CORPORATE GOVERNANCE

Responsibility of the board

The board is responsible for the corporate governance of Terry White Group Ltd. (TWG) and has adopted as a guiding principle that it act honestly, conscientiously and fairly, in accordance with the law and in the interests of TWG’s shareholders (with a view to building sustainable value for them), franchisees, employees and other stakeholders. The Company also recognises the performance of the franchisees, and of the pharmacies they own and operate, is the key element underlying the Company’s ongoing success.

The Board’s broad function, including responsibilities imposed by law, involves:

  • - composition of the Board itself including appointment of directors;
  • - oversight of TWG including its control and accountability systems;
  • - appointing and removing the chief executive officer;
  • - where appropriate, ratifying the appointment and the removal of senior management;
  • - reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal compliance;
  • - monitoring executive management’s implementation of strategy and ensuring appropriate resources are available;
  • - monitoring financial performance and position, including stewardship of assets and other reporting;
  • - the overall corporate governance of TWG including the strategic direction and goals for management, and monitoring the achievement of these goals; and
  • - establishment and oversight of committees.

Board composition

The composition of the Board should be subject to the following principles:

  • - the board must be appropriate for the activities of TWG, the Company and the stage of its development;
  • - the board must comprise at least three directors and, unless determined otherwise by the board, no more than ten directors, with at least one independent director who has financial expertise; and
  • - the Chairman must be a non-executive director.
  • Independence is determined by having regard to whether the director is free from any interest and any business or other relationship, which could, or could reasonably be perceived to materially interfere with the director’s ability to exercise independent judgement.

    Board charter and policy

    The board has adopted a charter (which will be kept under review and amended from time to time as the board may consider appropriate) to give formal recognition to the matters outlined above and covering other matters that are important for its effective operation including:

    • - a detailed definition of ‘independence’;
    • - a framework for the identification of candidates for appointment to the board and their selection;
    • - a framework for individual performance review and evaluation;
    • - proper training to be made available to directors both at the time of their appointment and on an on-going basis;
    • - basic procedures for meetings of the board and its committees;
    • - ethical standards and values; and
    • - communications with shareholders.

    These initiatives, together with the other matters provided for in the board’s charter, are designed to institutionalise good corporate governance and to build a culture of good governance practice in TWG’s own internal practices and in its dealings with others.

    Audit and risk management committee

    The objectives of this committee include:

    • - assisting the board in discharging its responsibilities with respect to the financial statements, financial report, annual report, risk management systems and protection of the Company’s capital;
    • - overseeing the Company’s relationship with the external auditors; and
    • - maintaining the independence of auditors.

    The committee is also responsible for the review and performance and nomination of the external auditor. Its members are Ron Higham (Chairman), Terry White and Kos Sclavos. The committee is responsible for a number of matters including:

    • - overseeing the Company’s relationship with external auditors and external audit functions generally;
    • - overseeing preparation of financial statements and reports;
    • - overseeing the Company’s financial controls and systems;
    • - managing the process of identification and management of business, financial and commercial risks;
    • - advising the board on the most appropriate corporate structure based on taxation and legislative constraints and opportunities;
    • - reviewing the annual budget; and
    • - reviewing compliance with banking requirements.
    • Meetings are normally held quarterly or as required.

      Remuneration committee

      The purpose of this committee is to report to the board on remuneration and issues relevant to remuneration policies and practices, including the remuneration of executive management and executive directors. Its members are Jane McKellar (Chair), Ron Higham and Adrian Staltari. Among the functions performed by the Committee are the following:

      • - reviewing market practices and trends in remuneration matters;
      • - reviewing TWG’s remuneration policies and procedures and remuneration practices;
      • - overseeing the performance review of the chief executive officer and ensuring that the chief executive officer implements sound processes for reviewing the performance of executive management;
      • - reviewing the remuneration of the chief executive officer and directors and overseeing the remuneration reviews for executive management; and
      • - preparing for the board any report that may be required under applicable legal or regulatory requirements about remuneration matters.

        Meetings are normally held half yearly or as required.

        Best practice commitment

        The Company is committed to achieving and maintaining the highest standards of conduct and has undertaken various initiatives that are designed to achieve this objective. TWG’s corporate governance charter is intended to institutionalise good corporate governance and, generally, to build a culture of good governance practice both in the Company’s own internal practices and in its dealings with others.

        Independent professional advice

        With the prior approval of the Chairman, which may not be unreasonably withheld or delayed, each director has the right to seek independent legal and other professional advice concerning any aspect of the Company’s operations or undertakings in order to fulfil their duties and responsibilities as directors. Any costs incurred are borne by the Company.