Corporate Governance

The board of directors and management of Pioneer Foods pledge commitment to the principle of sound governance and strive for the highest standards of ethical conduct, integrity and values-based leadership.


The Group views the recent Competition Commission challenges in a serious light. In order to mitigate future governance related risks, the Company instituted the following actions:

  • All managers and employees, whose jobs include regular interface with external stakeholders, were put through a comprehensive competition compliance on-line training programme.
  • A compliance and risk management officer was appointed as a dedicated resource at corporate level – i.e. with unlimited access to the Group’s audit and risk committee.
  • The Group’s legal department was also expanded, with the aim to enhance the department’s capacity.
  • The structural changes included separating the company secretariat function, group legal and group sustainability, and at the same time, integrating the Group’s sustainability agenda into business strategies and operations. The latter was done by means of establishing a new department that now focuses mainly on sustainability, corporate affairs and stakeholder management.
  • The Group’s Code of Ethics was subsequently also reviewed and approved by the board of directors, whereas focus groups were established to create more awareness around the practicalities and impact thereof. Going forward, the objective is to review the Code periodically.

KING III

The board, via its governance structures, recently embarked on a process to review the status quo and at the same time, identify the gaps between the recommendations as per King III versus the existing business practices implemented at Pioneer Foods.

Once this process is completed, recommendations will be made as to how best the Group can comply with King III and other relevant protocols and legislative requirements.

CODE OF ETHICS

During the year under review, the Group revisited its Code of Ethics, before presenting it to the board of directors for endorsement. Several mechanisms were, as a result, put in place to enable the Code of Ethics as the Pioneer Foods ‘way of life’.

BOARD OF DIRECTORS

Role and function of the board of directors

The board is mainly responsible for directing the Group’s strategy and operations in order to build and enhance the Group’s sustainability. In doing that, the board remains cognisant of the Group’s impact on its internal and external stakeholders when considering the short- and long-term effect of the Group’s strategy on the economy, society and the environment.

It continues to be accountable for exercising overriding control over the Group’s business operations and ensuring that the agreed values and ethical conduct are entrenched into the organisation. The board is also responsible for ensuring that proper systems and processes are in place to enable the Group to conduct its business in a sustainable manner. In addition, it exercises independent judgement on issues facing the Group as well as reviewing, assessing and guiding management in setting Group strategies and business plans.

Delegation of authority

The board, furthermore, fulfils its duties in terms of a decision making framework which is reviewed from time to time, whereas the execution of the board’s responsibilities is done by delegating the necessary authority to the board’s subcommittees and management. The functional responsibilities of the board’s subcommittees, are described in the relevant charters.

Composition of the board of directors

The board of directors comprises eleven members, of which eight are non-executive directors. There is a balance of power and authority at board level to ensure than no one director has unfettered powers of decision making. All non-executive directors are selected for specific terms whereas their re-appointment is not automatic, but by way of vote. All appointments to the board is formal and transparent and are considered as a matter for the board as a whole.

The chairman of the board is an independent non-executive director.

The executive directors and the company secretary are appointed by the board.

Board meetings

During the year under review, the board of directors met five times and reviewed, inter alia, strategy, operating and capital budgets, marketing plans as well as expanding its operations into new emerging markets. Other matters relating to the overall Group objectives were also discussed – the latter, among other issues, included effective control measures and good corporate governance practices.

Board evaluation

A board effectiveness assessment is undertaken on an annual basis and guided by the nominations committee. This year, the board followed a hybrid methodology whereby 50% of the board participated by way of written questionnaires and 50% by way of face-to-face interviews with an independent assessor.

The results of the evaluation process were analysed by the nominations committee and areas of concern as well as merit are being tabled at board meetings for discussion and strategy.

Insider trading

The Group regularly reviews its Insider Trading policy and updates the content where necessary. It is noteworthy to record that the closed periods for trading in the Group’s shares are maintained to prevent insider trading.

Closed periods apply at least every six months from 15 March or 15 September, respectively, until publication of the interim or annual financial results on SENS.

All directors, executive management and other affected employees are consequently prohibited from trading in Pioneer Foods’ shares (i.e. directly or indirectly) in any other price sensitive period.

Company secretary

The Group’s company secretary is responsible for providing guidance to the board on the duties of the directors and good corporate governance principles. All directors have access to the company secretary, who ensures that the board procedures and applicable rules and regulations are fully observed and implemented.

The company secretary therefore also ensures that the proceedings of board and its committee meetings are properly recorded and that minutes of meetings are circulated to the directors in a timely manner, after the approval by the chairman of the board or the relevant board subcommittee.

Board committees

In order to fulfil its duties and execute its responsibilities, the board established three subcommittees of which each have a specific mandate defined in its terms of reference.

The three subcommittees of the board, include the following forums:

  • Audit and risk committee
  • Human capital committee
  • Nomination committee

Below is a summary of the mandates of the subcommittees of the board as well as its representation and meeting attendance during the year under review.

