Principle 2

Structure the Board to be Effective and Add Value

Board Meetings

The Board meets at least nine 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, understand and review the business performance and operational issues. To assist with the Board’s understanding of the business, the Board regularly conducts Board meetings at various business locations followed by management presentations and site tours. 

Corporate and divisional management are required to regularly attend and present at Board meetings on strategy, divisional operational issues and performance.  Regular group strategy meetings are held with the Board which enables the directors to review corporate strategy 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, treasury and other matters.

Composition of the Board

The Board presently comprises seven directors*, six of whom, including the Chairman and Deputy Chairman, are non-executive directors and one, the Company Secretary, is an executive director. 

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 Chief Executive Officer 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.

*The Board appointed Mr Urs Meyerhans as Managing Director and Chief Executive Officer on 1 July 2021.  This brings the total number of directors to eight comprising six non-executive directors and two executive directors (including the Managing Director/CEO and Company Secretary).

Board Skills and Experience

Since the float of the Group in 1993, the business strategy has transitioned from that of an Australian manufacturer to that of a designer, importer and distributor of branded building products with a focus on providing sustainable solutions for water.  The current Board represents a diverse range of professional backgrounds, experience and perspectives as outlined in the director profiles in the Annual Report.  The possessed skills align with the current business strategy of the Group and are regularly reviewed to ensure it covers the skills needed to address existing and emerging business and governance issues relevant to the business. 

The Board’s collective skills and experience include:

  • supply chain and distribution;
  • marketing and branding;
  • retail and FMCG industry knowledge and experience;
  • engineering and construction industry knowledge and experience;
  • consumer focused business transformation;
  • digital and information technology;
  • corporate and financial management;
  • accounting and taxation;
  • insurance and financial services;
  • leadership and general management experience;
  • human resources management;
  • legal, governance and regulation;
  • risk management.

To the extent that any skills are not represented on the Board, they are augmented through management and, as required, 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 any director not specifically required to stand for re-election) must stand for re-election.  In addition, no 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 Fourth Edition of 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 six independent directors and one non-independent director (being the 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 at 30 June 2021, and whether they are considered to be independent:

Director Role Length of Service Non-Executive Independent
D McDonough Chairman 12 years Yes Yes
J Mulcahy Deputy Chairman 11 years Yes Yes
P Birtles Non-Executive Director 11 years Yes Yes
R Thornton Executive Director 12 years No No
J McKellar Non-Executive Director 5 years Yes Yes
S Goddard Non-Executive Director 5 years Yes Yes
A Barrass Non-Executive Director 2 years Yes Yes

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 including its gender diversity target for Board composition;
  • 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.

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 for gender diversity for Board composition for future director appointments.

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, tailored to their existing skills, knowledge and experience, to allow new appointees to participate fully and actively in Board decision making.  The Board views the induction program as critical in enabling new directors to gain an understanding of the Group’s strategy and operations, the industry in which it operates and new and emerging business issues.  The Company Secretary assists with the induction program to ensure the Group’s corporate governance policies and practices are understood. 

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 themself 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.  There is also a requirement for the directors to notify the Chairman on accepting any new outside roles to ensure that the appointment does not give rise to a conflict of interest.

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.