Four standing Committees assisted the Board during fiscal 2012:
The members of each Committee, their qualifications and their attendance at Committee meetings during the year are set out in the Directors’ Report contained in our 2012 Annual Report. Following each Committee meeting, the Board receives a report from that Committee on its deliberations, conclusions and recommendations.
Each Committee operates in accordance with a written Charter approved by the Board. The Board appoints the members and the Chairman of each Committee. With the exception of the Technology Committee, it is a Board requirement that only independent Directors can serve on Board Committees.
The role, Charter, performance and membership of each Committee are reviewed each year. Copies of the current Charters of Telstra’s Board Committees are available on these Webpages.
In addition, the NBN Due Diligence Committee was established during fiscal 2011. The role of the Committee was to assist the Board in discharging its responsibilities by co-ordinating and overseeing the due diligence process required in connection with the NBN related resolution put to shareholders at Telstra’s 2011 AGM. The Committee ceased operation during the second half of fiscal 2012.
Audit Committee
Role and responsibilities of the Audit Committee
The Audit Committee:
- assists the Board in discharging its responsibilities by monitoring and advising on matters relating to financial reporting, risk management, internal control, internal and external audit, corporate governance, compliance and matters that may significantly impact the financial condition or affairs of the business;
- provides a forum for communication between the Board, management and both the internal and external auditors; and
- provides a conduit to the Board for external advice on audit, risk management and compliance matters.
Composition and membership of the Audit Committee
The Audit Committee comprises at least three Board members, all of whom must be independent non-executive Directors. Each member shall:
- be financially literate (i.e. able to read and understand financial statements) and have sufficient financial knowledge to allow them to discharge their duties and actively challenge information presented by management, internal and external auditors;
- have reasonable knowledge of Telstra, the industries in which it operates and its risks and controls;
- not serve on more than two other public company audit committees (unless the Board determines that such responsibilities will not impair the Director’s ability to serve on the Telstra Audit Committee); and
- have the capacity to devote the required time and attention to prepare for and attend Committee meetings.
The Chairman of the Audit Committee is an independent Director who is not Chairman of the Board. In addition, at least one member is a qualified accountant or other finance professional with experience of financial and accounting matters.
Meetings of the Audit Committee
Audit Committee meetings are held on a regular basis, as determined annually in advance by the Board, and scheduled to correspond with Telstra’s financial reporting cycle. Special meetings may be convened as required. Other members of the Board may attend Audit Committee meetings and the Audit Committee may ask management, the external auditor and others to attend meetings and provide any required advice.
The Audit Committee regularly meets with the internal auditor and the external auditor in the absence of management.
Relationship with external auditor
The Audit Committee oversees the relationship with the external auditor including:
- reviewing and agreeing on the terms of engagement and fees for the external auditor;
- reviewing the external auditor’s proposed annual audit scope and audit approach, including materiality levels;
- reviewing and assessing the performance, independence and objectivity of the external auditor; and
- monitoring management’s adherence to the policy on audit and non-audit services provided by the external auditor.
During the most recent fiscal year, the Audit Committee provided an annual, formal, written report detailing the nature and amount of any non-audit services rendered by the external auditor and an explanation of how the provision of those non-audit services are compatible with auditor independence. Details of amounts paid or payable to the auditor for non-audit services provided during the year are disclosed in Note 8 to the financial statements.
Telstra shareholders appointed Ernst & Young as the Company’s external auditor at the 2007 AGM following the resignation of the Australian National Audit Office at the conclusion of T3. The Board, on recommendation of the Audit Committee, extended Ernst & Young’s tenure as external auditor to the 2010 financial year. The Audit Committee offered the external audit to tender during fiscal 2010 and, following this process, the Board (on recommendation of the Audit Committee) reappointed Ernst & Young as the Company's external auditor. Ernst & Young is appointed as the Company’s external auditor until the end of the 2013 fiscal year.
In accordance with the Corporations Act, the lead Ernst & Young partner on the audit is required to rotate at the completion of a five year term. This occurred on signing of the fiscal 2007 audit opinion. A rotation occurred after the fiscal 2011 half year accounts were signed as the lead partner retired from Ernst & Young. The Board undertook a process with Ernst & Young and agreed upon the new lead partner.
The external auditor attends the AGM and is available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.
Nomination Committee
Role and responsibilities of the Nomination Committee
The Nomination Committee monitors and advises on:
- Board composition and performance (including Board diversity);
- Director independence; and
- appointment of the CEO and CEO succession planning.
Composition and membership of the Nomination Committee
The Nomination Committee is comprised of at least three independent Directors including the Chairman of the Board. Each member is expected to:
- have a reasonable knowledge of Telstra and the industries in which it operates; and
- have the capacity to devote the required time and attention to prepare for, and attend, Committee meetings.
Meetings of the Nomination Committee
Nomination Committee meetings are held on a regular basis, as determined annually in advance by the Board. Special meetings may be convened as required.
Other members of the Board can attend Nomination Committee meetings and the Committee can invite others, including any Telstra employees, to attend all or part of its meetings as it deems necessary or appropriate. However, if a person has a material personal interest in a matter that is being considered at a meeting, they must not be present for consideration of that matter.
The Board’s policy and procedure for the selection, nomination and appointment of Directors is discussed in more detail in the sections above entitled “Board membership and size” and “Board composition”.
Remuneration Committee
Role and responsibilities of the Remuneration Committee
The Remuneration Committee monitors and advises on:
- remuneration of the Board, CEO and Company Secretary;
- performance and remuneration of senior management;
- remuneration strategies, practices and disclosures generally;
- work health and safety;
- diversity (excluding Board diversity);
- employee equity plans; and
- management succession, capability and talent development.
The Committee also exercises the administrative powers delegated to it by the Board under Telstra’s equity plans and, in certain circumstances, makes offers to employees under those plans.
Composition and membership of the Remuneration Committee
The Remuneration Committee comprises at least three Board members including the Chairman of the Board, all of whom must be independent non-executive Directors. Each member is expected to:
- be familiar with the legal and regulatory disclosure requirements in relation to remuneration;
- have adequate knowledge of executive remuneration issues, including executive retention and termination policies, and short term and long term incentive arrangements;
- have a reasonable knowledge of Telstra and the industries in which it operates; and
- have the capacity to devote the required time and attention to prepare for, and attend, Committee meetings.
Telstra’s Remuneration Committee structure complies with the ASX Listing Rules.
Meetings of the Remuneration Committee
Remuneration Committee meetings are held on a regular basis as determined annually in advance by the Board and scheduled to correspond with Telstra’s remuneration review and reporting cycle. Special meetings may be convened as required.
Other members of the Board may attend Remuneration Committee meetings and the Remuneration Committee may invite other people, including any Telstra employees, to attend all or part of its meetings, as it deems necessary or appropriate. However, if a person has a material personal interest in a matter that is being considered at a meeting, that person must not be present for consideration of that matter. This ensures that no senior executive is directly involved in deciding their own remuneration.
Technology Committee
The Technology Committee allows the Board to review technology developments which may be relevant to Telstra’s business in greater detail than is possible at Board meetings. The Committee regularly reviews product development activities, including proposed new technology products and timelines to market. The Committee's primary purpose is educative and all Directors are encouraged to attend Committee meetings, which are scheduled to coincide with Board meetings.
