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Recommendation |
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Comply |
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1.1 Formalise and disclose the functions reserved to the Board and those delegated to management
The Board has adopted a Charter that details the functions and responsibilities of the Board, which is available on Caltex’s web site. Management of Caltex’s day-to-day operations is undertaken by the Managing Director and Chief Executive Officer, subject to specified delegations of authority approved by the Board.
The Board has also adopted the practice of formal letters of appointment for all new directors. The letter sets out the key terms and conditions of the director’s appointment. |
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2.1 A majority of the Board should be independent directors
A majority of the Board are independent directors. The matters and thresholds considered by the Board in assessing the independence of directors are set out in the Board’s Charter of Director Independence, which is available on Caltex’s web site. The definition of independent director does not depart materially from that recommended by the ASX Corporate Governance Council. Materiality thresholds have been determined by the Board which are reasonable and consider the materiality to both the service provider or supplier/customer and to Caltex.
The Board makes an assessment of the independence of each director upon appointment and in February of each year. Directors are required on an ongoing basis to disclose to the Board relevant personal interests and conflicts of interest. Upon any such disclosure, a director’s independence is reassessed.
In 2007, non-executive directors met on four occasions in the absence of management. In addition, all directors (including the Managing Director and Chief Executive Officer) meet before other members of management join each Board meeting. |
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2.2 The Chairperson should be an independent director |
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2.3 The roles of the Chairperson and Chief Executive Officer should not be exercised by the same individual |
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2.4 The Board should establish a nomination committee
The Board has a Nomination Committee, the membership of which was changed in May 2007 to be all the members of the Board. The Chairman of the Nomination Committee is the Chairman of the Board. Prior to 1 May 2007, the Nomination Committee was combined with the Human Resources Committee, which consists of three members, the majority of whom are independent, and is chaired by an independent director.
The Board has adopted a Charter for the Nomination Committee which reflects the matters set out in the commentary and guidance to recommendation 2.4, a copy of which is available on Caltex’s web site.
The Board has adopted a process and selection criteria for appointment to the Board of Caltex Australia Limited. The selection criteria include generic corporate attributes, industry-specific attributes and personal attributes (including time availability) required in directors. Further information on the selection process is outlined in the Policy & Process for the Appointment, Election and Re-election of Directors approved by the Nomination Committee in September 2007 and posted on Caltex’s web site.
A non-executive director is elected for a period of up to three years or until the third Annual General Meeting after the director’s election (whichever is longer). As the ASX Listing Rules require Caltex to hold an election of directors each year, directors may be subject to re-election before the expiration of this term. Any director (other than the Managing Director) who is appointed to the Board as a casual vacancy or as an addition to the Board during a year holds office until the end of the next Annual General Meeting, but is eligible for election by shareholders at that meeting. |
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2.5 Provide the information indicated in the Guide to reporting on Principle 2
Included in the Directors’ Report is information on:
- the skills, experience and expertise of each director;
- an assessment of independence of each director;
- the term of office held by each director; and
- the names of members of the Nomination Committee and their attendance at meetings of the Committee.
Directors may obtain independent professional legal advice at Caltex’s expense, subject to making a request to, and obtaining the prior authorisation of, the Chairman. Where the Chairman wishes to obtain independent professional legal advice, the Chairman is required to make a request to, and obtain the prior authorisation of, the Chairman of the Audit Committee. |
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3.1 Establish a code of conduct to guide the directors, the Chief Executive Officer, the Chief Financial
Officer and any other key executives as to:
3.1.1 the practices necessary to maintain confidence in the company’s integrity
3.1.2 the responsibility and accountability of individuals for reporting and investigating reports
of unethical practices
Caltex has adopted a Code of Conduct to guide the standards of ethical behaviour expected of Caltex directors and employees in the performance of work for Caltex. A copy of the Caltex Code of Conduct is available on Caltex’s web site. |
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3.2 Disclose the policy concerning trading in company securities by directors, officers and employees
The Caltex Share Trading Policy is available on the Caltex web site. In particular, the Caltex Share Trading Policy prohibits directors and employees who hold unvested Caltex shares pursuant to any share scheme offered by Caltex to enter into any transaction that is designed or intended to hedge that person’s exposure to those unvested shares. |
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3.3 Provide any information indicated in the Guide to reporting on Principle 3 |
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4.1 Require the Chief Executive Officer and the Chief Financial Officer to state in writing to the Board that
the company’s financial reports present a true and fair view, in all material respects, of the company’s
financial condition and operational results and are in accordance with relevant accounting standards
When the Board considers the half-year and full-year financial statements, the Chief Executive Officer and Chief Financial Officer provide the requisite written statement. The statement is considered by the Audit Committee prior to being provided to the Board. |
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4.2 The Board should establish an Audit Committee |
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4.3 Structure the Audit Committee so that it consists of:
• only non-executive directors
• a majority of independent directors
• an independent chairperson, who is not chairperson of the Board
• at least three members |
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4.4 The Audit Committee should have a formal charter
A copy of the Charter of the Audit Committee is available on the Caltex web site. The Charter reflects the matters set out in the commentary and guidance to recommendation 4.4. |
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4.5 Provide the information indicated in the Guide to reporting on Principle 4
Information on the names and qualifications of the members of the Audit Committee, as well as the number
of meetings of the Audit Committee in 2007 and who attended those meetings, is included in the
Directors’ Report.
