Corporate Governance
This Statement outlines the main corporate governance principles and practices of Espreon Limited. Unless otherwise stated, these comply with the ASX Corporate Governance Council's Principles of good Corporate Governance and Best Practice Recommendations (ASX Principles) released in March 2003.
1. Role of the Board and ManagementThe Board's main role is to protect and maintain long-term shareholder value and exercise responsibility for the overall corporate governance of Espreon Limited.
The objective of Espreon Limited's existing governance framework is to allow the Board to:
- Provide strategic direction for the Company and effective oversight of management
- Facilitate accountability to our shareholders through clearly defined roles and responsibilities for the Board and management.
Responsibilities of the BoardThe responsibilities of the Board can be summarized as follows:
- Establish a strategic plan and goals for the Company
- Monitor the performance of management against these goals
- Ensure that the company has adequate reporting systems and internal controls
- Establish criteria for Board membership, review Board membership, identify and nominate Directors for shareholder consideration and appoint and remove the Managing Director
- Establish and monitor policies to ensure that the company complies with all applicable laws and regulations
- Appoint and determine an appropriate remuneration package for the Managing Director and provide guidance on the appointment and remuneration of other senior management
- Adopt clearly defined delegations for the Managing Director
- Ensure that satisfactory arrangements are in place for auditing the company's financial affairs and that the scope of the external audit is adequate
- Ensure that a sound system of risk oversight and management is established
- Adopt an annual budget for the financial performance of the company and monitor results on a monthly basis
- Agree on performance indicators with senior management.
Responsibility of ManagementThe Board has delegated responsibility for management to the Managing Director and the senior executive team. The Managing Director is accountable to the Board for all authority delegated to the senior executive team.
The Directors have adopted a Charter for the Board, which sets out the responsibilities of the Board those matters reserved for the Board and those delegated to management. A copy of the Board Charter is available here.
2. Board Structure
Board of Directors
The names of the Directors in office at the date of this Statement together with details of their skills, experience and expertise, the date of their appointment to the Board and the board's determination of their independent status, are disclosed in the Annual Report.
Majority of Independent Non-executive DirectorsThe ASX Principles include a definition of independence and recommend that the Chairman and a majority of the Board should be independent.
The Board currently consists of five Directors, comprising four Non-executive Directors and one Executive Director (the Managing Director). The Non-executive Directors are independent in accordance with the definition of independence contained in the ASX Principles. The Board composition currently complies with this ASX Principle.
Directors are required to disclose any conflicts of interest and to abstain from participating in any discussion or voting on matters in which they have a material personal interest. With prior consent of the Chairman, individual directors may seek independent professional advice at the expense of the Company. Any advice obtained must be made available to all Directors.
No Director has a fixed term of office, however, under the Company's constitution, one third of the Directors, excluding the Managing Director, must retire each year by rotation.
Independent ChairmanThe Chairman is an independent Non-executive Director in accordance with the definition of independence contained in the ASX Principles.
Role of the Chairman and Managing DirectorThe same individual does not exercise the roles of Chairman and Managing Director.
Board CommitteesThe Board has two formal committees, the Audit and Risk Committee and the Remuneration and Nomination Committee Each Committee operates under a formal charter, copies of which are available here. These charters set out the authority under which each Committee operates and the responsibilities as delegated by the Board to them. Each meeting of the Committees is convened on the same principles as those that apply to the Board. Details of Board and Board Committee meetings held during the year and attendance at those meetings are set out in the Directors' Report.
Nomination of DirectorsIn its nomination role, the Remuneration and Nomination Committee assists and advises the Board on its composition and succession planning. Its responsibilities are summarised as follows:
- Assessment of the necessary and desirable competencies of Board members;
- Review Board succession plans;
- Identification and screening of candidates for election or appointment to the Board; and
- Initiate through the Chairman, a review of Board and individual director performance on at least a bi-annual basis.
The names and qualifications of those appointed to the Committee and their attendance at meetings of the Committee are disclosed in the Annual Report.
3. Ethical and Responsible Decision Making
Ethical Business Behaviour
Espreon Limited is steadfast in preserving high ethical standards and the promotion of responsible decision making. To help achieve these objectives, the Board has established a Board Charter and a Code of Conduct. Copies of these are available here.
Dealing in Company SharesThe company has in place a Trading Policy, which sets out a procedure for Directors, officers and staff members dealing in the company's securities. The company's Constitution permits Directors, officers and staff members to acquire shares in the Company.
This policy allows Directors, officers and staff members to deal in Company shares only:
- For 45 days immediately after the announcement of the Company's half-yearly results;
- For 45 days immediately after the announcement of the Company's full year results;
- For other specific periods for which approval:
(i) from the Board is obtained in the form of a Board resolution - for Directors, and
(ii) from the Managing Director and the Chairman is obtained - for officers and staff members.
The Board can order the suspension of trading activities at any time during the trading windows if they believe that the Directors, officers or staff members are in possession of price sensitive information not yet announced to the market. A copy of the Trading Policy is available here.
