Principle 2

Structure the Board to add value

Board Meetings

The Board meets at least 9 times each year for scheduled meetings and may, on other occasions, meet to deal with specific matters that require attention between scheduled meetings. Together with the Board Committees, the directors use the Board meetings to challenge and fully understand the business and its operational issues.  To assist with the Board’s understanding of the business, the Board regularly conducts Board meetings at the various business locations followed by management presentations and site tours.

The Divisional Chief Executives and General Managers are required to regularly attend and present at the Board meetings on divisional and business unit operational issues and performance.  An annual group strategy meeting is held as part of the budget approval process which enables the Board to review corporate strategies and performance with the executives.  This ensures that the Board is effectively carrying out its duties of providing input and approving corporate strategies and performance objectives.

The Chief Financial Officer is required to attend Board meetings to answer questions from the directors on financial performance, accounting, risk management and treasury matters.

Composition of the Board

The Board presently comprises 7 directors, 5 of whom, including the Chairman and Deputy Chairman, are non-executive directors and 2, the Managing Director[1] and Executive Director, are executive directors.

The profiles of the directors are set out in the Annual Report.  The profiles outline the skills, experience and expertise of each Board member, including the period of office held by each director.

The composition of the Board is determined by the Nomination and Remuneration Committee and, where appropriate, external advice is sought.  The following principles and guidelines are adhered to:

  • The Board should maintain a majority of non-executive directors
  • The Board should consist of a majority of independent directors
  • The Chairperson should be an independent director
  • The role of Chairperson and Managing Director should not be exercised by the same individual
  • Non-executive directors should not be involved in management of the day to day operations of the Group
  • All Board members should be financially literate and have relevant experience in the industries in which the Group operates

[1] The Chief Executive Officer, Tim Salt, was appointed Managing Director of GWA Group Limited effective from 1 July 2016.

Board Skills and Experience

The business strategy of the Group has transitioned from that of an Australian manufacturer to that of an importer and distributor of branded building products.  The current Board represents a diverse range of professional backgrounds and perspectives as outlined in the director profiles in the Annual Report.  The possessed skills align with the current business strategy of the Group.

The Board’s collective skills and experience include:

  • importing and manufacturing
  • marketing and branding
  • retail experience
  • corporate and financial management
  • insurance and financial services
  • CEO and general management experience
  • engineering and supply chain
  • legal and governance
  • risk management

To the extent that any skills are not represented on the Board, they are augmented through management and external advisers.

Re-Election of Directors

In accordance with the Group’s constitution, at each Annual General Meeting, a number of directors will face re-election.  One third of the Board (excluding the Managing Director and any director not specifically required to stand for re-election) must stand for re-election.  In addition, no director (other than the Managing Director) may hold office for more than three years without standing for re-election and any director appointed by the Board since the last Annual General Meeting must stand for re-election at the next Annual General Meeting.  All retiring directors are eligible for re-election.

Independence of Directors

The Board considers that the non-executive directors must be independent from management and free of any business or other relationship that could interfere, or reasonably be perceived to interfere, with the exercise of their unfettered and independent judgement.

In considering the relationships which may affect independent status as outlined in the recommendations of the ASX Corporate Governance Council, it has been determined that the Group’s non-executive directors are independent.  Therefore, the Board comprises 5 independent directors and 2 non-independent directors (being the Managing Director and Executive Director) which meets the recommendation of the ASX Corporate Governance Council of having a majority of the Board comprising independent directors.

The following table outlines the Group’s directors considered to be independent:

Director Role

Length of Service

Non-Executive

Independent

D McDonough Chairman

7 years

Yes

Yes

J  Mulcahy Deputy Chairman

6 years

Yes

Yes

T Salt* Managing Director

n/a

No

No

B Bartlett** Non-Executive Director

9 years

Yes

Yes

R Anderson** Non-Executive Director

24 years

Yes

Yes

P Birtles Non-Executive Director

6 years

Yes

Yes

R Thornton Executive Director

7 years

No

No

Notes:
* Mr T Salt was appointed Managing Director and Chief Executive Officer effective from 1 July 2016.
** Mr R Anderson and Mr B Bartlett have announced their retirements from the Board at the conclusion of the 2016 and 2017 Annual General Meetings respectively.