Information on the process for the appointment and monitoring of the external auditor and oversight of the rotation of external audit partners and the independence of the external auditor is set out in the External Auditor Policy available on Caltex’s web site. |
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5.1 Establish written policies and procedures designed to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure accountability at a senior management level for that compliance
The Board has adopted the Caltex Continuous Disclosure Policy, which sets out the key obligations of the Board and senior management to ensure that Caltex complies with its disclosure obligations under the ASX Listing Rules and the Corporations Act 2001 (Cth). A copy of the Caltex Continuous Disclosure Policy is available on the Caltex web site. |
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| 5.2 Provide the information indicated in the Guide to reporting on Principle 5 |
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6.1 Design and disclose a communication strategy to promote effective communication with shareholders
and encourage effective participation at general meetings
The Board has adopted a Caltex Shareholder Communications Policy, a copy of which is posted on the Caltex web site. |
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6.2 Request the external auditor to attend the Annual General Meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report. |
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7.1 The Board or appropriate board committee should establish policies on risk oversight and management
Caltex has adopted a risk management framework throughout its operations to proactively and systematically identify, assess and address events that could potentially impact upon business objectives. Under the Risk Management Policy, which supports the risk management framework, there is regular reporting to the Board and the OHS & Environmental Risk Committee on the key risks and controls at Caltex. The OHS & Environmental Risk Committee is a new committee of the Board established in 2007. This committee was established to enable the Board to focus on its oversight of OHS and environmental matters. A copy of the Charter of the OHS & Environmental Risk Committee is available on the Caltex web site.
Caltex has an internal audit function which reports to both the Audit Committee and the Managing Director and Chief Executive Officer. The Audit Committee oversees the internal audit function and the appointment of the Internal Audit Manager. The Internal Audit Manager meets with both the Chairman of the Audit Committee and the Audit Committee as a whole in the absence of management. This function has full access to personnel and information and is independent of the external auditor. |
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7.2 The Chief Executive Officer and the Chief Financial Officer should state to the Board in writing that:
7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of financial
statements) is founded on a sound system of risk management and internal compliance and
control which implements the policies adopted by the Board
7.2.2 the company’s risk management and internal compliance and control system is operating
efficiently and effectively in all material respects
When the Board considers the half-year and full-year financial statements, the Chief Executive Officer and Chief Financial Officer provide the requisite written statement in terms consistent with the guidance from the Group of 100. The statement is considered by the Audit Committee prior to being provided to the Board. |
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7.3 Provide the information indicated in the Guide to reporting on Principle 7
A description of Caltex’s risk management policy and internal control systems is available on the Caltex
web site. |
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8.1 Disclose the process for performance evaluation of the Board, its committees and individual directors
and key executives
The Caltex Performance Evaluation Process sets out the processes by which the performance of the Board and all Caltex employees is evaluated, and is available on Caltex’s web site. Information on performance evaluation of key executives is also included in the Remuneration Report in the Directors’ Report, as Caltex strongly believes in the link between performance and remuneration.
Directors are encouraged to attend director training and professional development courses, as required, at Caltex’s expense. New directors also receive an information pack, meet with senior executives to gain further background on Caltex’s business operations and visit facilities as appropriate. The Nomination Committee reviews this induction process on a regular basis to ensure that appropriate induction is provided for new directors.
Caltex management provides detailed papers for each Board and Committee meeting and attends meetings to answer any questions that directors may have. Directors are free to request any further information they may require. All directors have access to the Company Secretary and the Company Secretary is accountable to the Board, through the Chairman, on governance matters. |
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9.1 Provide disclosure in relation to the company’s remuneration policies to enable investors to understand
(i) the costs and benefits of those policies and (ii) the link between remuneration paid to directors and
key executives and corporate performance.
A Remuneration Report can be found in the Directors’ Report commencing here. |
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9.2 The Board should establish a remuneration committee
The Board has a Human Resources Committee that considers the remuneration arrangements for employees and directors of Caltex. The Committee is composed of three members, the majority of whom are independent directors, and the Chairman is an independent director. Prior to May 2007, the Committee operated as the Human Resources & Nomination Committee.
The Board has adopted a Charter for the Committee which reflects the matters set out in the commentary and guidance to recommendation 9.2, a copy of which is available on Caltex’s web site. |
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9.3 Clearly distinguish the structure of the non-executive directors’ remuneration from that of executives
As discussed in the Remuneration Report contained in the Directors’ Report, 100% of the remuneration of non-executive directors is fixed and non-executive directors do not participate in any incentive plan. Also, fees paid to non-executive directors must be within the aggregate remuneration pool approved by shareholders. Remuneration paid to executives in 2007 included fixed and variable components, as detailed in the Remuneration Report. |
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9.4 Ensure that payment of equity based executive remuneration is made in accordance with thresholds set
in plans approved by shareholders
Senior executives of Caltex may receive shares under long-term incentive plans. Where required, the terms and conditions of the plan have been approved by shareholders. Grants have been made in accordance with the plan rules. |
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9.5 Provide the information indicated in the Guide to reporting on Principle 9
Information on the members of the Human Resources Committee, as well as the number of meetings of the Human Resources Committee in 2007 and who attended those meetings, is included in the Directors’ Report.
Following the decision to discontinue the Caltex retirement scheme for non-executive directors with effect from
1 January 2004, non-executive directors residing in Australia are entitled only to statutory superannuation.
Directors not residing in Australia are not entitled to any superannuation. |
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10.1 Establish and disclose a code of conduct to guide compliance with legal and other obligations to
legitimate stakeholders
A copy of the Code of Conduct is available on Caltex’s web site. |
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