Macmahon Holdings Limited ("Company" or "Macmahon")
The Board of Macmahon (“Board”) is committed to ensuring that the Company’s obligations and responsibilities to its various stakeholders are fulfilled through its corporate governance practices. The Directors and its executive management undertake to perform their duties with honesty, integrity, care and diligence, to act in good faith in the best interests of the Company in a manner that reflects the highest standards of corporate governance.
The Company has followed the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations with 2010 Amendments (2nd edition) (“ASX Principles and Recommendations”) where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where, after due consideration, the Company’s corporate governance practices depart from a recommendation, the Board has offered full disclosure and reason for the adoption of its own practice, in compliance with the “if not, why not” regime.
Principle 1: Lay solid foundations for management and oversight
Companies should establish and disclose the respective roles and responsibilities of board and management.
Recommendation 1.1: Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.
The Company has established and disclosed (on its website) its Board Charter in accordance with this recommendation. The Board Charter establishes the relationship between the Board and management and describes their respective functions and responsibilities. The Board Charter is attached as Annexure A.
Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior executives.
The Board undertakes a review of the Chief Executive Officer's performance, at least annually. Targets are approved by the Board after they have been established between the Chief Executive Officer and the Board’s Remuneration & Nomination Committee. These targets are aligned to overall business goals and the Company’s requirements of the position.
All senior executives of Macmahon are subject to a formal annual performance evaluation. Performance targets which reflect overall business goals and the Company’s requirements of the position are set each year for senior executives by his or her superior. The Chief Executive Officer carries out an informal assessment of progress for each senior executive each half year. The Chief Executive Officer, in conjunction with the Remuneration & Nomination Committee, carries out a full evaluation of each executive’s performance against the agreed targets once a year. Performance pay components of executives’ remuneration packages are dependent on the outcome of the evaluation.
Recommendation 1.3: Companies should provide the information indicated in the Guide to reporting on Principle 1.
The Company makes the relevant material available in its Corporate Governance Statement within its Annual Report and its website disclosure, in accordance with this recommendation.
Principle 2: Structure the Board to add value
Companies should have a board of effective composition, size and commitment to adequately discharge its responsibilities and duties.
Recommendation 2.1: A majority of the board should be independent directors.
The Company has a majority of independent directors.
In assessing the independence of each Director the Board considers, amongst other things, whether the Director:
- is a substantial shareholder of the Company (as defined by the Corporations Act) or an officer of, or otherwise associated directly with a substantial shareholder of the Company;
- within the last three years has been employed in an executive capacity by the Company or another group member or been a Director after ceasing to hold any such employment;
- within the last three years has been a principal of a material professional advisor or a material consultant to the Company or another group member, or an employee materially associated with the service provided;
- is a material supplier or customer of the Company or other group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer;
- has a material contractual relationship with the Company or another group member other than as a Director of the Company;
- has served on the Board for a period which could or could reasonably be perceived to materially interfere with the Directors’ ability to act in the bests interests of the Company; and
- is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company.
The Company has established and disclosed (on its website) a Board Conflict of Interest Policy (refer to Annexure L) to ensure an appropriate procedure is followed where:
- a Director may have a material personal interest in a matter that is or is to be under consideration by the Board; or
- a Director has a financially material relationship or other material association with another entity, and that entity or a related entity of that entity has or may have a material interest in a matter that is or likely to be under consideration by the Board.
Recommendation 2.2: The chair should be an independent director.
The Chair of the Company is independent.
Recommendation 2.3: The roles of the chair and chief executive officer should not be exercised by the same individual.
These roles are not exercised by the same individual.
Recommendation 2.4: The board should establish a nomination committee.
The Board has established a Remuneration & Nomination Committee which operates under a charter approved by the Board. The Charter is disclosed on the Company’s website (refer to Annexure K).
Recommendation 2.5: Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.
The Board undertakes an annual evaluation of its effectiveness as a whole and in committee against a broad range of good practice criteria and may use the assistance of an external facilitator. The Chairman reviews individual performance of each Board member. Prior to each Director being considered for re-election the Board will assess and make a recommendation as to such re-election.
The Chairman’s performance is evaluated periodically by the Board. The Board may involve an external facilitator for this purpose.
Any Director whose performance is consistently unsatisfactory may be asked to retire.
Recommendation 2.6: Companies should provide the information indicated in the Guide to Reporting on Principle 2.
The Company makes the relevant material available in the Corporate Governance Statement within its Annual Report and its website disclosure, in accordance with this recommendation, including the following policies and procedures.
In determining the independence of Directors, materiality is assessed on a case-by-case basis with consideration of the nature, circumstances and activities of the Directors having regard to the guidelines the Board uses to assess the independence of Directors under recommendation 2.1, rather than by applying general materiality thresholds.
It is a policy of the Board that each Director has the right to seek independent professional advice at the Company’s expense, subject to prior approval of the Chairman which will not be unreasonably withheld.
The Board's policy and procedure for the selection, nomination and appointment of new Directors and the re-election of incumbent Directors is as follows:
The Board (with assistance from the Remuneration & Nomination Committee) oversees the appointment and induction process for Directors and the selection, appointment and succession planning process of the Company’s Chief Executive Officer. When a vacancy exists or there is a need for particular experience or skills, the Remuneration & Nomination Committee determines the selection criteria based on the experience or skills deemed necessary. The Remuneration & Nomination Committee identifies potential candidates and may use the assistance of an external consultant. Those nominated are assessed by the Board against background, gender, experience, professional skills, personal qualities, whether the nominee’s skills and experience will augment the existing Board, and their availability to commit themselves to the Board’s activities. Upon recommendation from the Remuneration & Nomination Committee, the Board then appoints the most suitable candidate. Board candidates must stand for election at the next general meeting of shareholders.
When Directors are due for re-election, the Board does not endorse the reappointment of a Director who is not satisfactorily performing the role.
Principle 3: Promote ethical and responsible decision-making
Companies should actively promote ethical and responsible decision-making.
Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a summary of the code as to the practices necessary to maintain confidence in the company’s integrity; the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
The Company has established and disclosed (on its website) its Code of Conduct in accordance with this recommendation. It is a policy of the Board that the Code of Conduct applies to Directors, officers, employees and consultants of the Company. The Code is regularly reviewed and updated as necessary to ensure it reflects the high ethical standards of conduct necessary to maintain confidence in the Company’s integrity. The Code of Conduct is attached as Annexure B.
The Company has also established and disclosed (on its website) its Whistleblower Policy (Annexure C).
Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them.
The Company has established and disclosed (on its website) its Diversity Policy in accordance with this recommendation. The Diversity Policy is attached as Annexure D.
Recommendation 3.3: Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them.
The Company outlines its diversity targets and performance against these targets in its Annual Report, in accordance with this recommendation.
Recommendation 3.4: Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.
The Company provides the relevant disclosures in the Corporate Governance Statement in its Annual Report and on its website, in accordance with this recommendation.
Recommendation 3.5: Companies should provide the information indicated in the Guide to reporting on Principle 3.
The Company provides the relevant information in the Corporate Governance Statement in its Annual Report and on its website, in accordance with this recommendation.
Principle 4: Safeguard integrity in financial reporting
Companies should have a structure to independently verify and safeguard the integrity of their financial reporting.
Recommendation 4.1: The board should establish an audit committee.
The Board has established an Audit Committee.
Recommendation 4.2: The audit committee should be structured so that it:
- consists only of non-executive directors
- consists of a majority of independent directors
- is chaired by an independent chair, who is not chair of the Board
- has at least three members.
The Audit Committee established by the Board is structured in accordance with this recommendation.
Recommendation 4.3: The audit committee should have a formal charter.
The Audit Committee has a formal charter which is disclosed on the Company’s website and is attached as Annexure E.
Recommendation 4.4: Companies should provide the information indicated in the Guide to reporting on Principal 4.
The Company makes the relevant material available in the Corporate Governance Statement within its Annual Report and on its website, in accordance with this recommendation. Set out below is the Company's External Auditor Selection Policy.
1. Selection of external auditor
Should there be a vacancy for the position of external auditor, the Board conducts a formal tendering process, via either a general or selective tender.
Tenders are evaluated in accordance with the criteria, as appropriate from time to time, provided to tenderers. Tenders are not assessed solely on the basis of price, but on a number of issues such as:
- skills and knowledge of the team proposed to do the work;
- quality of work;
- independence of the audit firm;
- lead signing partner and independent review partner rotation and succession planning;
- value for money; and
- ethical behaviour and fair dealing.
2. Appointment of external auditor
Through the tendering process the Audit Committee identifies and recommends an appropriate external auditor for appointment by the Board and by Shareholders at a general meeting. The appointment is made in writing.
3. Rotation of external audit partners
The external auditor is required to rotate its audit partners so that no partner of the external auditor is in a position of responsibility in relation to Macmahon’s accounts for a period of more than five consecutive years. Further, once rotated off Macmahon’s accounts, no partner of the external auditor may assume any responsibility in relation to Macmahon’s accounts for a period of two consecutive years. This requires succession planning on the part of the external auditor, a process in which the Audit Committee is involved.
4. Written statement by Chief Executive Officer and Chief Financial Officer
The Chief Executive Officer and the Chief Financial Officer provide a written statement to the Board each half and full year confirming that the financial records of the Company for the financial year have been properly maintained, and that the Company’s financial reports for the financial year comply with accounting standards and present a true and fair view of the Company’s financial condition and operational results.
5. Internal and third party audits
Internal audits and third party audits covering financial and operational aspects of the Company’s activities are conducted throughout the year.
Principle 5: Make timely and balanced disclosure
Companies should promote timely and balanced disclosure of all material matters concerning the company.
Recommendation 5.1: Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.
The Company's Continuous Disclosure Policy, which is available on the Company's website, is attached as Annexure F. This Policy sets out the Company’s procedures to enable accurate, timely, clear and adequate disclosure to the market in accordance with the ASX Listing Rules.
