- 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 accountable to shareholders for overseeing the management and performance of Telstra, and is responsible for setting the Company’s overall strategy and governance. The Board’s role includes:
- providing strategic direction to the Company by defining the corporate objective, approving the corporate strategy and performance objectives, monitoring developments and approving any variations;
- approving the annual corporate plan and monitoring its implementation;
- approving significant business decisions;
- appointing, assessing the performance of, and determining the remuneration of the CEO;
- overseeing the performance of the executives who report directly to the CEO and any other members of the management team the Remuneration Committee determines should be subject to its supervision, reviewing senior management succession and talent development plans, and reviewing senior management performance measures and remuneration arrangements;
- approving Telstra’s overall remuneration framework;
- promoting diversity (including gender diversity) within all levels of the Company;
- ensuring appropriate resources are available to senior management;
- requiring appropriate compliance frameworks and controls to be in place and operating effectively;
- monitoring the integrity of internal control and reporting systems and monitoring strategic risk management systems;
- approving Telstra’s statutory accounts and overseeing its financial position as well as internal and external audit activities;
- approving decisions concerning Telstra’s capital and determining the dividend policy;
- overseeing the review and update of corporate governance practices and procedures as necessary to support Telstra’s commitment to excellence in corporate governance in Australia;
- monitoring and influencing Telstra’s culture, reputation and ethical standards;
- driving Board succession planning; and
- overseeing shareholder reporting and communications.
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. A summary of the powers retained by the Board is set out in Appendix 1 of the Board Charter. This is complemented by a formal delegation 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 is fixed by the Directors from time to time, but may not be more than 11 unless 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 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.
Any decision on the appointment of a new Director is made by the Board on the basis of advice received from the Nomination Committee.
The tenure of the CEO as a Director is linked to his or her executive office. Under Telstra’s Constitution, no other 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 will determine if it will recommend to the shareholders that they vote in favour of the re-election of the Directors due to stand 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 Nomination Committee may negotiate the retirement or resignation of individual Directors after consultation with the Board.
Board composition
The Board’s policy is that the Board needs to have an appropriate mix of skills, experience, expertise and diversity (including gender diversity) to be well equipped to help the Company navigate the range of challenges that it faces.
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.
In respect of diversity, the Board considers that diversity includes differences that relate to gender, age, ethnicity and cultural background. It also includes differences in background and life experience, communication styles, interpersonal skills, education, functional expertise and problem solving skills.
The Board has an appropriate mix of relevant skills, experience, expertise and diversity. This enables it to discharge its responsibilities and deliver the corporate objective, as well as seek new ways of driving performance through innovation and entrepreneurship.
Since 1 July 2010, one new non-executive Director has been appointed to the Telstra Board. Dr Nora Scheinkestel was appointed to the Board effective 12 August 2010 and her appointment was approved by shareholders at Telstra’s 2010 AGM. Dr Scheinkestel has significant expertise in the financial sector, as well as broad experience as a director of large Australian companies operating in increasingly competitive markets.
In respect of Dr Scheinkestel’s appointment, 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 of a candidate to serve on the Board of a major public company like Telstra. In addition, it set criteria regarding the specific qualifications a candidate should possess to ensure the Board maintained the appropriate mix of skills, experience, expertise and diversity. The Board also undertook an assessment of whether a candidate satisfied the requirements of the Board’s Charter.
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 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 included in the annual Board cycle.
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 2011 Annual Report.
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 principal responsibilities are to ensure that the Board fulfils its obligations under the Board Charter and as required under relevant legislation, and to provide appropriate leadership to the Board and Telstra. The Chairman’s specific responsibilities include:
- representing the views of the Board to all shareholders and maintaining appropriate ongoing contact with major shareholders to ensure the Board understands their views;
- establishing the timetable and working with the CEO and Company Secretary to agree the agenda for Board meetings;
- chairing Board meetings, non-executive Directors’ meetings and shareholder meetings;
- facilitating Board and non-executive Directors’ meetings to ensure:
- the discussions are conducted in an open and professional manner where Directors are encouraged to express their views, leading to objective, robust analysis and debate; and
- the core issues facing Telstra are addressed;
- working with the CEO to ensure the CEO provides the Board with the information it requires to contribute effectively to the Board decision making process and to monitor the effective implementation of Board decisions;
- maintaining a regular dialogue and mentoring relationship with the CEO and senior management, serving as the primary link between the Board and management and providing continuity between Board meetings;
- guiding and promoting the ongoing effectiveness and development of the Board and individual Directors; and
- ensuring the meetings of shareholders are conducted in an open and proper manner with appropriate opportunity to ask questions.
Director Independence
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, at least annually, assesses the independence of each non-executive Director, having regard to the specific considerations set out in the Board Charter. These considerations are consistent with those set out in the ASX Principles and Recommendations.
In Telstra’s view, consistent with the ASX Principles and Recommendations, independent Directors must not be members of management and must be free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of the Director’s unfettered and independent judgment and ability to act in the best interests of the Company. 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.
The Board’s current policy is that the CEO and the Chief Financial Officer (CFO) are the only executive Directors and that the non-executive Directors should be independent Directors, as defined in the Board Charter.
With the exception of the CEO and CFO, all Directors are non-executive Directors and have been determined by the Board to be independent. During fiscal 2011, 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.
The Board’s Charter provides that 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.
Board Meetings
The Board meets regularly to discuss, among other things, strategic matters, business performance oversight, senior executive appointments, performance and remuneration, financial matters, risk management, compliance and relationships with stakeholders. It has 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.
The Board and the Company Secretary
The Company Secretary plays an important role in supporting the effectiveness of the Board by monitoring that Board policy and procedures are followed, and co-ordinating the completion and despatch of Board agendas and materials in a timely manner. The Company Secretary reports directly to the Board through the Chairman and all Directors have access to the Company Secretary.
Board access to management and independent professional advice
Directors have complete access to senior management through the Chairman, CEO or Company Secretary at any time. In addition to regular presentations by senior management to the Board and Board Committee 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 the same basis.
In certain circumstances, each Director has the right to seek independent professional advice at Telstra’s expense, within specified limits, or with the prior approval of the Chairman.
Performance Evaluation
The Board annually reviews its performance (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 2010 review was undertaken with the assistance of an external facilitator, the fiscal 2011 Board performance review (including a review of Board Committee and individual Director performance) was conducted internally, led by the Chairman. The process comprised:
a) a whole of Board discussion around what currently works well and areas for improvement;
b) one-on-one review meetings between the Chairman and each Director; and
c) a review of the Chairman's performance which was facilitated by the Chairman of the Audit Committee.
As noted earlier, the Board makes recommendations to shareholders regarding the re-election of Directors having regard to the outcome of these reviews.
During the year, the Board also implemented the recommendations arising from the fiscal 2010 performance reviews.
Declaration of Interests
Directors are required to take all reasonable steps to avoid actual, potential or perceived conflicts of interest and to be sensitive to situations in which these may arise. This is a matter for ongoing consideration in view of the dynamic and rapidly changing nature of Telstra's business.
The Corporations Act, Telstra's Constitution and the Board Charter 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 the Board Charter to deal with such circumstances.
