Integrated Annual Report 2014

Corporate governance report

KEY STANDARDS AND PRINCIPLES

Sibanye listed on 11 February 2013, with its primary listing on the JSE. It is registered with the US Securities and Exchange Commission (SEC) in the United States of America and its ordinary shares are listed on the New York Stock Exchange in the form of an American Depositary Receipt programme administered by BNY Mellon.

As a result, the Group is subject to compliance with the JSE Listings Requirements and to the disclosure and corporate governance requirements of the New York Stock Exchange. The Group’s compliance with the terms of the Sarbanes-Oxley Act, 2002 (SOX) is documented in the Form 20-F. In 2014, the Group complied with all the applicable governance requirements.

The Group has adopted high standards of accountability, transparency and integrity in the running of the business and reporting to shareholders and other stakeholders.

The approach to corporate governance is guided by the principles of fairness, accountability, responsibility and transparency. Special attention has been given to providing stakeholders and the financial investment community with clear, concise, accurate and timely information about the Group’s operations and results; reporting to shareholders on an integrated basis on Sibanye’s financial and sustainable performance; ensuring appropriate business and financial risk management; ensuring that no director, management official or other employee of the Sibanye Group deals directly or indirectly in Sibanye shares on the basis of unpublished price-sensitive information regarding the Sibanye Group, or otherwise during any prohibited period; and recognition of the Group’s social responsibility to provide assistance and development support to the communities in which it operates and to deserving institutions at large.

The Group applies the principles contained in King III and has implemented the King III principles and recommendations across the Group.

Sibanye complies with the principle that companies should remunerate directors and executives fairly and responsibly. The Remuneration Committee develops a remuneration policy aligned with the strategy of Sibanye and linked to individual performances. This policy addresses the base pay, bonuses, employee contracts, severance and retirement benefits and share-based and other long-term incentive schemes.

The one exception is the King III recommendation that employment contracts should not compensate executives for severance because of change of control (although this does not preclude payments for retaining key executives during a period of uncertainty). Read the Remuneration Report.

All 75 King III principles are recorded in the compliance schedule on Sibanye’s website, detailing the principles and the corresponding explanations.

Sibanye complied with all of the mandatory specific governance requirements contained in paragraph 3.84 of the JSE Listing Requirements during the 2014 financial year.

The Group’s Code of Ethics requires its directors, officers and employees to conduct business in an ethical and fair manner and it promotes a socially and environmentally responsible culture. The Audit Committee is responsible for ensuring compliance with the Code of Ethics.

In addition to meeting the requirements of King III and SOX, the Group also meets the relevant requirements of the Dodd-Frank Act (2010), the Foreign Corrupt Practices Act (1977), the UK Bribery Act (2010), the Organisation for Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997), the UN Convention against Corruption (2003) and South Africa’s Prevention and Combating of Corrupt Activities Act (2004).

Employees, suppliers and customers are encouraged to report irregularities and misconduct without fear of victimisation using an independently managed, anonymous, toll-free line.

BOARD OF DIRECTORS

The Company’s MOI requires no fewer than four and no more than 15 members on the Board of Directors. The Board currently comprises 13 members – nine of these are independent, non-executive directors, two non-independent non-executive directors and the two executive directors holding the positions of CEO and CFO. Chris Chadwick and Robert Chan were appointed on 16 May 2014 as additional members of the Board and are eligible and available for election at the upcoming Annual General Meeting.

The roles of the Chairman of the Board and the CEO are separate.

The Board, advised by the Nominating and Governance Committee, ensures that the candidates for election as independent, non-executive directors are reputable, competent and experienced and are willing to devote the necessary time to the role.

The Board of Directors’ Charter (see below) outlines the objectives and responsibilities of the Board and all Board sub-committees operate in accordance with written terms of reference, which are regularly reviewed by the Board. The Board takes ultimate responsibility for the Group’s adherence to sound corporate governance standards and sees to it that all business judgements are made with reasonable care, skill and diligence.

