Premier Investments Limited
ACN 066 727 966
Corporate Governance Statement
The Board of Premier Investments Limited (“Premier”) is responsible for the corporate governance of the Group. The Board guides and monitors the business of Premier and its subsidiaries on behalf of its shareholders.
To ensure the highest standards of ethical behaviour and accountability, the Board undertook a review of its corporate governance policies and practices (“Governance Review”) after the acquisition of Just Group Limited. The Board completed its review at the end of September 2008, and has implemented significant changes as a result. Premier and its Board are fully committed to achieving and demonstrating the highest standards of accountability and transparency in their reporting and see the continued development of a cohesive set of corporate governance policies and practices as fundamental to Premier’s successful growth.
The Board as part of the Governance Review, has included in its corporate governance policies those matters contained in the Australian Securities Exchange Corporate Governance Council’s Corporate Governance Principles and Recommendations (“ASX Recommendations”) where applicable. However, the Board also recognises that full adoption of the ASX Recommendations may not be practical or provide the optimal result given the particular circumstances of Premier.
This corporate governance statement outlines Premier’s corporate governance policies and practices for the 2007/08 financial year, while highlighting the changes that have been implemented for the 2008/09 financial year as a result of the Governance Review. Premier has elected to make an early transition to the revised ASX Corporate Governance Principles and Recommendations announced by he ASX in August 2007.
1. Principle 1 - Lay solid foundations for management and oversight
1.1 Role of the Board
The Directors are responsible for protecting the rights and interests of Premier, its shareholders and other stakeholders, including creditors and employees.
The Board’s key responsibilities are set out in its Board Charter and include:
- protecting and enhancing the value of the assets of Premier;
- setting strategies, directions and monitoring and reviewing against these strategic objectives;
- overseeing the conduct of Premier’s business in order to evaluate whether Premier is adequately managed;
- identifying, assessing, monitoring and managing risk and identifying material changes in Premier’s risk profile to ensure it can take advantage of potential opportunities while managing potential adverse effects;
- monitoring Premier’s financial results;
- ensuring the significant risks facing Premier have been identified and adequate control monitoring and reporting mechanisms are in place;
- approval of transactions relating to acquisitions, divestments and capital expenditure above delegated authority limits;
- determining Premier’s investment policy;
- approval of financial statement and dividend policy; and
- ensuring responsible corporate governance.
The Board has delegated responsibility for compliance with the ASX’s disclosure requirements and for shareholder communication to the Company Secretary. The Company Secretary uses the ASX and professional legal advice in ensuring compliance with Premier’s obligations with respect to the ASX Listing Rules and Corporate Governance Principles. Premier communicates with shareholders through announcements to the ASX, general meetings of shareholders, the annual report and through written and electronic correspondence from the Company Secretary from time to time.
1.2 Role of Management
During the 2007/08 financial year, Premier did not have a Chief Executive Officer (“CEO”). Premier is actively seeking to appoint a CEO. Until such time as a CEO is appointed, the Board can delegate the responsibilities allocated to the CEO to other persons, such as:
- the Chairman;
- external service providers including, without limitation, Century Plaza Trading Pty Ltd; and
- existing employees of Premier and its subsidiaries.
Under the Premier Board Charter, once appointed, the CEO’s responsibilities will include:
- the day-to-day leadership and management of Premier;
- assisting the board with the strategy and long term direction of Premier;
- managing and overseeing the interfaces between Premier and the public and to act as the principal representative for Premier; and
- to report annually to the Board on succession planning and management development.
The Board will continually evaluate the performance of the CEO once appointed in accordance with the Board Charter. The evaluation is based on criteria that include the performance of the business, the accomplishment of long-term strategic objectives and other non-quantitative objectives established at the beginning of each year.
