The Stockland Board takes its governance responsibilities very seriously and believes it has the necessary mix of experience and skills to oversee the high standard of corporate governance, integrity and accountability required of a professional and ethical organisation.
The Board believes that Stockland’s governance accords fully with the principles and recommendations of the ASX Corporate Governance Council as summarised in our corporate governance statement at www.stockland.com.au/about-stockland/corporate-governance.
The Board has overall responsibility for the good governance of Stockland. The Board:
The Board has delegated responsibility to the Managing Director to manage Stockland’s business and to its various Board Committees to oversee specific areas of governance. Delegated responsibilities are regularly reviewed and the Managing Director regularly consults with the Board on Stockland’s performance. Matters which are not specifically delegated to the Managing Director require Board approval, including capital expenditure decisions above delegated levels, expenditure outside the ordinary course of business, major acquisitions and sales, changes to corporate strategy, the issue of equity or debt by Stockland and key risk management and accounting policies. The Company Secretary is directly accountable to the Board through the Chairman on all matters to do with the proper functioning of the Board.
The Board aims to ensure that its securityholders are kept well-informed of all major developments and business events that are likely to materially affect Stockland’s operations and financial standing and the market price of its securities. Further information in relation to communication with Stockland’s securityholders is located on the Stockland website at www.stockland.com.au/about-stockland/corporate-governance.
Stockland’s Directors, management and employees are required to maintain high ethical standards of conduct. Stockland’s Code of Conduct and Ethical Behaviour (the Code) is periodically reviewed and endorsed by the Board and covers dealings with both external parties and internal operations. Further information in relation to the Code is located on the Stockland website at www.stockland.com.au/about-stockland/corporate-governance.
Stockland is committed to having a Board whose members have the capacity to act independently of management, and have the collective skills and diversity of experience necessary to optimise the long-term financial performance of Stockland so as to sustain superior returns to securityholders.
The Board recognises the advantage of having a mix of relevant business, executive and professional experience on the Board, the importance of cultural and ethical values, and the benefits of diversity, including gender diversity. The Board has identified a range of core skills and experience that will assist the Board collectively to fulfil its oversight role effectively. These include experience with property investment and management, property and community development, construction and project management, retailing and consumer marketing, industrial supply chain logistics, funds management, banking and finance, government and regulatory relations and environmental, social and governance matters. It is also advantageous for some Board members to have experience in the audit and risk management field, people management and executive remuneration. The Board believes that the core skills of importance to Stockland are well represented among the current Directors. In addition, most Directors have occupied senior executive management positions in large corporations both in Australia and globally, including CEO and CFO positions, covering a wide range of industry sectors or have held senior positions in relevant finance and accounting disciplines.
The Board also believes that it is important to maintain a range of director tenures to facilitate orderly Board renewal while maintaining valuable continuity and corporate knowledge among Directors. As at 30 June 2016, the Board comprised one Executive Director and eight Non-Executive Directors. Of the nine Directors, including the Managing Director, five had tenure of less than six years, two had tenure of between six and nine years and two had served for more than nine years. The Board also values the importance of diversity; currently three of the eight Non-Executive Directors are women and three of the last six Director appointments have been women.
Mr Stephen Newton joined the Board on 20 June 2016. Mr Newton has deep experience across real estate development, property management and infrastructure investment gained during almost 23 years with Lend Lease Corporation and more than 13 years as a Principal of investment management and capital advisory business, Arcadia Funds Management. It was also announced in June 2016 that Mr Peter Scott would retire from the Board in August 2016. These changes reflect the ongoing succession planning and renewal program for the Board.
Where a Board vacancy occurs or whenever it is considered that the Board would benefit from the services of an additional director, the Board identifies the skills and experience it seeks to complement the competencies of continuing Directors. In defining the Board’s requirements for a new director, consideration is given to the skills, professional experience and educational backgrounds of continuing members of the Board, including any identified skills gaps. Criteria used also include consideration of the value of gender diversity on the Board.
