1. Board of Directors

1.1      Role and responsibilities

Transfield Services’ Board of Directors (Board) is responsible for the Company’s performance and strategic direction, with the aim of protecting and enhancing shareholder value.

The Board Charter outlines the Board’s role, responsibilities and internal procedures. In summary, specific responsibilities of the Board include:

  • Overseeing the Company’s financial integrity, including approving statutory accounts and directors’ reports, monitoring financial performance, approving major borrowings or giving security over assets, and approving the appointment of the internal and external auditor.
  • Reviewing and approving business strategy, including approving the Company budget and strategic plans, assessing performance against approved strategies and continued suitability and sustainability of strategies and considering management recommendations on proposed mergers, acquisitions, divestments and capital management.
  • Monitoring the identification and management of business risks, including approving material policies for management of business risks and oversight of management of these risks.
  • Ensuring effective legal compliance, including monitoring compliance with law and the Company’s contractual obligations, ensuring that an appropriately informed market exists at all times in respect of the Company and ensuring that robust ethical standards are maintained by the Company and that the ‘tone at the top’ is set by the Board and senior executives.
  • Ensuring effective governance, including ensuring that the Company maintains appropriate corporate governance practices and overseeing compliance with such practices, and monitoring compliance with major policies and the Code of Business Conduct.
  • Making key human resources and remuneration strategy decisions, including approving the appointment and removal of the Managing Director and Chief Executive Officer (MD/CEO) and senior executives, evaluating their performance, determining their fair and responsible remuneration and monitoring their succession planning and monitoring the balance of skills, expertise and experience on the Board, and where appropriate, selecting new directors for the approval of shareholders.

The Board has delegated specific authority to the MD/CEO. Transactions outside the delegated authority framework must be presented to the Board for approval.

The delegated authority framework is embedded within the Board-approved risk appetite statement for the Company, which sets the foundation for an appropriate risk culture within the Company. A summary of the delegated authority framework is available on the Transfield Services website.  

The Board meets as frequently as required, but not less than six times a year.  This year, key activities for the Board included:

  • considering and approving the Company’s strategic plan and budget
  • reviewing and approving the Company’s actions arising out of TSI Fund’s capital structure review
  • considering and approving a Share Purchase Plan, following requests from retail shareholders
  • overseeing the issue of US$170 million in the US private debt market as part of ongoing prudent capital management initiatives, and
  • overseeing continued Board renewal.

1.2      Board composition and independence

The directors are profiled on pages 14 and 15 of this annual report. Their skills, knowledge, perspective and experience are appropriate to ensure the effective performance of Transfield Services and to address current and emerging industry issues.

The Board comprises eight directors – seven non-executive directors, five of whom are independent and the MD/CEO. The roles of Chairman and MD/CEO are separate. The Chairman is responsible for the leadership of the Board. The Company considers the Chairman to be independent in accordance with the definition of independence contained in the Board Charter.

The Board Charter, guided by the characteristics of independence promoted by the ASX Principles and Recommendations, requires all directors to exercise independent and informed judgment. A key factor in the assessment of independence is whether the director brings an enquiring, open and independent mind to Board meetings, listens to the debate on each issue, considers the arguments for and against each decision and ultimately reaches a decision that he or she believes is in the best interests of the Company.To this end, the Charter facilitates directors having access, where necessary, to independent, external and professional advice at the Company’s expense. Directors also have access to the Chief Risk and Legal Officer/Company Secretary and senior executives for information and support to assist in making informed decisions.

As a guide, the Company considers that where a director’s interest or relationship exceeds a materiality threshold of 10 per cent of revenue, it may be deemed material, depending on the circumstances. The Company reviews directors’ independence on an ongoing basis.

The non-executive directors are all independent, except Guido Belgiorno-Nettis AM and Luca Belgiorno-Nettis AM, who are directors of the founding shareholder Transfield (TSL) Pty Limited, which is part of the Transfield Holdings Group. 

The Chairman, Anthony Shepherd, is continuing his oversight of the Board renewal process to ensure that the composition of the Board reflects industry and market expectations of responsible governance. This financial year, Jagjeet Bindra and Douglas Snedden were appointed as new directors, and Professor Stephen Burdon retired from the Board in July 2010.

Anthony Shepherd is Chairman of ConnectEast Group, which has commercial relationships with the Company. However, this relationship is not considered material. 

1.3    Directors’ terms of appointment and induction

Directors are appointed to the Board on the following terms:

  • the terms of appointment are agreed as part of such appointment, although every three years, a third of directors must retire and, if applicable, offer themselves for re-election
  • directors will not usually serve more than 10 years except in special circumstances, as the Board may determine
  • directors are expected to be available to fulfil their obligations as directors as and when required, and
  • directors will comply with the powers and duties of directors set out in the Company’s constitution, Board and Committee Charters and the Corporations Act.

New directors and new senior executives take part in an induction program as an introduction to the Company’s vision, values and functions, as well as its systems, processes and key contacts. The program provides resources to allow directors and senior executives to participate in the Company’s operations at the earliest opportunity.

1.4    Board performance review

Board, committee and director performance is reviewed internally on an annual basis, with an external review undertaken every three years. The internal review process seeks anonymous responses from directors on elements of Board effectiveness, including:

  • Board composition and responsibilities
  • Board meetings and decision-making
  • Board committees
  • Chairman’s role
  • strategic planning and budgeting
  • relationship with management, and
  • evaluation and remuneration of directors and management.

Since the last external Board performance review was undertaken in 2007, the Chairman has commenced preparations for engaging an independent advisory body to conduct a review in 2010.

The Chairman, on behalf of the Board, has also recently completed a 360° review with the MD/CEO. This review has highlighted the successful accession to the role of the MD/CEO in the eyes of the Board, the senior executive team and investors.