The executive directors and the Corporate Secretary keep the Board informed of all developments in the Group.

The current membership of all the Board sub-committees is disclosed below, under Board committees.

The Board met six times during the year under review..

REMUNERATION

The Board obtains independent advice before making recommendations to shareholders for the remuneration of non-executive directors. The remuneration is paid in accordance with a special resolution approved by the shareholders within the previous two years.

Non-executive directors only receive remuneration due to them as members of the Board. Directors serving on Board sub-committees receive additional remuneration. Details of the directors’ remuneration packages as well as those of the prescribed officers are disclosed in the Remuneration Report.

MONITORING PERFORMANCE

In 2014, and in line with recommendations of King III, the Board carried out a rigorous evaluation of the independence of directors.

The Chairman is appointed annually by the Board which, with the assistance of the Nominating and Governance Committee, carried out a rigorous review of the Chairman’s performance and independence during 2014. The Board concluded that there were no factors that impaired his independence and appointed the Chairman for another year. As part of continuous improvement the Board appointed an independent outside consultant to assess the effectiveness of the Board and Board sub-committees.

The performance of the Corporate Secretary was evaluated by the Board. The Board was satisfied with his competence, qualifications, experience and maintaining an arms-length relationship with the Board.

ROTATION AND RETIREMENT FROM THE BOARD

In accordance with the MOI, one third of the directors shall retire from office at each AGM. The first to retire are those directors appointed as additional members of the Board, followed by the longest-serving members. The Board, assisted by the Nominating and Governance Committee, can recommend the eligibility of retiring directors (subject to availability and their contribution to the business) for re-appointment. Retiring directors can be immediately re-elected by the shareholders at the AGM.

BOARD OF DIRECTORS’ CHARTER

The Board reviewed and re-assessed the adequacy of the Board of Directors’ Charter (Charter). This document compels directors to promote the vision of the Group, while upholding sound principles of corporate governance. Directors’ responsibilities under the Charter include:

  • determining the Group’s Code of Ethics and conducting the Group’s affairs in a professional manner, upholding the core values of integrity, transparency and enterprise;
  • evaluating, determining and ensuring the implementation of corporate strategy and policy;
  • determining compensation, development, skills development and other relevant policies for employees;
  • developing and setting best-practice disclosure and reporting practices that meet the needs of all stakeholders;
  • authorising and controlling capital expenditure and reviewing investment capital and funding proposals;
  • constantly updating the risk management systems, including setting management expenditure authorisation levels and exposure limit guidelines; and
  • reviewing executive succession planning and endorsing senior executive appointments, organisational changes and general remuneration policies.

In this regard the Board is guided by the Remuneration Committee, the Audit Committee, Risk Committee as well as by the Nominating and Governance Committee.

The Board considers that this Integrated Report and associated reports comply in all material respects with the relevant statutory requirements of the various regulations governing disclosure and reporting by Sibanye; and that the consolidated financial statements comply in all material respects with IFRS, the South African Institute of Chartered Accountants Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the Companies Act and the JSE Listing Requirements. As such, the Board has approved the content of the Integrated Report 2014, including the consolidated financial statements on 20 March 2015.

BOARD COMMITTEES

The Board has formed the following committees in compliance with good corporate governance:

  • Audit Committee
  • Risk Committee
  • Remuneration Committee
  • Nominating and Governance Committee
  • Safety, Health and Sustainable Development Committee
  • Social and Ethics Committee (to comply with the statutory requirements of the Companies Act)

All these committees are composed exclusively of independent non-executive directors except for the Safety, Health and Sustainable Development Committee of which the CEO is also a member. The committees are all chaired by an independent non-executive director and operate in accordance with written terms of reference which have been approved by the Board.