The Board is responsible for ensuring that the action of individual directors in the Boardroom is that of independent persons.  The Board distinguishes between the concept of independence and issues of conflict of interest or material personal interest which may arise from time to time – refer Conflicts of Interest below.

In recognising the importance of the independence of directors and the immediate disclosure of conflicts of interest, the Board has included both matters as permanent items on the agenda at Board meetings.  Any independence or conflict of interest issues that arise must be disclosed to the Chairman prior to each Board meeting.  The disclosure is recorded in the Register of Directors’ Interests and in the Board minutes.

(i) Board Succession Planning

The Board has established succession plans for the retirement of individual Board members to ensure an appropriate balance of skills, experience and expertise on the Board.  The Board views director renewal as an essential process to ensure optimal Board performance.  The Board is also mindful of the need to increase diversity of the Board for future director appointments.

Following a comprehensive Board succession process, the Chairman announced on 14 July 2016 the retirements of Robert Anderson and Bill Bartlett as Non-Executive Directors effective from the conclusion of the 2016 and 2017 Annual General Meetings respectively.  The Chairman also announced the appointments of Jane McKellar and Stephen Goddard as Non-Executive Directors effective from the conclusion of the 2016 Annual General Meeting.

(ii)  Length of Service – Mr Robert Anderson

 The Board is of the opinion that the length of service of Mr Anderson as Non-Executive Director has not compromised his ability to bring independent judgement to bear on issues before the Board and to act in the best interests of the Group and its shareholders.  Mr Anderson is a highly experienced director and has a deep understanding of the Group and its businesses through his long association.  The Group and its shareholders are well served by his appointment as a director.

Mr Anderson has announced his retirement from the Board at the conclusion of the 2016 Annual General Meeting; refer Board Succession Planning above.

Conflicts of Interest

The directors are required to disclose to the Board any relationships from which a conflict of interest might arise.   A director who has an actual or potential conflict of interest or a material personal interest in a matter is required to absent himself from any meeting of the Board or Board Committee, whenever the matter is considered.  In addition, the director does not receive any Board papers or other documents in which there is a reference to the matter.

This process is applied to business and trading relationships, dealings with the directors, dealings with companies with common directors and dealings with any significant shareholders of the Group.

The materiality thresholds used for the determination of independence and issues of conflict of interest has been considered from the point of view of the Group and directors.  For the Group, a relationship which accounts for 5% or more of its revenue is considered material.  For a director, a relationship which accounts for 5% or more of the total income of a director is considered material.  Directors’ fees are not subject to this test.

Access to Independent Advice

Directors and the Board Committees have the right in connection with their duties and responsibilities to seek independent advice at the Group’s expense.  Prior approval of the Chairman is required, but this will not be unreasonably withheld.  Where appropriate, directors share such advice with the other directors.

Selection and Appointment of Directors

The Nomination and Remuneration Committee is responsible for the selection and appointment of directors.  In the circumstances where there is a need to appoint a director, whether due to the retirement of a director, growth of the Group, or changed circumstances of the Group, certain procedures will be followed including the following:

  • Determination of the skills and experience appropriate for an appointee, having regard to the Group’s business strategy, the skills and experience of the existing directors and other likely changes to the Board
  • Upon identifying a potential appointee, consider the competency and qualifications, independence, other directorships, time availability, and the effect that their appointment would have on the overall balance of the composition of the Board
  • Consideration of the need for Board diversity and whether the potential appointee furthers the Board’s objective of achieving a diverse workforce in accordance with its Diversity Policy
  • The Board members consent to the proposed appointee

Details of the skills, experience and expertise of each director are outlined in the director profiles in the Annual Report.

Induction Program

The Nomination and Remuneration Committee is responsible for ensuring that an effective induction program for new directors is in place and regularly reviewed to ensure its effectiveness.  The Board has developed a comprehensive induction program for new directors to allow the new appointees to participate fully and actively in Board decision making.  The Board views the induction program as critical in enabling the new directors to gain an understanding of the Group and the markets in which it operates.  The Company Secretary assists with the induction program for directors to ensure the Group’s corporate governance practices are understood.  The Group also supports appropriate professional development opportunities for directors to enable them to enhance their skills and knowledge.