2. Principle 2 - Structure the Board to add value
The Board of Premier comprises six directors. The members of the Board and their position as at the date of this report are:
Name |
Date Appointed |
Position |
Solomon Lew |
31 March 2008 |
Non-Executive Chairman |
Gary Weiss |
11 March 1994 |
Non-executive director |
Henry Lanzer |
31 March 2008 |
Non-executive director |
Lindsay Fox |
1 April 1987 |
Non-executive director |
Frank Jones |
1 April 1987 |
Non-executive director |
Michael McLeod |
29 August 2002 |
Non-executive director |
Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 1.
2.1 Director Independence
ASX Recommendation 2.1 requires that the Board comprise a majority of independent directors. Directors are assessed as being an independent director where they are independent of management and free of any business or other relationship that could materially interfere with the exercise of their unfettered and independent judgement.
The current structure of the Board does not comply with ASX Recommendation 2.1. During the 2007/08 financial year, there were no independent directors on the Board. Companies associated with Messrs Weiss and Fox are no longer substantial shareholders of Premier. However, Premier has decided to continue to consider Messrs Weiss and Fox as non-independent directors for at least a 12 month period after companies associated with Messrs Weiss and Fox ceased to be substantial shareholders due to the length of time they have served on the Premier Board while associated with substantial shareholders.
The Board is aware of ASX Recommendation 2.1 and is confident that proper processes are in place through its Board Charter to address needs and expectations with respect to decision making and the management of conflicts of interest. The directors on the Board of Premier all add significant value and expertise in a variety of fields. Given Premier’s unique circumstances and history, a majority independent board is not the most appropriate means for achieving Premier’s aims and goals. However, Premier is currently seeking to appoint two independent directors to the Board to enhance the composition of the Board.
2.1 Chairman of the Board
Mr. Lew is Chairman of the Board, which does not comply with ASX Recommendation 2.2 that the chair should be an independent director. The Board believes that Mr. Lew’s position as a director of Premier’s major shareholder, Century Plaza Investments Pty Ltd, does not prevent him from carrying out his responsibilities as Chairman of the Board. Given Mr Lew’s industry experience, skills, expertise and reputation, and his relationship with Premier as its founder, the Board feels that Mr Lew adds most value to the Board as its Chairman and is the most appropriate person for the position.
2.3 Nomination Committee
During the 2007/08 financial year, Premier did not have a Nomination Committee, as recommended by ASX Recommendation 2.4. However, the full Board of Premier undertook all functions, duties and responsibilities that would typically be delegated to such a committee.
On 23 September 2008, and following the Governance Review, Premier established a Remuneration & Nomination Committee. The Remuneration & Nomination Committee will support and advise the Board on the nomination policies and practices of Premier. The Committee is to consist of three members, all of whom are non-executive directors. The nomination purposes of the Committee include:
- reviewing and providing recommendations of plans of succession for executives, non-executive directors and Premier’s Chief Executive Officer (when appointed);
- establishing and maintaining a formal procedure for the selection and appointment of directors to the Board;
- undertaking regular reviews of the structure and size of the Board to ensure that the Board continues to have a mix of skills and experience necessary to conduct Premier’s business and to make any consequential recommendations to the Board; and
- identifying, assessing the suitability of, and investigating the backgrounds of, individuals qualified to become directors and to make recommendations to the Board about potential nominees.
Directors are free to take independent professional advice on matters pertaining to their roles and responsibilities as directors of Premier. Premier may pay the reasonable costs incurred by a director in doing so, provided that before the advice is obtained the director discusses the requirement for the advice with the Chairman.
2.5 Term of office
Premier’s Constitution specifies that all directors must retire from the office at no later than the third annual general meeting following their last election. Where eligible, a director may stand for re-election.
3. Principle 3 - Promote ethical and responsible decision-making
3.1 Code of conduct
The Board insists on the highest ethical standards from all officers and employees of Premier and is vigilant to ensure appropriate corporate professional conduct at all times.
Standards by which all officers, employees and directors are expected to act are contained in the Board Charter and the Premier share trading policy. They include:
- insider trading and employee security trading;
- conflicts of interest; and
- confidentiality and privacy policy.