Board meetings and attendance
 Date
Director18/216/53/729/76/111/12
Moloko, Sello (Chairman)
Cumming, Timothy
Chadwick, Chris1
Chan, Robert1
Davison, Barry
Froneman, Neal
Keyter, Charl
Menell, Richard
Nika, Nkosemntu
Rayner, Keith
Skweyiya, Zola
van der Merwe, Susan
Vilakazi, Jerry
  1. 1 Messrs Chadwick and Chan were appointed to the Board on 16 May 2014.

THE AUDIT COMMITTEE

This committee monitors and reviews Sibanye’s accounting controls and procedures, including the effectiveness of its information systems and other systems of internal control; the effectiveness of the internal audit function; reports of both external and internal auditors; half-yearly reports, the Form 20-F; the consolidated annual financial statements; the accounting policies of Sibanye and any proposed revisions thereto; external audit findings and reports, and the approval thereof; and compliance with applicable legislation and requirements of regulatory authorities and Sibanye’s Code of Ethics.

The CFO’s expertise was evaluated by the Audit Committee. The committee is satisfied that the incumbent has the appropriate expertise and experience to carry out his duties as the financial director of the Group and that he is supported by qualified competent senior staff.

The committee reviewed and assessed the independence of the external auditors, including their confirmation in writing that the criteria for independence as set out in the rules of the Independent Regulatory Board for Auditors and international bodies have been followed. The committee is satisfied that KPMG Inc is independent of the Group.

Sibanye’s CFO and internal and external auditors as well as management attend all the Audit Committee meetings and have unrestricted access to the chairman of this committee. The Audit Committee, in turn, communicates freely with other members of the Board not serving as members of the Audit Committee. To perform its functions effectively, the Audit Committee meets at least quarterly, but more frequently if required.

The Sarbanes-Oxley Act requires the Board to identify a financial expert from within its ranks. The Board has resolved that the committee’s Chairman, Keith Rayner, is the Audit Committee’s financial expert.

Membership and attendance of the Audit Committee
 Date
Director17/213/317/415/528/712/95/11
Rayner, Keith (Chairman)
Menell, Richard
Nika, Nkosemntu
van der Merwe, Susan

THE RISK COMMITTEE

The Committee was established by the Board on 16 May 2014 to assist the Board in ensuring that management implemented appropriate risk management processes and controls. Previously, this function was performed by the Audit Committee. The total process of risk management, which includes the related systems of internal control, is the responsibility of the Board. Management is accountable to the Board for designing, implementing and monitoring an integrated process of risk management into the daily activities of Sibanye. The Board, through the Risk Committee, ensures that management implements appropriate risk management processes and controls. The Board approved the Terms of Reference of the Risk Committee in July 2014. The responsibilities of the committee are as follows:

  • Reviewing the effectiveness and efficiency of the Enterprise Risk Management (ERM) system within the Company and being assured that material risks are identified and that appropriate risk management processes are in place, including the formulation and subsequent updating of appropriate Company policies.
  • Reviewing the adequacy of the risk management charter, policy and plan.
  • Reviewing the parameters of the Company’s risk/reward strategy, in terms of the risk appetite and tolerance relative to reward and ensuring that risks are quantified where practicable.
  • Regularly receiving a register of the Company’s key risks and potential material risk exposures from Management. Reviewing and approving mitigations strategies. Reporting to the Board any material changes and/or divergence to the risk profile of the Company.
  • Monitoring the implementation of operational and corporate risk management plans.
  • Reviewing the insurance and other risk transfer arrangements, and considering whether appropriate coverage is in place.
  • Reviewing the business contingency planning process within the Group and being assured that material risks are identified and that appropriate contingency plans are in place.
  • Conducting a formal risk assessment at least once a year, which should be continually reviewed, updated and applied.
  • Ensuring that a combined assurance model is applied to provide a coordinated approach to assurance activities.
Membership and attendance of the Risk Committee
 Date
Director28/75/11
Menell, Richard (Chairman)
Chadwick, Chris
Chan, Robert
Cumming, Timothy
Rayner, Keith
Skweyiya, Zola

THE NOMINATING AND GOVERNANCE COMMITTEE

This committee is responsible for ensuring that new directors undergo an appropriate induction process; recommending to the Board the need for Board participation in continuing education programmes; identifying and recommending to the Board successors to the Chairman and CEO; developing the approach of Sibanye to matters of corporate governance; and making recommendations to the Board concerning such matters.

