How we are governed to create value

Nampak’s board of directors is committed to ensuring that the group adheres to the highest standards of corporate governance in the conduct of its business. The group’s structures and processes are adapted from time to time to reflect best practice standards.

In the year under review Nampak complied with all the corporate governance requirements of the JSE Limited. A statement of how the company has applied the principles of King III is set out in the full corporate governance report on the company’s website, while a statement of the exceptions where the company elected not to comply with the principles of King III appears here. King IV released in November 2016 will be applicable to Nampak for the financial year ending 30 September 2018.

Governance framework and structure

The diagram below is a simple overview of the corporate governance structure at Nampak.


Board of directors

The board is made up of an appropriate combination of executive and non-executive directors who have suitable academic qualifications and diverse experience, race and genders. All non-executive directors are considered independent. For the biographical details of directors, and their length of tenure, click here, where graphs also provide details of the board’s representation by race and gender.

Mrs DC Moephuli and Mrs CWN Molope have indicated their intention to step down as non-executive directors of the company immediately prior to commencement of the annual general meeting (“AGM”) on 1 February 2017 due to pressure of other commitments and Mrs Molope has indicated that she will also not make herself available for re-election as chairperson of the audit committee. The board agreed to recommend the election of Mr RC Andersen as chairman of the audit committee to replace Mrs Molope. A further announcement will be made in due course about the appointment of a new non-executive director and the recommended election of a fourth member to the audit committee.

The board is responsible for the strategic direction of the group, while also maintaining control over all material matters affecting the group.

In the year under review, the board reviewed the independence status of all the non-executive directors and considered them all to be independent. In particular, the board reviewed the independence and performance of Dr RJ Khoza, who completed 10 years of service as a non-executive director on 30 September 2016. The board concluded that Dr Khoza’s independence of character and judgement was not in any way affected by his length of service and that his service was of considerable benefit to the company.

The performance of the chairman is assessed by the board every second year and will next be assessed in 2017. No one director has unfettered power of decision making.

The positions of chief executive officer (CEO) and chairman are separated, with responsibilities divided between them for matters affecting the board and management. The division of responsibilities ensures a balance of power and authority. The chairman leads the board and ensures that all relevant information is placed before it for decision. The CEO is responsible for the operation of the businesses, the development of strategy and the submission of business plans and budgets to the board for consideration.

All directors, other than the CEO and chief financial officer (CFO), are subject to retirement and re-election by shareholders every three years. The CEO and CFO are not subject to this during the periods of their service contracts. Re-election takes place on a staggered basis to ensure continuity, but reappointment is not automatic. The appointments of new directors are subject to confirmation by shareholders at the first annual general meeting after their appointment.


Board committees

The board is assisted in the discharge of its duties by a number of committees, details of which are set out below:

  Audit committee
Role, purpose and principal functions

The committee operates within written terms of reference which are reviewed and updated regularly. A copy of the charter is available on the company’s website http://www.nampak.com/Content/Documents/About/audit-committee-charter.pdf.

Strategic focus for the year under review
  • Considered deleveraging of the group’s balance sheet
  • Considered the sale and leaseback of property transaction
  • Considered liquidity issues in Nigeria and Angola
  • Considered the JSE report on monitoring financial statements
  • Considered the Nampak dividend policy
  • Considered impairment of Angolan tinplate line

  Investment committee
Role, purpose and principal functions

The committee operates within written terms of reference which are reviewed and updated regularly. A copy of the charter is available on the company’s website http://www.nampak.com/Content/Documents/About/investment-committee-charter.pdf

Strategic focus for the year under review
  • Considered the sale and leaseback of property transaction
  • Reviewed the Nampak Glass furnace 3 project
  • Considered Glass opportunities in both Nigeria and Ethiopia
  • Considered Plastics opportunities in Europe
  • Considered the Nampak debt covenant position and rand volatility

  Nomination committee
Role, purpose and principal functions

The committee operates within written terms of reference which are reviewed and updated regularly. A copy of the charter is available on the company’s website http://www.nampak.com/Content/Documents/About/nomination-committee-charter.pdf

Strategic focus for the year under review
  • Considered board and executive succession planning and personal development
  • Considered non-executive director independence and rotation
  • Monitored implementation of action plans from the board evaluation process
  • Reviewed the induction programme

  Remuneration committee
Role, purpose and principal functions

The committee operates within written terms of reference which are reviewed and updated regularly. A copy of the charter is available on the company’s website http://www.nampak.com/Content/Documents/About/remuneration-committee-charter.pdf

Strategic focus for the year under review
  • Reviewed remuneration policy with independent external consultants (PwC)
  • Approved a medium-term incentive scheme to replace the short-term incentive scheme for 2017 and 2018
  • Reviewed defined benefit obligations and strategies to manage the liability

See the remuneration committee report

  Risk and sustainability committee
Role, purpose and principal functions

The committee operates within written terms of reference which are reviewed and updated regularly. A copy of the charter is available on the company’s website http://www.nampak.com/Content/Documents/About/risk-and-sustainability-charter.pdf

Strategic focus for the year under review
  • Reviewed group key risks, mitigations and monitored the implementation of mitigation activities
  • Approved risk appetite and tolerance levels for 2016

  Social, ethics and transformation committee
Role, purpose and principal functions

The committee operates within written terms of reference which are reviewed and updated regularly. A copy of the charter is available on the company’s website http://www.nampak.com/Content/Documents/About/social-ethics-and-transformation-committee-charter.pdf

Strategic focus for the year under review
  • Recommended transformation commitments and targets to the board for approval
  • Reviewed proposals submitted by management to provide an extension to the lock-in period for active employees who remained beneficiaries in The Black Management Trust as at 31 December 2015 when the original lock-in period expired
  • Monitored the group’s performance against its code of conduct and business ethics

See the full social, ethic and transformation committee report on the website www.nampak.com.

