to Board
Having regard to the importance and relative infrequency of Board changes, as well as the small number of Board positions there is no nomination committee but rather the Board retains the nomination responsibility for itself. The consideration of Board composition and appointments is periodically dealt with in the Board’s annual programme of work.
Although there is no specific process of Director selection detailed in the Board Charter, when a need to appoint a Director to the Board arises, the Board evaluates its skill set and needs and engages an independent search firm to assist and advise the Board in identifying and selecting the best candidates for the given vacancy. The assessment process includes interviews by at least a majority of, if not all, Board members. The Board assesses the nominees against a range of specific criteria, including their experience, professional skills, potential conflicts of interest, the requirement for independence and the existing collective skill sets of the Board.
Details of each current Director’s skills, qualifications, experience, relevant expertise and date of appointment are set out in the Annual Report.
As previously foreshadowed the Board undertook a formal review of its own performance during the year. This was facilitated by the Chairman and included a review of each individual Director’s performance. The outcomes of the review and opportunities to improve Board, as well as Director performance were formally reported to and considered by the Board.
Board structure
The Board has established a number of Board Committees to facilitate the execution of its responsibilities. The Committees provide a forum for a more detailed analysis of key issues and interaction with management. Each Committee reports its deliberations to the next Board meeting. The current Committees are:
Remuneration Committee
Members
Robert Rae (Chair), Doug Bailey, Besty Donaghey, Colin Wise.
Function
The Committee assists and advises the Board in relation to the remuneration of the Managing Director and CEO, his senior executive direct reports, employees of the Company, consultants/ contractors who are engaged to perform executive responsibilities, and non-executive Directors.
Audit Committee
Members
Doug Bailey (Chair), Phil Lockyer, Robert Rae, Colin Wise.
Function
The Committee assists and advises the Board in discharging its responsibilities in relation to financial reporting, financial risk management, evaluating the effectiveness of the financial control environment, oversight of the external audit function and review of Ore Reserve estimation processes. Matters relating to the assessment and supervision of non-financial business risks and compliance are covered directly by the Board.
Health and Safety Committee
Members
Phil Lockyer (Chair), Betsy Donaghey, Colin Wise.
Function
The Committee assists and advises the Board in relation to safety and health issues, including, in conjunction with Management, promoting a safety conscious culture throughout the Company;
- overseeing the function and effectiveness of the Health and Safety Management Committee; and
- recommending to the Board outcomes on Health and Safety policy, plans, compliance and issues.
Details of the number of meetings of the Board and each Committee during the year, and each Director’s attendance at those meetings, are set out in the Annual Report. Every Director has a standing invitation to attend any committee meeting and to receive committee papers.
Director participation
Directors visit St Barbara’s mining operations at least once per annum and meet with Management from time to time to gain a better understanding of the Company’s business.
Independent professional advice and access to Company information
As specified in the Board Charter and individual letters of appointment, Directors have right of access to all relevant Company information as well as to the Company’s executives and senior Management and, if necessary and subject to prior consultation with the Chairman, may seek independent advice on any issue of particular concern from a suitably qualified adviser at St Barbara’s expense.
Principle 3
Promote ethical and responsible decision making
The Board and the Company’s employees are expected to uphold the highest levels of integrity and professional behaviour in their relationships with all of the Company’s stakeholders. As part of a re-statement of its overall vision, the Company previously adopted a formal set of behavioural values which encompasses the Board, Management, employees and other members of the work force. The vision and those values underpinning it are available on the Company website. Employees are also made aware of acceptable behaviour through on-going training and development and contact with senior staff who are encouraged to lead by example.
In addition to upholding those values, the Company has specific policies and procedures that cover trading in St Barbara’s securities and conflicts of interest for Directors. These include maintaining a register of Director interests. Employees are accountable for their conduct under a range of Company policies and procedures, including an Occupational Health and Safety Policy, an Equal Opportunity Policy, an Environment Policy, a policy on the Use of Computer Facilities and others. The Company Secretary is responsible for investigating any reports of unethical practices and reporting outcomes to the Managing Director and CEO or the Board, as appropriate.
The Company has not enshrined its values into a formal code of ethics at this time as it considers that all matters describing, prescribing and underpinning ethical behaviour are contained in the values and attendant policies outlined above.