Table 1: A synopsis of the subcommittees of the board


   Human Capital Committee  Audit and Risk Committee  Nomination Committee 
Chairman  Dr MI Survé
Independent non-executive 		 AH Sangqu
Independent non-executive 		 JF mouton
non-executive 
Composition  Non-executive directors
4 		 Non-executive directors
3 		 Non-executive directors
3 
Frequency of meetings  Met four times this year  Met four times this year  Met three times this year 
Board approved charter  Yes  Yes  Yes 
Primary responsibilities 
  • Maintain and approve the HR Policy (or HR Policies)
  • Executive management succession planning
  • Monitor the implementation of relevant labour legislation
  • Monitor and enable transformation and sustainability
  • Remuneration of directors and executive management
  • Evaluation and approval of a remuneration philosophy, strategy and policy
 
  • Appointment of auditors for the annual financial audit
  • Ensures that appropriate internal control procedures are in place and applied
  • Ensures that risk management procedures are adequate
  • Ensures that appropriate standards of reporting and compliance are maintained
  • Relevant legislation is adhered to
  • The audit function operates effectively and is totally independent
 
  • Evaluate proposals for all non-executive appointments
  • Proposals for the appointment of the company secretary
  • Performance evaluation of the board
  • Performance evaluation of the chairman
  • Succession planning of the chairman
 
Invitees 
  • Meetings are attended by relevant members of management
 
  • Meetings are also attended by internal and external auditors and relevant members of management
 		   
Access    
  • All auditors have unlimited access to the audit and risk committee, thereby ensuring independence is not compromised in any way
  • A fixed agenda item is a closed session discussion without management
 		   
           

Table 2: Subcommittees of the board – Meeting attendance


   Directors’  Directors’          
   meetings  meetings          
   (scheduled) (unscheduled) Audit and Risk  Human Capital  Nomination 
Directors  5  5  4  5  3 
HE Blanckenberg* (Chairman) 3  4     3  3 
JA Louw* (Vice-Chairman) 3  3     3    
WA Agenbach*  3  1  1       
AW Bester*  2  2        2 
GD Eksteen  5  4     5  1 
AE Jacobs*  3  3  2       
N Mjoli-Mncube  5  1  2     3 
AH Sangqu  5  2  4       
AC Singleton*  3     1       
Dr FA Sonn*  1        1    
Dr MI Survé (Vice-Chairman) 4  2     5    
JH van Niekerk*  3  2  1     2 
WA Hanekom (Managing Director) 5  5          
TA Carstens  5  4          
LR Cronjé  5  5          
MT Swanepoel*  3  2          
JF Mouton  4  4          
ZL Combi** (Chairman) 2        3    
MM du Toit**  2        3    
ASM Karaan**  2     2       
Dates of scheduled meetings  15/10/09  05/02/10  25/11/09  12/11/09  13/10/09 
   26/11/09  10/02/10  24/03/10  18/02/10  26/11/09 
   18/02/10  24/02/10  19/05/10  12/05/10  24/02/10 
   20/05/10  29/03/10  22/07/10  20/05/10    
   05/08/10  29/03/10     11/05/10    
*      Retired/resigned
 
**  New Appointment
 

RISK MANAGEMENT

The board of directors, through the audit and risk committee, is committed to executing its responsibility for ensuring that appropriate risk management processes are in place. The Group strives to adopt a structured and comprehensive approach to the effective management of risks at both divisional and operational level, by aligning strategy, processes, people, technology and knowledge for the purpose of evaluating and managing the inherent risks of doing business.

The Group’s risk management policy, as approved by the board during the year under review, furthermore governs the risk management processes as well as each of the divisional risk management frameworks.

INTERNAL AUDIT

Pioneer Foods’ internal audit department is an independent appraisal and assurance function, which fulfils a core function within the Group’s governance structures. It aims to provide autonomous and objective assurance to the Group, as well as rendering consulting services that are designed to add value and improve the Company’s operations.

Its independence is manifested by the function reporting directly to the managing director. It furthermore has regular and unrestricted access to the audit and risk committee.

Internal audit aims to assist the business to accomplish its objectives by applying a systematic, disciplined approach in order to evaluate and improve the effectiveness of risk management, integrated systems, control and governance processes across the Group.

The role and responsibilities of internal audit is contained in the internal audit charter, as approved by the audit and risk committee.

The internal audit of specialised information technology and the SAP ERP system environment has, however, been outsourced to a division of PricewaterhouseCoopers Inc. This division functions independently from the external audit function.

Findings and recommendations of all internal audit processes are reported to management and the audit and risk committee.

TIP-OFFS ANONYMOUS

Tip-offs Anonymous is an independent hot-line service whereby any employee or stakeholder can, on an anonymous and confidential basis, report any dubious activity or unethical conduct in the Group.

Reports are sent directly to the internal audit function and reported to the audit and risk committee.