To underpin the alignment of Directors and securityholder interests, the Board believes that Directors should hold a meaningful number of Stockland securities. In August 2015 the Board revised its existing policy to increase the minimum number of securities each Non-Executive Director is required to acquire from 10,000 to 40,000 securities within a reasonable time of becoming a Director. The increased minimum roughly equates to one year’s base Board fees. All new Directors will have a period of three years to comply with this policy and any existing Directors who hold less than 40,000 securities will have until 30 June 2018 to comply. Stockland also has a policy regarding the minimum securityholdings for Senior Executives as set out in the Remuneration Report. Both these policies are intended to align the personal financial interests of Directors and Senior Executives with those of securityholders.
Four permanent Board Committees have been established to assist in the execution of the Board’s responsibilities (see below).
The membership and the procedures for the Committee meetings are set out in the Board Committee Charter located, together with the charters for each Board Committee (except the Financial Services Compliance Committee) on the Stockland website at www.stockland.com.au/about-stockland/corporate-governance.
|Human Resources Committee||
The Human Resources Committee incorporates the functions of two Board Committees recommended by the ASX Guidelines: a Nominations Committee and a Remuneration Committee. The Human Resources Committee seeks to ensure that there is a strong link between employee reward, Stockland’s performance and ultimately securityholder returns. The Human Resources Committee also seeks to ensure that remuneration for Non-Executive Directors is designed to attract and retain talented and experienced individuals. Refer to the Remuneration Report on pages 35 to 49 of our FY16 Financial Report for further information.
The Board has delegated oversight for the preparation of Stockland’s financial reports and the maintenance of a sound financial reporting control environment to the Audit Committee. The Audit Committee works in conjunction with the Sustainability Committee, Human Resources Committee and Risk Committee to assist the Board in fulfilling its responsibilities for ensuring Stockland has adopted and maintains appropriate corporate governance procedures. From February 2016 the responsibilities of the Financial Services Compliance Committee were incorporated into the Audit Committee.
The Board as a whole is ultimately responsible for the sound management of risk and compliance across the organisation. The purpose of the Risk Committee is to assist the Board to fulfil its risk governance responsibilities. The Risk Committee provides a board-level forum to oversee Stockland’s risk culture and review the effectiveness of risk identification and management including the structures, processes and management systems within Stockland’s overall risk management framework.
Stockland recognises that a sustainable future for its business depends upon the sustainability of the communities, economy and society in which it operates. The purpose of the Sustainability Committee is to consider the social, environmental and ethical impact of Stockland’s business activities; major corporate responsibility and sustainability initiatives and changes in policy; and stakeholder communication about Stockland’s corporate and sustainability policies.
|Financial Services Compliance Committee||
(Incorporated into the Audit Committee from February 2016). The Financial Services Compliance Committee was responsible for monitoring and reviewing the effectiveness of the Compliance Plan in respect of Stockland Trust and its controlled entities and in ensuring adherence to applicable laws and regulations. The Compliance Plan is designed to protect the interests of securityholders. The Compliance Plan for Stockland Trust and its controlled entities has been approved by the Australian Securities and Investments Commission (ASIC). The Financial Services Compliance Committee met regularly and was required to report breaches of the law and Constitution to the Board, which is required to report any material breach of the Compliance Plan to ASIC.
Stockland maintains a Tax Control and Governance Framework, reviewed and approved by the Audit Committee, which outlines the principles governing Stockland’s tax strategy and risk management policy.
Stockland’s Tax Control and Governance Framework is consistent with the guidelines published by the Australian Taxation Office (ATO) regarding tax risk management and governance processes for large business taxpayers.
We undertake a periodic review of the Tax Control and Governance Framework to test the robustness of its design against ATO benchmarks and to demonstrate the operating effectiveness of internal controls to stakeholders.
The key principles of the Stockland Tax Control and Governance Framework are summarised as follows: