Role of the board
The role of the Board of Directors
The Board is accountable for managing the Company on behalf of its shareholders and each Director acts in a way which promotes the long-term success of the Company for the benefit of shareholders as a whole. The Board ensures an appropriate balance between promoting long-term growth and delivering short-term objectives is achieved.
The Board is primarily responsible for: determining strategic direction and demonstrating leadership; focusing on matters that consistently add value for the shareholders of the Company, both present and future; the governance and stewardship of the Group to provide protection and security for the shareholders’ assets; the management of the Group’s employees; setting the Group’s standards and values, and ensuring that its obligations to shareholders and other stakeholders are understood and met. Other key responsibilities of the Board include determining the nature and extent of the principal risks the Group is willing to take to achieve its strategic objectives and maintaining a system of internal control that provides assurance of effective and efficient operations, suitable and sufficient financial controls and compliance with laws and regulations.
The Board currently comprises eight Directors: the Chairman, two executive Directors, four independent non-executive Directors, and one non-independent non-executive Director. Each of the Directors is significantly experienced in areas relevant to our activities. This balance ensures that the interests of particular groups do not dominate decisions and the interests of minority shareholders are protected.
THE ROLE OF THE CHAIRMAN
In addition to being a Board member accountable to the Company, the shareholders and other stakeholders, the key roles and responsibilities of the Chairman include ensuring that:
- the Board and its committees operate efficiently and in accordance with the highest standards of corporate governance;
- the interests of the Company are promoted to secure the Group’s future success with special regard to Group planning and development;
- the Board has strong leadership;
- Board meetings are effective and open and constructive debate is promoted, the view of all Directors are taken into account and adequate time is available for discussion on all agenda items;
- shareholders and the Board receive accurate, relevant, timely and clear information;
- the Nomination Committee is chaired well and an effective and complementary Board is assembled by initiating change and succession planning of Board and Committee members;
- a comprehensive induction programme is put in place for new Directors and that the ongoing development needs of all Directors are identified and met;
- the performance of the Board, its committees and individual Directors is formally evaluated annually, and that an externally facilitated evaluation is performed every three years;
- effective and constructive communication takes place between non-executive Directors and executive Directors and senior management, non-executive Directors hold meetings without the executive Directors being present to discuss any concerns they may have;
- the view of shareholders are regularly sought and understood by the Board; and
- an effective working relationship with the Chief Executive is maintained ensures that the interests of particular groups do not dominate decisions and the interests of minority shareholders are protected.
THE ROLE OF THE CHIEF EXECUTIVE
In addition to being a Board member accountable to the Company, shareholders and other stakeholders, the key roles and responsibilities of the Chief Executive include ensuring that:
- a safety-focused culture is adopted throughout the Group’s operations through which safe working environments are created and maintained and the Group operates in compliance with all relevant health and safety requirements;
- activities are undertaken with special regard to environmental and social concerns in the countries and communities in which the Group operates;
- the management team is led effectively in the day-to-day running of the Group’s business, including chairing meetings of the Executive Committee;
- the Group objectives and strategy are developed in consideration of the Group’s responsibilities to its shareholders, customers, employees and other stakeholders;
- an appropriate organisational structure is establied and maintained to enable the Group’s strategy to be implemented effectively;
- the Group's business is carried out in accordance with agreed plans, strategies and policies;
- appropriate asset base is maintained for the Group to execute its strategy through appropriate investment and divestment;
- effective communication with shareholders and other interested parties is developed and promoted;
- the Group conducts its business in accordance with the legal requirements of the countries in which it operates or, if higher, the Group’s standards;
- staff recruitment and development is effectively planned and carried out to ensure that the Group has the capabilities and resources required to achieve its plans;
- a strong senior management team is established with the knowledge, skills, attitude and motivation to achieve the Group’s objectives and with appropriate succession planning to ensure that this continues in the future;
- an effective framework of internal controls and risk management is developed and maintained;
- the Group’s risk profile is managed in line with what is deemed acceptable by the Board;
- appropriate annual budgets and medium-term financial and production plans are recommended to the Board; and
- the flow of information to the Board is relevant, accurate, timely and clear.
