1. Introduction (click here to see PGG Wrightson Constitution)
1.1 The Board of PGG Wrightson Ltd is committed to acting with integrity and expects high standards of behaviour and accountability from all of PGG Wrightson’s officers and staff. As part of this commitment, the Board has adopted this Corporate Governance Code relating to the composition and conduct of the Board. The statement substantially adheres to the New Zealand Securities Commission Governance Principles and Guidelines and the NZX Corporate Governance Best Practice Code.
1.2 The Board’s primary objective is the creation of shareholder value through following appropriate strategies and ensuring effective and innovative use of Group resources in providing customer satisfaction. The Group will be a good employer and a responsible corporate citizen.
1.3 To ensure efficiency, the Board has delegated to the Managing Director and subsidiary company boards (other than PGG Wrightson Finance Limited) the day to day management and leadership of the Group.
2. Code of Ethics (see below for the link to PGG Wrightson’s Code of Ethics)
2.1 Consistent with the principle that Directors should observe and foster high ethical standards, the Board has developed and adopted a written Code of Ethics.
2.2 It is the responsibility of the Board to review the Code of Ethics from time to time, to implement the Code and to monitor compliance.
2.3 An interests register is maintained and regularly updated documenting interests disclosed by all Board members.
2.4 Directors are entitled to seek independent professional advice to assist them in meeting their responsibilities.
3. Board Composition and Performance
3.1 The Board is committed to the principle that there should be a balance of independence, skills, knowledge and experience among Directors so that the Board works effectively.
3.2 The Board currently has nine Directors.
3.3 In accordance with NZX requirements, no less than one third of the total number of Directors are required to be Independent Directors. The Board currently has four Independent Directors. For the purposes of this Code, the Board defines an Independent Director as one who:–
• is not an executive of the Company; and
• has no disqualifying relationship within the meaning of the NZX Listing Rules.
3.5 The Constitution contains no provisions for compulsory retirement or a fixed tenure for Directors, although Directors must periodically retire and seek re-election in accordance with the Constitution and Listing Rules. One third of the Directors or, if their number is not a multiple of three, then the number nearest to one third, shall retire from office at the annual meeting each year.
3.6 The Board will formally review the performance of each Director and the Board as a whole, not less than every two years.
3.7 The full Board met in person eleven times in the year ended 30 June 2010. Directors also meet on other occasions for strategic planning and hold conference calls as required.
4. Director Remuneration
4.1 The Board is committed to the principle that remuneration of Directors and executives should be transparent, fair and reasonable.
4.2 Directors fees in aggregate are approved by shareholders.
4.3 The Board supports Directors holding shares in the Company but it does not consider this should be compulsory.
5. Board Committees
5.1 The Board has delegated some of its powers to Board operating committees – the Audit Committee and the Remuneration and Appointments Committee.
5.2 The Committees are made up of a minimum of three non-executive Director members and each Committee has a written Board-approved charter which outlines that Committee’s authority, duties, responsibilities and relationship with the Board. The Board regularly reviews the performance of each Committee in accordance with the relevant Committee’s written charter. Committees meet an average of four times a year, with additional meetings being convened when required.
Senior management are invited to attend Committee meetings as is considered appropriate. The Committees may appoint advisors as they see fit.
Other Committees of the Board are formed as and when required.
5.3 Audit Committee (click here to see the Board Audit Committee Charter)
The majority of the members of the Audit Committee will be Independent Directors and at least one member will have an accounting or financial background. The Committee will be chaired by an independent Director other than the Chair of the Board. No member of the Audit Committee will be an Executive Director. The members of the Audit Committee are currently B R Irvine (Chairman), K R Smith, and Sir Selwyn Cushing. The Audit Committee met four times during the financial year.
The main responsibilities of the Audit Committee are:
• Ensuring that processes are in place and monitoring those processes so that the Board is properly and regularly informed and updated on corporate financial matters.