Just Group Limited also has its own formal code of conduct, outlining the standards by which its employees are expected to act.
ASX Recommendation 3.1 asks that a company also disclose its code of conduct or a summary of that code. Following the Governance Review, Premier is seeking to implement a formal code of conduct. This code will be available on the Premier website once completed.
3.2 Share Trading Policy
Premier has established formal guidelines regarding trading in Premier shares. These guidelines prohibit directors and members of senior management (and their associates) from dealing in Premier’s shares while in possession of price sensitive information. Directors and officers are permitted to buy and sell shares at all times other than when in possession of such information or during:
- the period commencing 1 December and ending 24 hours after the release of Premier’s half year results to the ASX; or
- the period commencing 6 weeks prior to the release of Premier’s year end results to the ASX and ending 24 hours after such release; or
- the period commencing 2 weeks prior to Premier’s Annual General Meeting and ending 24 hours after the Annual General Meeting.
Outside of these periods, directors and members of senior management must advise the Company Secretary of their intention to trade. The Company Secretary will discuss the proposed trading with the Chairman.
4. Principle 4 - Safeguard integrity in financial reporting
4.1 Audit Committee
In accordance with ASX Recommendation 4.1, the Board has established an Audit Committee. The Audit Committee supports and advises the Board in fulfilling its corporate governance and oversight responsibilities in relation to Premier’s financial reporting, internal control structures, ethical standards and risk management framework and systems.
The Committee consists of three members, who as at the date of this report are:
Name |
Date Appointed |
Position in Committee |
Frank Jones |
7 September 1995 |
Chairperson |
Gary Weiss |
7 September 1995 |
Non-executive director |
Lindsay Fox |
31 March 2006 |
Non-executive director |
Details of the respective directors’ qualifications, skills, directorships and experience are set out in the Directors’ Report at page 1.
Following the Governance Review, the Audit Committee has now become the Audit & Risk Committee. This committee’s role and responsibilities, as well as composition, structure and membership requirements is set out in a formal charter approved by the Board, in accordance with ASX Recommendation 4.3. The Audit and Risk Committee’s prime responsibilities under its charter include:
- reviewing the appropriateness of the accounting policies and principles, any changes to those policies and principles and the methods of applying them to ensure that they are in accordance with Premier’s stated financial reporting framework;
- reviewing the nomination, performance, independence and competence of the external auditor;
- meeting periodically with key management, external auditors and compliance staff to understand Premier’s control environment; and
- examining and evaluating the effectiveness of the internal control system with management and external auditors.
The composition of the Audit Committee did not satisfy ASX Recommendation 4.2 during the 2007/08 financial year. While it consists of 3 members, all of whom are non-executive directors, it is not comprised of a majority of independent directors, and the chair of the Committee is also not independent.
Mr Jones has been appointed Chairman of the Audit and Risk Committee as he is considered to be the most qualified and appropriate Director for this role. The Board believes that his role as advisor to the Century Plaza Group of Companies does not affect his ability to discharge his responsibilities as Chairman of the Audit and Risk Committee in an objective and impartial manner. However, Premier is actively seeking to appoint two independent directors to the Board. It is envisaged that ASX Recommendation 4.2 will be followed once further independent directors are appointed.
The Audit & Risk Committee will meet as frequently as required to undertake its role effectively. During the 2007/08 financial year, the former Audit Committee met two times.
The Chief Executive Officer (or the Chairman in the absence of a Chief Executive Officer) is invited to attend each scheduled meeting of the Audit & Risk Committee and a standing invitation will be issued to the external auditors.
Directors who are not members of the Audit and Risk Committee are notified of all meetings and may attend if they wish. Other senior managers and external advisors may also be invited to attend meetings of the Audit and Risk Committee. The Audit and Risk Committee may request management and/or others to provide such input and advice as required.