THE ROLE OF THE SENIOR INDEPENDENT DIRECTOR
In addition to being a Board member accountable to the Company, shareholders and other stakeholders, the key roles and responsibilities of the Senior Independent Director include ensuring that:
- acts as a point of contact for shareholders and other stakeholders to discuss matters of concern which would not be appropriate through the normal channels of communication with the Chairman, Chief Executive and Chief Financial Officer. No such matters of concern were raised by shareholders during the year ended 31 December 2015;
- acts as a sounding board for the Chairman and serving as an intermediary for the other Directors when necessary;
- meets with the non-executive Directors (without the Chairman being present) at least annually and leading the Board in the ongoing monitoring and annual performance evaluation of the Chairman;
- monitors the training and development requirements of Directors; and
- is available to meet with a range of major shareholders when requested, to develop a balanced understanding of their issues and concerns and report the outcome of such meetings at subsequent Board meetings.
THE ROLE OF OUR NON-EXECUTIVE DIRECTORS
The non-executive Directors provide a strong independent element to the Board and a solid foundation for good corporate governance. Although all Directors are equally accountable under the law for the stewardship of the Company’s affairs, the non-executive Directors fulfil a vital role in corporate accountability. The non-executive Directors have a responsibility for constructively challenging the strategies proposed by the executive Directors and scrutinising the performance of management in achieving agreed goals and objectives. They also play a key role in the functioning of the Board and its committees. Between them, the current non-executive Directors have the appropriate balance of skills, experience, knowledge and independent judgement to undertake their roles effectively.
It is the Company's policy that at least half the Board, excluding the Chairman, should be independent non-executive Directors.
CHANGES TO CORPORATE GOVERNANCE FROM 1 JANUARY 2018
On 27 April 2017 the Group announced the following changes to the Board with effect from 1 January 2018:
- Simon Heale, the non-executive Chairman of the Company, will retire from the Board having served eleven years with the Company, including five as Chairman
- Oleg Novachuk, Chief Executive Officer, will become Chair
- Andrew Southam, Chief Financial Officer, will be appointed Chief Executive Officer
- Michael Lynch-Bell, Senior Independent Director will be additionally appointed Deputy Chair with responsibility for Board governance matters and to represent the interests of independent shareholders constituting the Group’s majority free float
- A new independent non-executive Director has been appointed
The Board is mindful of the UK Corporate Governance Code’s provisions regarding a Chief Executive Officer going on to become Chair of the same company. However, having consulted with major shareholders, the Board believes that Oleg’s appointment as Chair will allow the Group to continue to benefit from his unique skills, experience and relationships in the region in which the Group operates. In recognition of the need to maintain the Group’s existing high standards of corporate governance the Board will appoint Michael Lynch-Bell, the current senior independent Director, as Deputy Chair with effect from 1 January 2018. The division of responsibilities between the Chair, Deputy Chair and Chief Executive Officer have been clearly defined and approved by the Board. The Chair will lead the Board other than in matters of governance, which will be led by the Deputy Chair. In addition, the Chair will be responsible for the development of strategy, government relations and business development. The Chief Executive Officer will be responsible for the day to day executive management of the Group.
The Deputy Chair role will expand the authority and responsibilities of the senior independent Director. Michael Lynch-Bell will lead on governance issues, including the annual review of Board effectiveness, the leadership of the Nomination Committee and acting as an intermediary between non-executive Directors and the Chair. The Deputy Chair will also provide a point of contact between the Company and independent shareholders who may wish to raise issues with the Board other than through the Chair. Michael has been a Director of KAZ Minerals PLC and chair of the Audit Committee since 2013 and was formerly an audit partner at Ernst and Young, where he worked for over 38 years having developed and later led its global mining practice.
To further strengthen the representation of shareholders, the Group has appointed an additional independent non-executive Director. At all times a majority of the Board will comprise non-executive Directors determined by the Board to be independent.
ARTICLES OF ASSOCIATION OF KAZ MINERALS PLC