- Role and responsibilities of the Board
- Board membership and size
- Board composition
- Role of the Chairman
- Director Independence
- Board Meetings
- The Board and the Company Secretary
- Board access to management and independent professional advice
- Performance Evaluation
- Declaration of Interests
Role and responsibilities of the Board
The Board is responsible, and is accountable to shareholders, for managing Telstra’s business. In addition to the matters required by law to be approved by the Board, the Board’s reserved powers and key responsibilities include:
- authorising all matters which are within the reserved powers of the Board and responsibility for which has not been delegated to management;
- approving Telstra’s strategy and monitoring its performance;
- annually approving Telstra’s corporate plan and monitoring the implementation of Telstra’s strategy and performance against the corporate plan;
- appointing, assessing the performance of, and determining the remuneration of, the CEO;
- approving the appointment and remuneration, and overseeing the performance of, the executives who report directly to the CEO and any other members of the senior management team that the Board or the Remuneration Committee determines should be subject to its supervision;
- approving Telstra’s overall remuneration framework, including any employee equity plans;
- overseeing Telstra’s financial position and approving decisions concerning the capital management policy of Telstra, including capital restructures, capital returns and share buy backs, dividend policy and the payment of dividends;
- overseeing Telstra’s external and internal audit activities, internal control framework and reporting systems and strategic risk management systems;
- monitoring and influencing Telstra’s culture, reputation, ethical standards and legal compliance, and overseeing Telstra’s corporate governance framework and the key supporting policies governing the operations of Telstra;
- monitoring Telstra’s work health and safety performance;
- approving Telstra’s policies in relation to diversity at all levels of the Company (including the Board), and setting and assessing annually measurable objectives in relation to diversity and progress in achieving them.
The Board has adopted a Charter that details its role and responsibilities.
The Board has delegated responsibility for day-to-day management of the Company to the CEO and there is a formal delegations structure in place which sets out the powers delegated to the CEO and those specifically retained by the Board. This is complemented by a formal delegations structure from the CEO to Telstra employees.
Board membership and size
Telstra’s Constitution requires a minimum of 3 Directors. Subject to the Corporations Act, the maximum number of Directors may not be more than 11 unless Telstra’s shareholders, in a general meeting, resolve otherwise. The Directors must not determine a maximum which is less than the number of Directors in office at the time the determination takes effect.
The Directors may appoint an individual to be a Director, either as an addition to the existing Directors or to fill a casual vacancy up to the maximum number. Any decision on the appointment of a new Director is made by the Board on the basis of advice received from the Nomination Committee. Any new Director appointed by the Board during the year is required to stand for election at the next AGM. Individuals may also nominate themselves (prior to the AGM and in accordance with the process outlined in the Constitution) for election as a Director at the AGM.
The tenure of the CEO as a Director is linked to his or her executive office. Under Telstra’s Constitution, no non executive Director may hold office for more than three years or beyond the third AGM following their appointment (whichever is the later) without re-election. In accordance with the ASX Listing Rules, the Company must hold an election of Directors each year. If no Director would otherwise be required by Telstra’s Constitution to submit for election or re-election, then the procedure in rule 23.4(b) of Telstra’s Constitution must be followed.
A recommendation to re-elect a Director at the end of their term is not automatic. Prior to each AGM, the Board determines if it will recommend to shareholders that they vote in favour of the re-election of the Directors standing for re-election. This decision is made by the Board, having regard to the Directors’ annual performance reviews and any other matters it considers relevant.
The Board considers that it has an appropriate mix of diversity (including gender diversity), skills, experience and expertise, to enable it to effectively discharge its responsibilities and to be well equipped to help the Company navigate the range of challenges that it faces.
The Board has developed a Board Skills Matrix which it utilises continuously to identify areas of focus to maintain the appropriate mix of diversity, skills, experience and expertise. The skills, experience and expertise which the Board considers to be particularly relevant include those in the areas of telecommunications, information technology, multimedia, advertising, retail and sales, infrastructure, Government relations, Australian and international business, finance and legal. Two new non-executive Directors were appointed to the Telstra Board during fiscal 2012: Mr Timothy Y. Chen* and Ms Margaret Seale. Details regarding these appointments can be found in the section entitled Diversity and Inclusion at Telstra.
In respect of both appointments, the Board undertook a formal selection process and engaged an executive search firm to assist in the process. The Board established criteria regarding the general qualifications and experience, as well as the specific qualifications a candidate should possess to ensure the Telstra Board maintained the appropriate mix of diversity, skills, experience and expertise. Formal letters of appointment are provided to all new Directors setting out the key terms and conditions of their appointment.
All new Directors participate in a formal induction process co-ordinated by the Company Secretary. This induction process includes briefings on the Company’s financial, strategic, operational and risk management position, the Company’s governance framework, culture and values and key developments in the Company and the industry and environment in which it operates. Telstra also has in place a continuing education program for Directors which is incorporated in the annual Board cycle, with specific sessions scheduled around Board meeting dates.
A brief biography of each Director setting out their experience, expertise and membership of Telstra Board Committees, together with details of the year of initial appointment and re-election, (where applicable), is included in the Directors’ Report contained in our 2012 Annual Report.
* On 5 October 2012, Mr Chen resigned as a non executive Director of Telstra to return to a full time executive career based in China.
Role of the Chairman
The Chairman must be an independent Director and is appointed by the Board. Telstra’s Chairman, Catherine Livingstone, is an independent non-executive Director. She has been a Director of Telstra since 2000 and was elected Chairman in 2009.
The Chairman’s overarching responsibilities are to provide appropriate leadership to the Board and Telstra and to ensure the Board fulfils its obligations under its Charter. The Chairman also has specific responsibilities to:
- chair Board meetings, non-executive Directors’ meetings and shareholders’ meetings, and facilitate discussion within each meeting;
- represent the views of the Board and Telstra to shareholders and the public and to ensure the Board understands the views of the major shareholders;
- maintain a regular dialogue and mentoring relationship with the CEO and senior management, serving as a primary link between the Board and management and providing continuity between Board meetings; and
- work with the CEO in relation to the Board’s requirements for information to contribute effectively to the Board decision making process and to monitor the effective implementation of Board decisions.
The Board recognises the important contribution independent Directors make to good corporate governance. All Directors, whether independent or not, are required to act in the best interests of the Company and to exercise unfettered and independent judgment. The Board intends that the CEO is to be the only executive Director and that all non-executive Directors should also be independent Directors.
The Board assesses, at least annually, the independence of each Director. Telstra considers that an independent Director is a non-executive Director who is free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of his or her unfettered and independent judgement and ability to act in the best interests of Telstra. Materiality is assessed on a case-by-case basis from the perspective of both Telstra and the relevant Director and consideration is given to both qualitative and quantitative factors.
When assessing the independent status of a Director, the Board considers the relationships potentially affecting the independent status of a director as described in Box 2.1 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. The Board may determine that a Director is independent notwithstanding the existence of a relationship of the kind referred to above. However, the Board will state the reasons for making its determination in such a case.
With the exception of the CEO, all Directors are non-executive Directors and have been determined by the Board to be independent. During fiscal 2012, no non-executive Director had any relationship that could materially interfere with, or be perceived to materially interfere with, his or her unfettered and independent judgement and ability to act in the best interests of the Company.
If at any time during the year a Director ceases or may have ceased to be independent he/she is required to advise the Chairman immediately. Where the Board determines a Director is no longer independent an announcement will be made to the market.
The Board meets regularly to discuss matters relating to, among other things, strategy and performance, financial position, risk management, people, sustainability and governance. It has routinely scheduled meetings and meets on other occasions to deal with specific matters that need attention as required. The Board liaises with senior management outside Board meetings where appropriate, and may consult with other Telstra employees and advisers and seek additional information.
Details regarding the number of meetings held by the Board during fiscal 2012, and attendance by Board members, are set out in the Directors’ Report contained in our 2012 Annual Report.
The Board and the Company Secretary
The Company Secretary reports directly to the Board through the Chairman, and all Directors have access to the Company Secretary. The Board is supported in governance and administration by the Company Secretary whose responsibilities include coordinating all Board business, (including meetings, agendas, board papers and minutes, and monitoring the completion of actions arising from Board meetings), retaining independent professional advisors at the request of the Board, Board Committee or as permitted under the Board Charter, and attending to certain statutory requirements relating to Telstra.
Board access to management and independent professional advice
Directors have complete access to Telstra’s senior management through the Chairman, CEO or Company Secretary at any time. In addition to regular presentations by senior management to Board meetings, Directors may seek briefings from senior management on specific matters.
The Board has the authority to conduct or direct any investigation required to fulfil its responsibilities and has the ability to retain, at Telstra’s expense, such legal, accounting or other advisers, consultants or experts as it considers necessary from time to time in the performance of its duties. All Committees of the Board have access to independent professional advice on this basis.
In certain circumstances, each Director has the right to seek independent professional advice at Telstra’s expense within specified limits.
The Board reviews its performance annually (including its performance against the requirements of its Charter), the performance of individual Committees and the performance of individual Directors, including the performance of the Chairman as Chairman of the Board.
In recent years, these performance reviews have been conducted both internally and externally, generally on an alternating basis. In line with this approach and on the basis that the fiscal 2011 review was conducted internally, led by the Chairman, the fiscal 2012 review was facilitated by an external consultant. The process incorporated a number of components, including:
- a document review (such as Board agendas and Charters);
- a Board performance survey of Directors and key members of senior management;
- an in-depth structured interview with each Director and key members of senior management in relation to Board, Committee and individual Director/Chairman performance;
- overall Board performance feedback;
- individual feedback to Directors relating to their performance from the external consultant; and
- a separate consideration by the Board of the performance review findings in relation to the Chairman, in the absence of the Chairman, with feedback provided to the Chairman in the presence of non-executive Directors.
The review included consideration of matters relating to:
- the effectiveness of discussions and debate at Board and Committee meetings;
- the relationship between the Board and management, including the level of engagement and flow of information;
- Board processes, including level and timeliness of information provided to the Board.
The findings and recommendations of the external consultant’s review were provided to the Board. The external consultant also met separately with each Director to review individual feedback. As noted above, the Board makes recommendations to shareholders regarding the re-election of Directors having regard to the outcome of these reviews.
The overall conclusion of the review was positive and the recommendations arising from it will be implemented during fiscal 2013 to support the continued effectiveness of the Board’s performance. During fiscal 2012, the Board also implemented the recommendations arising from the fiscal 2011 performance reviews.
Declaration of Interests
Directors are required to take all reasonable steps to avoid actual, potential or perceived conflicts of interest. The Corporations Act, Telstra’s Constitution and Telstra’s Directors’ Interests Policy require the Directors to disclose any conflicts of interest and, in certain circumstances, to abstain from participating in any discussion or voting on matters in which they have a material personal interest.
If a Director believes that he or she may have a conflict of interest or material personal interest in a matter, the Director is required to disclose the matter in accordance with the requirements of the Corporations Act and the Constitution, and must follow the procedures set out in Telstra’s Directors’ Interests Policy to deal with such circumstances.