Membership and attendance of the Nominating and Governance Committee
 Date
Director17/215/55/11
Moloko, Sello (Chairman)
Davison, Barry1
Menell, Richard
Nika, Nkosemntu1
Vilakazi, Jerry
  • 1 Messrs Davison and Nika were appointed on 16 May 2014

THE REMUNERATION COMMITTEE

This committee is responsible for determining Sibanye’s remuneration policy and the practices needed to attract, retain and motivate high-performing executives who are demonstrably aligned with Sibanye’s corporate objectives and business strategy; and for ensuring that remuneration levels relative to other comparable companies are pitched at the desired level taking relative performance into account. The Remuneration Committee also reviews, on behalf of the Board, both the remuneration levels of senior executives and management share-incentive schemes and the related performance criteria and measurements. To perform these functions the Remuneration Committee meets quarterly, or more frequently if required.

Membership and attendance of the Remuneration Committee
 Date
Director17/215/527/75/11
Cumming, Timothy (Chairman)
Chan, Robert1
Davison, Barry
Moloko, Sello
Nika, Nkosemntu
  • 1 Mr Chan was appointed on 16 May 2014

THE SAFETY, HEALTH AND SUSTAINABLE DEVELOPMENT COMMITTEE

This committee reviews adherence to occupational health, safety and environmental standards by Sibanye. The committee seeks to minimise mining-related accidents, to ensure that Sibanye’s operations are in compliance with all environmental regulations and to establish policy in respect of HIV/Aids and health matters.

Membership and attendance of the Safety, Health and Sustainable Development Committee
 Date
Director17/215/528/74/11
Davison, Barry (Chairman)
Chadwick, Chris1
Froneman, Neal
Menell, Richard
Moloko, Sello
Skweyiya, Zola
van der Merwe, Susan
  • 1 Mr Chadwick was appointed on 16 May 2014

THE SOCIAL AND ETHICS COMMITTEE

This committee is responsible for discharging its statutorily imposed duties as outlined in section 72 of the Companies Act and the applicable regulations, which include monitoring Sibanye’s activities in relation to relevant legislation, other legal requirements and prevailing codes of best practice regarding:

  1. the social and economic development;
  2. good corporate citizenship;
  3. the environment, health and public safety and the impact on Sibanye’s activities, products and services;
  4. consumer relations; and
  5. labour and employment legislation.

The Social and Ethics Committee must bring any matters relating to this monitoring to the attention of the Board and report to shareholders at the AGM. The Board seeks the assistance of the Social and Ethics Committee in ensuring that Sibanye complies with best practice recommendations in respect of social and ethical management.

Membership and attendance of the Social and Ethics Committee
 Date
Director17/215/528/75/11
Vilakazi, Jerry (Chairman)
Cumming, Timothy
Davison, Barry
Menell, Richard1
Moloko, Sello
Rayner, Keith
  • 1 Mr Menell was appointed on 15 May 2014

EXECUTIVE DIRECTORS AND EXECUTIVE COMMITTEE

Neal Froneman (CEO)
Charl Keyter (CFO)
Cain Farrel (Corporate Secretary)
Shadwick Bessit
Hartley Dikgale
Nash Lutchman1
Dawie Mostert
James Wellsted
Adam Mutshinya
Dick Plaistowe2
Wayne Robinson2
Richard Stewart2
Peter Turner
Robert van Niekerk
 

Sibanye’s Executive Committee meets on a regular basis to discuss and make decisions on the strategic and operating issues facing Sibanye.

  1. 1 Appointed on 1 March 2014
  2. 2 Appointed on 1 June 2014