• Recommending the appointment and removal of the independent auditor.
• Monitoring and reviewing the independent and internal auditing practices.
• Ensuring that the ability and independence of the auditors to carry out their statutory audit role is not impaired, or could reasonably be perceived to be impaired.
• To interface with management, Risk Management (internal auditors) and external auditors and review the financial reports, as well as advising all Directors whether they comply with the appropriate laws and regulations.
• Ensuring the external auditor or lead audit partner is changed at least every five years.
• Overseeing the Group management of operational risk and compliance.
• Overseeing matters relating to the values, ethics and financial integrity of the Group.
5.4 Remuneration and Appointments Committee (click here to see the Rem & Appts Committee Charter)
The members of the Remuneration and Appointments Committee are currently G A C Gould (Chairman), T Xie and Sir John Anderson. The Remuneration and Appointments Committee met three times during the financial year.
The main responsibilities of the Remuneration and Appointments Committee are:
• To undertake an annual performance appraisal of the Managing Director and review the appraisal of direct reports to the Managing Director.
• To review compensation policy and procedures, including employee benefits and superannuation, and recommend to the Board remuneration changes for the Managing Director and direct reports.
• To review succession planning and senior management development plans.
5.5 Credit Committe
PGG Wrightson Finance Ltd has a Credit Committee. The Credit Committee has delegated responsibility on behalf of the PGG Wrightson Finance Board for overseeing credit strategies and policies within PGG Wrightson Finance's business and for approving loan applications in accordance with delegated authorities. The PGG Wrightson Finance Board members of the Credit Committee are currently N G Bates, W D Thomas, T M Miles and M R Thomas. The Credit Committee met eight times during the financial year.
5.6 The Board notes best practice recommendations for the establishment of a Nominations Committee, but its preference is to appoint a subcommittee for this purpose as and when necessary.
6. Independent Auditors
6.1 The Board subscribes to the principle that it has a key function to ensure the quality and independence of the external audit process.
6.2 To ensure there is no conflict with other services that may be provided by the external auditors, the Company has adopted a policy whereby the external auditors will not provide any other services unless specifically approved by the Audit Committee.
7. Reporting and Disclosure
7.1 The Board endorses the principle that it should demand integrity both in financial reporting and in the timeliness and balance of disclosures on the Company’s affairs.
7.2 The Company will provide timely and adequate disclosure of information on matters of material impact to shareholders and comply with the continuous disclosure and other listing requirements of the NZX relating to shareholder reporting. The Company communicates through the interim and annual reports, releases to the NZX and media, and on the Group’s website at www.pggwrightson.co.nz.
7.3 PGG Wrightson has established and will maintain processes for the provision of information to the Board by management of sufficient content, quality and timeliness, as the Board considers necessary to enable the Board to effectively discharge its duties.
7.4 The Company has a detailed insider trading policy applying to all Directors and staff which incorporates all insider trading restraints. Directors and senior officers are able to trade in Company shares in accordance with that policy except when they are in possession of price-sensitive information not publicly available.
8. Risk Management
8.1 The Board is committed to the principle that it should regularly verify that the Company has appropriate processes in place to identify and manage potential and relevant risks.
8.2 In discharging this obligation the Board may:–
• Delegate, where appropriate, to the Board Committees.
• In conjunction with the Managing Director, internal and external audit, set up and monitor internal controls to ensure that management prudently and efficiently manage resources.
• In conjunction with the Managing Director, review the effectiveness and integrity of compliance and risk management systems within the business.
9. Annual Review
9.1 A review of this Corporate Governance Code and associated processes and procedures will be completed on an annual basis to ensure the Company adheres to best practice governance principles and maintains high ethical standards.
9.2 This review will include a consideration of any processes that materially differ from the principles set out in the NZX Corporate Governance Best Practice Code. Where the Company adopts a practice that materially differs from the NZX Best Practice Code, this will be identified and noted in the Company’s annual report.
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