Principle 2: Structure the board to add value
Companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.
• Composition
• Board independence
• Independent professional advice
• Appointment
• Board performance
• Compliance Committee performance
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Composition
There are currently five Directors of CMIL, three of whom are independent Directors. Details of their experience, qualifications and committee membership are set out below.
| Richard Michael Haddock AM – Chairman, Independent non-executive Director, Commonwealth Managed Investments Limited |
| Director since 1 January 2009 |
| Term in office – 2 years 7 months as at 16 August 20111 |
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Mr Richard Haddock has had a long career in financial services and was Deputy General Manager, Australia at BNP Paribas, Sydney from 1988-2001. Mr Haddock is a fellow of the Australian Institute of Management, the Financial Services Institute of Australia and the Australian Institute of Company Directors plus a member of the Law Society of NSW and the Commercial Law Association.
Mr Haddock is currently a Director and Chairman of the Audit Committee of Tishman Speyer Australia Ltd, a Director of Retirement Villages Group Fund, the Honorary Treasurer and a National Director of Caritas Australia, the Chairman of Catholic Care, the Chairman of the Catholic Superannuation and Retirement Fund and a Director of Catholic Church Insurances Ltd. |
| James Frederick Kropp – Independent non-executive Director, Commonwealth Managed Investments Limited |
| Director since 22 December 2003 |
| Term in office – 7 years 7 months as at 16 August 20111 |
| Mr Kropp was a senior audit and risk management consulting partner in the Sydney office of PricewaterhouseCoopers for over 18 years, retiring from the practice in December 1999. Mr Kropp is a Fellow of CPA Australia and was National President in 1995-96. Mr Kropp is Chairman of CMIL’s Audit Committee. Other positions that Mr Kropp currently holds include: a director of the Royal Institute for Deaf and Blind Children, a director of Colonial First State Capital Management Pty Limited and a director of Colonial First State Loan Note Issuer Pty Limited.
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| Nancy Milne OAM – Independent non-executive Director, Commonwealth Managed Investments Limited |
| Director since 1 January 2009 |
| Term in office – 2 years 7 months as at 16 August 20111 |
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Ms Nancy Milne is a lawyer with over 20 years experience, with primary areas of legal expertise in insurance and reinsurance, risk management, corporate governance and professional negligence. Ms Milne was a Partner at Clayton Utz until 2003 and is a member of the Australian Institute of Company Directors.
Ms Milne is currently a director of Australand Holdings Limited; the Chair of Securities Exchanges Guarantee Corporation Limited; a director of The Colonial Mutual Life Assurance Society Limited (and a member of the Board Audit and Risk Committee); a director of Commonwealth Insurance Limited (and a member of the Board Audit and Risk Committee); a director of Australian International Disputes Centre Limited; and a director of Montessori Children's Foundation. Ms Milne is also a consultant with Clayton Utz.
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| Ross Griffiths - Non-Exectuive Director, Commonwealth Managed Investments Limited |
| Director since 23 April 2012 |
Ross was appointed as the Commonwealth Bank’s Chief Credit Officer in 2008 having joined the Commonwealth Bank Group in 1986.
Prior to this, Ross was employed by Price Waterhouse for over 15 years during which time he was exposed to a wide variety of business enterprises.
Ross has a Bachelor of Business (Accounting) from the Swinburne University of Technology and a Masters of Business Administration from Macquarie University. Ross is a Fellow of the Institute of Chartered Accountants in Australia.
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| Michael John Venter – Executive Director, Commonwealth Managed Investments Limited |
| Director since 13 November 2006 (Non-Executive from November 2006 - May 2011; Executive from May 2011) |
| Term in office – 4 years 9 months as at 16 August 20111 |
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Mr Venter was appointed the to the role of Chief Financial Officer of the Commonwealth Bank's Wealth Management business unit in May 2011. Mr Venter was previously the Executive General Manager of Group Finance for the Bank.
Mr Venter has been with the Bank since January 2004. After Mr Venter's transfer to his new role in the Commonwealth Bank's Wealth Management Business Unit he is now considered to be an Executive Director as he will be involved in the management of the Trust.
Mr Venter holds post graduate accounting qualifications and is a member of the Institute of Chartered Accountants.
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1 Date of annual report
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Board independence
All the current Directors who are not senior executives of the Bank have been assessed as Independent Directors.
In reaching that determination, the Board has taken into account:
• the specific disclosures, made in accordance with the Act, by each such Director in respect of any material contract or relationship
• where applicable, the related party dealings referable to each such Director, noting that those dealings are not material under accounting standards. Full details of related party dealings are set out in the notes to the Fund’s financial statements as required by law
• that no such non-executive Director is, or is associated directly with, a substantial unitholder of the Trust or substantial shareholder of the Bank
• that no such non-executive Director has ever been employed by the Bank or any of its subsidiaries
• that no such non-executive Director is, or is associated with, a supplier, professional adviser, consultant to or customer of CMIL or the Bank which is material under accounting standards, and
• that no such non-executive Director personally carries on any other role for CMIL or the Bank which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act as a Director of CMIL and in the best interests of unitholders.
Under the accounting standards, a matter is considered to be material if it is equal to or greater than 10% of the appropriate base amount.
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Independent professional advice
Procedures, agreed by the Board, are in place, whereby the Directors may seek independent professional advice, at the expense of the Responsible Entity, to assist them in carrying out their duties as Directors.
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Appointment
The appointment of independent Directors to the Board of CMIL is made by the Board Performance and Renewal Committee of the Bank, CMIL’s parent entity.
Details of the Bank's Board Performance and Renewal Committee can be found at the Corporate Governance section of the Bank’s website.
These appointments are made upon the recommendation of the Bank’s Chief Executive Officer, having regard to a range of criteria, the skills and experience of the nominee and the business of the company.
A formal letter of appointment is issued to the successful nominee. Remuneration is agreed by the Bank, in consultation with the successful nominee. The Bank pays the remuneration of the independent Directors.
The renewal of an appointment is considered by the Bank’s Board Performance and Renewal Committee.
The senior executives of the Bank serving as CMIL Directors are appointed by the Bank having regard to their level of skill, experience and knowledge. They are not remunerated for their duties as Directors of CMIL.
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Board performance
The composition of all major wholly owned subsidiary companies of the Bank, including CMIL, is reviewed annually by the Board Performance and Renewal Committee of the Bank. The Committee operates in accordance with a charter and comprises three independent Directors of the Bank.
This Committee is responsible for critically reviewing, at least annually, the composition and effectiveness of the CMIL Board, both individually and as a whole, and seeks to identify where improvement might be made and to assess the quality and effectiveness of information that is provided to the CMIL Directors.
As a wholly owned subsidiary of the Bank, CMIL does not have its own People and Remuneration Committee.
To facilitate optimal performance, the CMIL Board participates in professional development programs, including those facilitated by the Bank and those arranged directly for it. All Directors receive a detailed information pack and training in the requirements of the Act as it pertains to Directors, and the program is updated to capture specific issues of relevance from time to time.
The CMIL Board also undertakes an annual self assessment of the performance of the Board and individual Directors, facilitated by the Secretariat. The review is conducted in-house by questionnaire and includes confidential discussions with individual Directors. The results of these discussions are reviewed by the CMIL Board, and the last assessment undertaken was conducted in accordance with this process during the 2010-11 financial year.
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Compliance Committee performance
At least annually, the CMIL Board considers the performance of the Compliance Committee, with a view to identifying areas for improvement and to assess the quality and effectiveness of information it is receiving. The Board undertakes this review at both an individual level and the Committee as a whole.
