Governance and remuneration report PDF
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Standard Bank Group GOVERNANCE AND REMUNERATION REPORT 2017 Standard Bank Group GOVERNANCE AND REMUNERATION REPORT 2017 All our reports and latest financial results presentations, ADDITIONAL INFORMATION ONLINE booklets and SENS announcements, are available online Directorate of key subsidiaries at www.standardbank.com/reporting. Financial and Credit ratings other definitions, and acronyms and abbreviations used in International representation our reports can also be found here. Scan the QR code to be taken directly to the website. Shareholder analysis Share statistics Instrument codes CONTENTS Our reporting suite 2 Chairman’s report 4 6 CORPORATE GOVERNANCE REPORT 46 REMUNERATION REPORT 112 ADDITIONAL INFORMATION Shareholders’ diary 112 Contact details ibc We welcome the views of our stakeholders on our reports. Please email your feedback to [email protected]. You can also use this address to request printed copies of our reports. Standard Bank Group 1 Governance and remuneration report 2017 OUR REPORTING SUITE We produce a full suite of reports to cater for the diverse needs of our stakeholders. References These icons refer readers to information elsewhere in this report or in our other reports, which are available online. Annual integrated report Provides a holistic assessment Frameworks* applied Assurance of the group’s ability to create value. •(cid:3)JSE Listings Certain information in this It considers the issues that are material Requirements report has been extracted ANNUALR INETPSEOtaGnRdaRTrd AB 2aTnk0 EG1roD7up to our commercial viability and social •(cid:3)King Code from the group’s audited relevance, which are required to achieve •(cid:3)<IR> Framework of the annual financial our strategy in the medium to long term. International Integrated statements. These include the macroeconomic and Reporting Council socio-political conditions in which AIR we operate. Where applicable, information in this report has been extracted from other publications in our reporting suite. Intended readers: primarily our providers of financial capital, being our shareholders, depositors and bondholders, but information relevant to our other stakeholders is also included. Report to society An account of the group’s social, Frameworks* applied Assurance economic and environmental impacts •(cid:3)King Code KPMG Inc. has provided and how these contribute to the •(cid:3)FTSE/JSE Responsible assurance over selected group’s sustainability and its ability Investment Index Series information in the report RStaEndParOd BRanTk’s TO SOCIETY 2017 to achieve its purpose. and Dow Jones/ to society. Moving Forward, Together RobecoSAM Our supplementary environmental, •(cid:3)Sustainalytics social and governance report, and our transformation report to society •(cid:3)Carbon Disclosure RTS Project are available online. •(cid:3)United Nations Sustainable Development Goals Intended readers: the group’s broad base of •(cid:3)Equator Principles stakeholders, particularly clients, employees, •(cid:3)Global business partners, regulators, government and civil Reporting Initiative society organisations. (as a guide) I Denotes text in the remuneration R Denotes text in the remuneration report that forms part of the group’s report that forms part of the remuneration implementation report. group’s remuneration policy. *Definitions: Banks Act – South African Banks Act 94 of 1990 The invitation to the annual general Companies Act – South African Companies Act 71 of 2008 meeting and the notice of the FTSE – Financial Times Stock Exchange resolutions to be tabled at the meeting IFRS – International Financial Reporting Standards will be sent separately to shareholders JSE – Johannesburg Stock Exchange and is also available on our website at: King Code – King Report on Corporate Governance, also known as King IV www.standardbank.com The group – Standard Bank Group 2 Intended readers of the reports below: shareholders, debt providers and regulators. This report Governance and remuneration report A detailed review of the group’s Frameworks* applied Assurance governance and remuneration •(cid:3)Companies Act Certain information in the practices, including the group’s •(cid:3)Banks Act governance and remuneration policy and •(cid:3)JSE Listings remuneration report has RGEOMV pg GORVEEMRRNUEPANSONEtanRCRdaTrAEd B T 2aAnIk0ON G1roND7up remuneration implementation report. •(cid:3)RKeinqgu Cireomdeents bgreoeunp e’sx taruadctiteedd faronmnu tahl e financial statements. •(cid:3)Basel III Annual financial statements Sets out the group’s full audited Frameworks* applied Assurance annual financial statements, •(cid:3)IFRS Unmodified audit ASNTNAUTAELM FEISNNtanTAdaSrNd B 2Cank0I GA1ro7Lup including the report of the group •(cid:3)Companies Act opinion expressed audit committee. •(cid:3)Banks Act by KPMG Inc. and AFS •(cid:3)JSE Listings PricewaterhouseCoopers Inc. Requirements •(cid:3)King Code Risk and capital management report A detailed view of the Frameworks* applied RM2Sta0InASd1arNK7d B AaAnkG NGrEoDupM CEANPTIT RAELP ORT management of risks relating •(cid:3)Various regulations, to the group’s operations. including Basel III •(cid:3)Banks Act RCM •(cid:3)IFRS •(cid:3)JSE Listings Requirements •(cid:3)King Code To assist in the reduction of the group’s carbon footprint we urge our stakeholders to make use of our reporting site to view our reporting suite at www.standardbank.com/reporting or scan the following code to be taken there directly. Standard Bank Group 3 