Trading in St Barbara shares
To safeguard against insider trading, St Barbara’s Dealing in Securities Policy prohibits Directors and employees from trading in St Barbara securities if they are aware of any information not in the public domain that would be expected to have a material effect on the price of Company securities. Dealing in Company shares by Directors, Officers and Employees is governed by a ‘Dealings in Securities’ Policy. This policy allows for a 30-day trading window commencing twenty four hours following significant public announcements, provided the Company is not at any time during the 30 days in possession of undisclosed potentially price sensitive information. St Barbara discloses to the ASX any transaction conducted by any Director in St Barbara securities in accordance with ASX Listing Rules.
Principle 4
Safeguard integrity in financial reporting
The Board has established an Audit Committee and its Charter is available on the Company’s website. The Audit Charter covers the role of the Committee, including the principles governing the Company’s relationship with its external auditor. The Committee considers that KPMG’s process of partner rotation is sufficient to maintain independence of the external auditor.
Principle 5
Make timely and balanced disclosure
St Barbara seeks to provide relevant up-to-date information to its shareholders and the broader investment community in accordance with the continuous disclosure requirements under the ASX Listing Rules. The Board has implemented a Continuous Disclosure Policy to ensure that information considered material to the share price or its value is lodged with the ASX as soon as practicable. Other relevant information, including Company presentations, updates by senior management and commentary on financial results, are also subject to a process of internal review and disclosed to the ASX and through the Company website.
Principle 6
Respect the rights of shareholders
The Company has a formal shareholder Communications policy which is available on St Barbara’s website. Communication to shareholders is facilitated by the production of the Annual Report, Quarterly Reports, public announcements and the posting of ASX releases on the website immediately after their disclosure on the ASX. Shareholders can register on the website to receive notice of announcements. The Company believes considering the size of the shareholder base, the current announcement procedures and distribution methods, shareholders have the opportunity to be fully informed of Company activities.
In addition, all shareholders are encouraged to attend the Annual General Meeting of Shareholders and use the opportunity to ask questions and vote on the resolutions. The Company makes every endeavour to respond to questions from shareholders. The external auditor attends the Annual General Meeting and is available to answer questions in relation to the audit.
Principle 7
Recognise and manage risk
Risk management and compliance are fundamental to sound management, and oversight of such matters is an important responsibility of the Board.
The financial reporting and control mechanisms are assessed during the year by Management, the Audit Committee and the external auditor. The Board has received the declaration from the Managing Director and the Chief Financial Officer provided in accordance with section 295A of the Corporations Act 2001 (Cth) that the Company’s financial statements are founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
The Company also has policies in place dealing with risks in the areas of Health and Safety, Environment and Employee Relations. Management has regularly informed the Board about risks within the business and the effectiveness of the Company’s management of those risks during the 2010 financial year.
Utilising external consultants the Company continued an enterprise wide risk and opportunity assessment which it had commenced during the previous financial year. The two year project is expected to deliver enhanced risk and opportunity reporting and control mechanisms, which are designed to ensure that strategic, operational, legal, reputational and financial risks and opportunities are identified, assessed and managed. All material business risks are being identified and evaluated as part of the Enterprise Wide Risk and Opportunity Assessment program. A Risk Management Policy, framework and risk evaluation matrix have been established.
Principle 8
Remunerate fairly and responsibly
The Remuneration Committee Charter was reviewed and updated during the year.
Board remuneration
The remuneration of the non-executive Directors is fixed rather than variable. There are no retirement benefits paid to non-executive Directors. Independent expert remuneration advice is considered from time to time in determining remuneration for the Chairman, Managing Director and CEO and non-executive Directors. The fee scale for non-executive Directors for the 2010 fiscal year remained unchanged from the scale which applied during the previous fiscal year.
Executive remuneration
The Remuneration Committee provides recommendations and direction for the Company’s remuneration policies. It utilises independent expert advice as appropriate and surveys to benchmark overall Company and executive remuneration, packaging, and remuneration practices. The Committee ensures that a significant proportion of each executive’s remuneration is linked to his or her performance and the Company’s performance. This remuneration has both short and long-term components. Short Term Incentives are aligned to achievement of specific annual corporate and individual targets and goals directed at creating near term value and/or mitigating business risks while Long Term Incentives are aligned to a long term increase in shareholder wealth. The Company has in place a formal policy prohibiting executives from entering into transactions, which hedge or protect the unvested portion of any of their equity-based remuneration entitlements.
Key components of senior manager contracts, including details of potential termination payments are set out in the Annual Report. Further details in relation to Director and Executive remuneration are set out in the Remuneration Report.
Diversity
The Company actively pursues diversity in its approach to recruitment, selection, training and promotion of staff. It is currently detailing and developing those practices into a formal policy which will be supplemented with enhanced education and training. It will report on the outcomes of these developments, in greater detail in 2011.