Mrs DC Moephuli was unable to attend all the board and relevant sub-committee meetings due to her commitments at Transnet where she is a
full-time employee.

Professor PM Madi was unable to attend all the board meetings and relevant sub-committee meetings due to other commitments.

Mr E Ikazoboh was unable to attend all the board meetings and relevant sub-committee meetings due to other commitments in Nigeria where
he resides.

Group executive committee

The group executive committee is constituted to assist the CEO in managing the business of the group, subject to authority limits delegated to the CEO and the group executive committee in terms of the group’s authority policy. The committee assists the CEO in guiding and controlling the overall direction of the business of the group and acts as a medium of communication and coordination between divisions, group companies and the board. The composition of the committee is as follows:

Members   Position
AM de Ruyter   Chief executive officer
C Burmeister   Group executive: DivFood and R&D
GR Fullerton   Chief financial officer
M Khutama   Group executive: Plastics
RG Morris   Group executive: Africa and Glass
EE Smuts   Group executive: Bevcan
FV Tshiqi   Group human resources director
NP O’Brien   Group executive: Legal, secretarial and insurance

Company secretary

The company secretary operates on an arm’s-length basis from the board and is not a member of the board. All directors have access to the advice and services of the company secretary. The company secretary is responsible for preparing meeting agendas and recording minutes of board meetings and for ensuring that sound corporate governance procedures are followed. During the year under review the board declared itself satisfied with the competence, qualifications and experience of Neill O’Brien as company secretary.

Board, committee and director evaluations

The board has decided that formal appraisals of the board, its committees and directors, will be conducted every second year and the next appraisal will take place in 2017.

Compliance

Nampak is committed to conducting its business in compliance with all applicable laws and regulations and with honesty in its dealings with customers, employees, suppliers, shareholders and the community. In pursuit of that goal Nampak maintains an effective compliance programme.

The primary purpose of the compliance programme is to detect violations of laws, regulations and company policy. Should Nampak become aware of any violations of laws, regulations or company policies, it will investigate the matter and take disciplinary action where appropriate.

Schedules of relevant laws and regulations are prepared and maintained for the businesses in the group. A code of conduct and business ethics lays down the standards expected of all employees, while potential violations can be reported through ‘Tip-Offs Anonymous’, which is available 24 hours a day, seven days a week.

Policies and procedures are in place to monitor compliance and to mitigate risks, to implement effective training programmes and to report to management and the board on the effectiveness of the programme. Litigation in the businesses is referred to the group legal adviser, who reports on material litigation to the risk and audit committees and to the board.

During the year there were no prosecutions of Nampak or its personnel for material violations of any laws or regulations, nor were any material penalties or fines imposed on the company or its directors or officers for contraventions of any laws or regulations.

No requests for information were lodged with the company, during the year, in terms of the Promotion of Access to Information Act, 2000.

Information management services

Information management services (IMS) is an important part of Nampak’s business and is essential to the support and sustainability of the group. The King III report on corporate governance places responsibility for IMS governance with the board, and the Nampak board has given the CFO overall responsibility for managing the IMS governance structures and processes. The IMS function is managed by the chief information officer (CIO), who reports to the CFO. An IMS steering committee is chaired by the CFO, and its membership comprises the CIO and the members of the group executive committee. The committee has a well-defined charter and it is responsible for overseeing IMS direction and investments, and ensuring alignment with business strategy and priorities.

Nampak’s IMS function has adopted the IT Governance Institute (ITGI) governance model, COBIT 5 (Control Objectives for Information and related Technology), as a framework for IMS governance, while continuing to employ best practice frameworks such as Information Technology Infrastructure Library (ITIL) as guidelines for establishing and maintaining effective internal controls, continuity and risk management.

In line with COBIT 5, a framework of IMS policies has been developed and adopted, taking into consideration stakeholder needs, the business imperatives, current legislation and IM trends.

Internal audit provides assurance to management, the audit committee and the risk committee on the effectiveness of IMS governance.

The group’s IMS focus remains to deliver value to Nampak through benefits realisation, resource optimisation and risk mitigation that are aligned with Nampak’s strategy and goals.

King III non-compliance
    King III principles   Nampak’s approach
2.22   The evaluation of the board, its committees and individual directors should be performed every year.   An in-depth evaluation of the board, its committees and individual directors is facilitated by an independent expert every second year, which the board considers to be an appropriate interval.
2.24   A governance framework should be agreed upon between the group and its subsidiary boards.   Reporting between the group and its subsidiaries is governed by internal policies and procedures and a formal governance framework is not considered essential.
6.4   The board should delegate to management implementation of an effective compliance framework and processes.   The operating entities in Nampak are required to identify laws, rules and standards that apply to the environment in which they operate and to ensure compliance therewith. The operating entities are kept abreast of legislative changes and compliance requirements from a group level.