4. Integrity in Financial Reporting
Audit and Risk Committee
The objective of the Audit and Risk Committee is to assist the Board in fulfilling its responsibilities relating to the accounting and financial reporting practices of the Company and to monitor compliance with the Company's various statutory and constitutional obligations. The Committee consists only of independent Non-executive Directors. It is responsible for establishing and maintaining an appropriate framework of internal control. The functions of the Committee include:
- Review reports prepared by the external auditors, liaising with the external auditors and ensuring that the annual audit and half-yearly review are conducted in an effective manner
- Review internal controls and recommending enhancements
- Monitor compliance with the Corporations Act, Stock Exchange Listing Rules and oversee matters relating to taxation and other regulatory authorities
- Monitor the accounting function
- Nominate external auditors
- Oversee the financial reporting process.
The names and qualifications of those appointed to the Committee and their attendance at meetings of the committee are included in the Annual Report.
Representations by the Managing Director and the Chief Financial OfficerThe Managing Director and the Chief Financial Officer provide a representation letter to the Board for the half year and full year financial statements whereby they certify that the Company's financial reports present a true and fair view of the results and the financial position of the Company and are in accordance with applicable accounting standards.
5. Continuous DisclosureThe Board recognizes the significance of relevant and timely disclosure of market-sensitive information and has adopted a Market Disclosure Policy, a copy of which is available here. The underlying purpose of this policy is to make explicit the Board's commitment to the disclosure of relevant and timely information to all market participants and stakeholders. The Company complies with the Australian Stock Exchange Listing Rules on Continuous Disclosure.
6. Shareholder CommunicationThe Directors recognize that for shareholders of Espreon Limited to be able to make informed decisions regarding their investment and effectively partake in general meetings, they need relevant and timely information. The Board has adopted a Shareholder Communications Policy a copy of which is available here.
7. Risk ManagementThe Board has put into place a procedure for ensuring that business risk management, assurance, financial and internal control frameworks are in operation. It manages risk through the Audit and Risk Committee. The risk management and internal control elements are defined in the Committee Charter, a copy of which is available here.
In its Risk role, the Audit and Risk Committee assists the Board in reviewing the efficiency and effectiveness of the Company's risk management and compliance environment. The primary responsibilities of the Committee are to:
- Establish appropriate risk management policies and procedures relevant to managing the underlying risks of the business;
- Communicate the risk management processes to those responsible for implementing them;
- Ensure relevant staff education and awareness of the risk process; and
- Receive regular reports on risk management from those staff responsible within the reporting framework.
8. Enhanced Performance EncouragedThe Directors recognize the necessity for the performance of the Board, its Committees, individual Directors and senior management to be regularly evaluated. It manages performance in these areas through the Remuneration and Nomination Committee. The performance appraisal policy is defined in the Committee Charter, a copy of which is available here.
9. Fair and Responsible Remuneration
Remuneration and Nomination Committee
In its Remuneration role, the Committee reviews and recommends to the Board the remuneration policies of the Company, including the basis for setting fees for non-executive directors within the limit fixed by shareholders in general meeting, and the remuneration packages of the Managing Director and senior executives, as well as any incentive schemes. There are no schemes for retirement benefits other than statutory superannuation for Non-executive Directors. The names and qualifications of those appointed to the Committee and their attendance at meetings of the committee are included in the Directors' Report.
The Board's Remuneration and Nomination Committee considers the remuneration of the Directors and senior executives annually on an individual basis after considering market information. The total allowable remuneration of Non-executive Directors is fixed by shareholders in general meetings.
Remuneration PolicyRemuneration policy is designed to be market competitive and to incorporate incentives that align executive focus with shareholder interests. The policy sets the framework within which the terms and conditions for the Managing Director and senior executives are determined and was developed by the Remuneration and Nomination Committee. The Remuneration and Nomination Committee reviews executive packages annually by reference to company performance, executive performance, market practice and appropriate independent advice. The performance of executives is measured against various criteria agreed annually. The policy is designed to attract the highest calibre executives and reward them for performance, which results in long-term growth in shareholder value.
The amount of remuneration for all Directors and the five highest paid continuing executives, including all monetary and non-monetary components, is detailed in the Directors' Report. All remuneration paid to executives is valued at the cost to the company and, with the exception of share base payments, expensed. Options, for the purpose of disclosure in the Directors' Report, are valued using either the Black-Scholes or a modified version of the binomial methodology.
The payment of bonuses, share rights and other incentive arrangements are reviewed by the remuneration committee annually as part of the review of executive remuneration and a recommendation is put to the board for approval. All bonuses, share rights and incentives are linked to predetermined performance criteria. The Board can exercise its discretion in relation to approving incentives, bonuses and rights to shares. Any changes must be ratified by reference to measurable performance criteria.
Shareholders approved an Employee Share Purchase Plan and an executive Long Term Incentive Plan at the Annual General Meeting held 16 November 2004, which replaced the previous incentive plan, the Employee Share Option Plan.
10. Legitimate Interests of Stakeholders RecognisedEspreon Limited is committed to maintaining high ethical standards in its internal operations and its interaction with shareholders, investors, clients, stakeholders and regulatory bodies. To support this commitment, the Board has established a Code of Conduct, which has the aim of ensuring a high standard of business behaviour with all employees having an obligation to treat others with fairness, honesty and respect. A copy of the Code is available here.
DocumentsAs these are pdf files, you will need to have Adobe Acrobat Reader installed on your computer. If you do not have Adobe Acrobat Reader, you can download it here.
Board Charter
Audit and Risk Committee Charter
Remuneration and Nomination Committee Charter
Code of Conduct
Share Trading Policy
Market Disclosure Policy
Shareholder Communication Policy
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