Governance and remuneration report 2017 CHAIRMAN’S STATEMENT “It gives me pleasure to present As the board, our leadership is underpinned by the group’s values and code of ethics. We strive to uphold good governance the 2017 corporate governance because we believe that it provides the necessary structure that statement on behalf of the board. enables the group’s success and creates sustainable value. The board and its committees adopted all the principles included The corporate governance in King IV and from 2017 onwards the group’s reporting will be statement details the group’s informed by this. Of critical importance to the board is leading ethically and seeking to lead by example, ensuring that there applied corporate governance is no ambiguity in the conduct expected of all our primary stakeholders. principles and practices.” For an account on how the board applied the King IV principles, please refer to the application register on www.standardbank.com Thulani Gcabashe Board effectiveness The board evaluates the effectiveness of its performance annually. In the current year, the company secretary facilitated the effectiveness review of the board and its committees. I conducted the individual director performance assessments, wwhheerree ddiirreeccttoorrss pprroovviiddeedd iinnsights and constructive feedback iinn oonnee--oonn--oonnee mmeeeettiinnggss oonn the issues pertaining to their ccoonnttrriibbuuttiioonn aass wweellll aass oobbsseervations on the functioning of the bbooaarrdd aanndd iittss ccoommmmiitttteeeess.. OOvveerraallll,, tthhee bbooaarrdd ooppeerraatteess effectively. Directors are engaged on mmaatttteerrss rreellaattiinngg ttoo tthhee bbooaarrd and the group. The executives eennggaaggee ooppeennllyy aanndd ttrraannssppaarently with the board. The board has a ggoooodd mmiixx ooff sskkiillllss aanndd eexxppeerrtise with demonstrated iinnddeeppeennddeennccee ooff mmiinndd.. TThhee ddiirreeccttoorrss’’ aaffffaaiirrss ccoommmmittee oversaw the implementation of aaccttiioonn ppllaannss ffrroomm tthhee 2200116 externally facilitated board eeffffeeccttiivveenneessss rreevview. GGOOVV For a detailed summary of the 2017 board RREEMM 2299 effectiveness results, refer to page 29. CCoollllaabborative leadership HHuummaann relationships underpin the proper ffuunnccttiiooning of the board. Tapping into the eexxppeerriieence and guidance of directors in a ssttrruuccttured manner is important for ccoollllaabborative leadership and value aaccccrreetion. We have over the past few years ccrreeaatteed an architecture that underpins ccoollllaabboration between the board and sseenniioor management. The chairmen of bbooaarrdd committees work closely not only wwiitthh mme as chairman, but also with the ggrroouupp chief executive and senior executives wwhhoo rreepport to the group chief executive. IInn tthhee rruun up to quarterly meetings, aapppprrooxxiimmaately three weeks before the sscchheedduulleedd mmeeting, the chairman of each ccoommmmiitttteeee mmeeets a senior executive who is a pprriimmaarryy lliiaaiissoonn for the committee to discuss any top 4 of mind issues and give input to the planned agenda. This has Governance of our subsidiaries several advantages including exposing directors to the group’s In the current year, the directors’ affairs committee approved the senior management, contributing to the preparation and revised subsidiary governance framework. The revision enhancing the quality of discussions at meetings. This considered corporate governance developments including King collaborative leadership has continued to strengthen the board’s IV and Basel Corporate Governance Principles for banks. work and the group’s ability to respond timeously to The framework sets the standard expected of group entities developments. on governance arrangements. Board and committee changes The board held its November 2017 meeting at Stanbic Zambia Board succession and composition remains an area of focus as in Lusaka, Zambia. This provided an opportunity for the board the board ensures that its composition remains relevant and to interact with the country board and management, exposed the enables the effective execution of its duties. In the current period, board to local operations and created a platform for holding Dr Shu Gu, a deputy chairman, and Wenbin Wang stepped down company and subsidiary board members to share learnings. from the board and were replaced by Dr Hao Hu and Lubin Wang in terms of the SBG and the Industrial and Commercial Bank Challenges of China (ICBC) shareholder agreement. Following a nine-year In the period under review the board and senior management term of office, Ted Woods retired from the board at the close dealt extensively with legal, reputational, and ethical risks arising of the 2017 annual general meeting (AGM) having reached the from supplier relationships, notably KPMG, McKinsey and SAP. non-executive director retirement age. Swazi Tshabalala stepped The group’s position in all these instances was articulated in down from the board in November 2017. communications issued by the company in October 2017. In all instances the group re-affirmed its commitment to the In line with King IV recommendations, the board appointed Constitution, to the law and the group’s values, including Peter Sullivan as the lead independent director. In addition to upholding the highest level of integrity. strengthening the independence of the board, we believe that this appointment will provide an additional point of contact between The group is of the view that consistency in dealing with these shareholders