The Board has received a written statement from the Chief Financial Officer/Company Secretary that Premier’s financial reports present a true and fair view in all material respects of Premier’s financial condition and operational results and in accordance with relevant accounting standards.
5. Principle 5 - Make timely and balanced disclosure
During the 2007/08 financial year, Premier adopted a policy to ensure that it complied with its continuous disclosure obligations under the ASX Listing Rules, the ASX Recommendations and the Corporations Act, and to ensure that all investors have equal and timely access to material and price sensitive information. Following the Governance Review, Premier has formalised that policy in its Board Charter.
6. Principle 6 - Respect the rights of shareholders
Premier endeavours to encourage and promote effective communication with its shareholders, as prescribed by ASX Recommendation 6.1. Premier’s constitution sets out the procedures to be followed regarding:
- the convening of meetings;
- the form and requirements of the notice;
- the chairperson and quorums; and
- the voting procedures, proxies, representations and polls.
Premier’s strategy is to ensure that shareholders, regulators and the wider investment community are informed of all major developments affecting Premier in a timely and effective manner. Information is communicated in a number of ways including:
- annual and half-yearly reports;
- market disclosures in accordance with the continuous disclosure protocol;
- updates on operations and developments;
- announcements on Premier’s website; and
- market briefings and presentations at general meetings.
Shareholders are encouraged to attend and participate at general meetings. To facilitate this, meetings are held during normal business hours and at a place convenient for the greatest possible number of shareholders to attend. Following the Governance Review, the full text of notices and accompanying materials will be included on Premier’s website. Information will be presented in a clear and concise manner designed to provide shareholders and the market with full and accurate information.
7. Principle 7 - Recognise and manage risk
The Board has overall responsibility to ensure that there is a sound system of risk management and internal control across the business. One of the primary responsibilities of the Board is to identify, assess, monitor and manage risk and identify material changes in Premier’s risk profile to ensure Premier can take advantage of potential opportunities while managing potential adverse effects.
7.1 Audit & Risk Committee
Following the Governance Review, the Board has delegated responsibility for the identification, assessment and management of risks relating to both internal and external controls on Premier to the Audit & Risk Committee. The risk management functions of the Audit and Risk Committee include:
- examining and evaluating the effectiveness of the internal control system with management and external auditors;
- assessing existing controls that management has in place for unusual transactions or transactions that may carry more than an accepted level of risk;
- meeting periodically with key management, external auditors and compliance staff to understand Premier’s control environment;
- receiving reports concerning all suspected and actual frauds, thefts and breaches of the law; and
- assessing and ensuring that there are internal processes for determining and managing key areas, such as important judgments and accounting estimates.
7.2 CEO assurance
In the absence of a CEO, the Chief Financial Officer/Company Secretary has provided assurance to the Board 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
- Premier’s risk management system is operating effectively in all material aspects in relation to financial reporting risks.
8.1 Remuneration Committee
During the 2007/08 financial year, Premier did not have a formal remuneration committee in place as recommended by ASX Recommendation 8.1. However, the full Board of Premier undertook all functions, duties and responsibilities that would typically be delegated to such a committee.
On 23 September 2008, Premier implemented a new Remuneration & Nomination Committee. The Remuneration & Nomination Committee will support and advise the Board on the remuneration policies and practices of Premier. The Remuneration and Nomination Committee is to consist of three members, all of whom are non-executive directors. The remuneration purposes of the committee include:
- review and make recommendations to the Board on remuneration packages and policies applicable to senior executives and Directors;
- define levels at which the Chief Executive Officer must make recommendations to the Committee on proposed changes to remuneration and employee benefit policies;
- ensure that remuneration packages and policies attract, retain and motivate high calibre executives; and
- ensure that remuneration policies demonstrate a clear relationship between key executive performance and remuneration.
Name |
Date Appointed |
Position in Committee |
Solomon Lew |
23 September 2008 |
Chairperson |
Henry Lanzer |
23 September 2008 |
Non-executive director |
Gary Weiss |
23 September 2008 |
Non-executive director |