Recommendation 5.2: Companies should provide the information indicated in the Guide to reporting on Principle 5.
The Company makes the relevant material available in the Corporate Governance Statement within its Annual Report and on its website, in accordance with this recommendation.
Principle 6: Respect the rights of shareholders
Companies should respect the rights of shareholders and facilitate the effective exercise of those rights.
Recommendation 6.1: Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.
The Company's Investor Communications Policy is as follows.
1. General Approach
Macmahon will communicate all major activities affecting operations to investors through the Annual Report, half-year and full year results announcements, formal disclosures to the ASX (i.e. company announcements), letters to Shareholders when appropriate, the Company website and at the Annual General Meeting (“AGM”). The AGM also provides an important opportunity for investors to ask questions, express views and respond to Board proposals.
Periodical reviews of communication systems to take advantage of new technologies may further enhance Macmahon’s ability to communication effectively with its investors. Macmahon will endeavour to provide advance notification of group briefings and make them widely accessible, including through the use of webcasting or conference calls where possible. Macmahon will also keep a summary record for internal use of the issues discussed at briefings as well as a record of those present, and the time and place of the briefing.
2. Company Announcements
Macmahon will endeavour to post all announcements made to the ASX on its website on the day the announcement is made. This includes all announcements made under Macmahon’s Continuous Disclosure Policy and all presentations to analysts.
Where Macmahon is unable to place an announcement on its website on the same day that the announcement is made, Macmahon will endeavour to post the announcement on its website as soon as is reasonably practicable thereafter.
3. Notices of Meeting and Explanatory Information
Macmahon posts the full text of each Notice of Meeting (including any accompanying explanatory information) on its website at the time the Notice is sent to Shareholders.
4. Historical Information
Macmahon will ensure that the above information is posted and maintained on its website for at least three years from the date of release.
5. Notices of Meeting
Macmahon prepares its notices of meeting by utilising plain English and using a structure and format that is readable and ensures ease of understanding for Shareholders.
Recommendation 6.2: Companies should provide the information indicated in the Guide to reporting on Principle 6.
The Company makes the relevant material available in the Corporate Governance Statement in its Annual Report and on its website, in accordance with this recommendation.
Principle 7: Recognise and Manage risk
Companies should establish a sound system of risk oversight and management and internal control.
Recommendation 7.1: Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.
The Company has established and disclosed (on its website) its Risk Management Policy in accordance with this recommendation. The Risk Management Policy is attached as Annexure G. The Board is responsible for the Company’s system of internal controls relating to the operational, administrative and financial aspects of the Company’s activities. The Board oversees the establishment, implementation and monitoring of the Company’s risk management system. Implementation of the risk management system and day-to-day management of risk is the responsibility of the Chief Executive Officer, with the assistance of senior management, as required.
In addition to this the Board has established a Corporate Governance Committee. The responsibilities of the Corporate Governance Committee are set out in the Corporate Governance Charter as disclosed on the Company’s website and attached as Annexure H.
Recommendation 7.2: The board should require management to design and implement the risk management and internal control system to manage the company's material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company's management of its material business risks.
The Board has established a risk management system under which management monitors risks throughout the Company with significant risks being reported to the Board.
The Chief Executive Officer is to report to the Board as to the effectiveness of the Company's management of its material business risks regularly in accordance with the Risk Management Policy.
Recommendation 7.3: The Board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
The Chief Executive Officer and Chief Financial Officer confirm in writing to the Board annually that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal compliance and control systems which, in all material respects, implement the policies which have been adopted by the Board either directly or through delegation to senior executives and that the such systems are operating effectively and efficiently in all material respects in relation to financial reporting risks.
Recommendation 7.4: Companies should provide the information indicated in the Guide to reporting on Principle 7.
The Company makes the relevant material available in the Corporate Governance Statement within its Annual Report and on its website, in accordance with this recommendation.
Principle 8: Remunerate fairly and responsibly
Companies should ensure that the level and composition of
remuneration is sufficient and reasonable and that its relationship
to performance is clear.
Recommendation 8.1: The board should establish a remuneration committee.
The Board has established a Remuneration & Nomination Committee. The responsibilities of the Remuneration & Nomination Committee are set out in the Company's Remuneration & Nomination Committee Charter as disclosed on the Company’s website and attached as Annexure K.
Recommendation 8.2: The remuneration committee should be structured so that it consists of a majority of independent directors, is chaired by an independent chair, and has at least three members.
The Remuneration & Nomination Committee established by the Board is structured in such a way as to meet compliance with this recommendation wherever possible. Any derivation from this recommendation will be highlighted in the Company’s Annual Report.
Recommendation 8.3: Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.
The Company remunerates its directors and senior executives in accordance with this Recommendation.
The Company's Senior Executives Remuneration Policy is attached as Annexure I.
The Company's Non-Executive Directors Remuneration Policy is attached as Annexure J.
Recommendation 8.4: Companies should provide the information indicated in the Guide to reporting on Principle 8.
The Company makes the relevant material available in the Corporate Governance Statement within its Annual Report and on its website, in accordance with this recommendation.