and the board. Trix Kennealy will succeed Richard matters is vital. As previously communicated, whenever the Dunne as the chairman of the group audit committee when he company becomes aware of information from which it can retires from the board at the company’s AGM on 24 May 2018. reasonably be inferred that a supplier might be violating Standard Bank’s values and ethics or might expose Standard Group technology and information Bank to legal or reputational risks, the group requests an committee explanation and, if appropriate, remedial action. Outcomes in each instance get communicated as appropriate. As the board, we are cognisant that data management is an important strategic enabler of the group. Accordingly, the Looking ahead mandates of the board and the group information technology Apart from seeking to lead by example in all instances, the board committee were revised to include oversight of data continues to support management in emphasizing the management, and the group information technology committee importance of doing the right business the right way to all staff was renamed the group technology and information committee. and other members of the group. GOV For details on work undertaken by the group technology and REM 36 information committee, refer to page 36. In 2018, the board will continue embedding its board continuity plans to ensure that the board’s mix of skills and experience remains relevant and assists in the delivery of the group’s strategy. Diversity The board will be hosting all non-executive directors of the We remain conscious of the importance of diversity and its group’s Africa Regions subsidiaries at our triennial directors’ positive impact on board effectiveness. There are several summit. The summit will enable the group board to interact with diversity markers which we take into account in board non-executive directors and chief executives in our Africa composition, including gender and race diversity. We specifically Regions. We continue to seek to ensure strategy alignment and report on gender and race diversity in line with regulatory disciplined execution by all members of the group, ensuring requirements. Following board changes in 2017, our female appropriate conduct that is consistent with the group’s values. gender representation is at 22%. We previously reported that the board set the female representation target at 33% by 2020. Efforts are underway to ensure that the board achieves the set target by 2020. In line with the JSE Listings Requirements, in 2018 the board will Thulani Gcabashe approve a race diversity policy for its composition. Chairman Standard Bank Group 5 Governance and remuneration report 2017 CORPORATE GOVERNANCE REPORT 6 CONTENTS Our approach to corporate governance 8 Our governance framework 9 Our board of directors 10 Executive committee 18 8 Board effectiveness 20 Board, board committee and executive committee responsibilities 20 Separation of roles 21 Composition 22 Skills and experience 22 Resignations and retirements 22 Diversity 22 Group secretary 22 Director independence 23 Board appointment process 23 Board meetings 24 Focus areas for 2017 25 Board meeting attendance 26 Conflicts of interest and other commitments 27 Directors’ induction and ongoing training 27 Access to and flow of information 27 Assessing board effectiveness 28 Governing of group subsidiaries 30 Entrenching ethics 30 Dealings in securities 30 Political party contribution 30 Being a responsible corporate citizen 31 Connecting with stakeholders 31 Annual general meeting 31 Quorum and participation at general meetings 31 Shareholders’ rights 31 Compliance 31 Going concern 31 32 Board committees Directors’ affairs committee 32 Group audit committee 34 Group technology and information committee 36 Group model approval committee 38 Group risk and capital management committee 40 Group remuneration committee 42 Group social and ethics committee 44 Standard Bank Group 7 Governance and remuneration report 2017 CORPORATE GOVERNANCE REPORT REMUNERATION REPORT ADDITIONAL INFORMATION OUR APPROACH TO CORPORATE GOVERNANCE The group’s corporate governance approach promotes strategic decision-making that combines long-term and shorter-term outcomes to reconcile the interests of the group, stakeholders and society to create sustainable value. Corporate governance is integrated across the group’s operations. We are committed to excellence in corporate Through the group’s corporate governance framework, the board fulfils governance an oversight role and deliberates with executive management over In line with this ambition, the King Code has formed the strategy direction, financial goals, resource allocation and risk appetite. cornerstone of our approach to governance. We support Management applies the tone and philosophy of governance, based the overarching goals of King IV, which is the creation of: on the group’s values, as a set of principles and structures that enable the business to create value for all of our stakeholders. Our approach extends beyond compliance. We see corporate governance as an enabler that creates competitive advantage through enhanced accountability, effective risk management, ETHICAL CULTURE clear performance management, greater transparency, and effective leadership. GOOD PERFORMANCE EFFECTIVE CONTROL LEGITIMACY The board is satisfied with the group’s application of the principles of King IV. A statement on the group’s application of the King IV principles is available online at www.standardbank.com 8
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