CSL’s Board and management maintain high standards of corporate governance as part of their commitment to maximise shareholder value through promoting effective strategic planning, risk management, transparency and corporate responsibility.This statement outlines the Company’s principal corporate governance practices in place during the financial year. The Board believes that the Company complies with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, released in August 2007 (the Corporate Governance Principles and Recommendations) and the amendments to the Corporate Governance Principles and Recommendations which applied to the financial year ending 30 June 2012.
A checklist summarising the Company’s compliance with the Corporate Governance Principles and Recommendations is available on the Company’s website -
1. The Board of Directors
1.1 The CSL Board Charter
The Board has a formal charter documenting its membership, operating procedures and the allocation of responsibilities between the Board and management.
The Board is responsible for oversight of the management of the Company and providing strategic direction. It monitors operational and financial performance, human resources policies and practices and approves the Company’s budgets and business plans. It is also responsible for overseeing the Company’s risk management, financial reporting and compliance framework.
The Board has delegated the day-to-day management of the Company and the implementation of approved business plans and strategies to the Managing Director, who in turn may further delegate to senior management. In addition, a detailed authorisations policy sets out the decision-making powers which may be exercised at various levels of management.
The Board has delegated specific authority to five Board committees that assist it in discharging its responsibilities by examining various issues and making recommendations to the Board. Those committees are:
- the Nomination Committee;
- the Audit and Risk Management Committee;
- the Human Resources and Remuneration Committee;
- the Innovation and Development Committee; and
- the Securities and Market Disclosure Committee.
Each committee is governed by a charter setting out its composition and responsibilities. A description of each committee and their responsibilities is set out below. The Board also delegates specific responsibilities to ad hoc committees from time to time.
The CSL Board Charter sets guidelines as to the desired term of service of non-executive directors. Non-executive directors should be able to serve for at least eight years, subject to re-election by shareholders. This charter also recognises that whilst board renewal is essential, a mixture of skills and differing periods of service provides for balance and optimal outcomes at a board level. Prior to the expiry of a director’s term of office, the Board reviews that director’s performance. In the event that such performance is considered less than adequate, the Board may decide that it will not support the re-election of that Director.
The Company Secretary is responsible to the Board for ensuring that Board procedures are complied with and advising the Board on governance matters. All directors have access to the Company Secretary for advice and services. The Board appoints and removes the Company Secretary.
Directors are entitled to access independent professional advice at the Company’s expense to assist them in fulfilling their responsibilities. To do so, a director must first obtain the approval of the Chairman. The director should inform the Chairman of the reason for seeking the advice, the name of the person from whom the advice is to be sought, and the estimated cost of the advice. Professional advice obtained in this way is made available to the whole Board.
Details of Board meetings held during the year and individual directors’ attendance at these meetings can be found on page 38 of the Directors’ Report attached to the financial report.
The CSL Board Charter is available on the Company’s website -
.1.2 Composition of the Board
Throughout the year there were between nine and eleven directors on the Board. On 17 August 2011, Bruce Brook was appointed to the Board. On 19 October 2011, Elizabeth Alexander (Chairman) and
David Simpson retired from the Board and John Shine was appointed as Chairman. Two of the current directors – the Managing Director and Peter Turner – are executive directors.
The CSL Board Charter provides that a majority of directors should be independent. No director acts as a nominee or representative of any particular shareholder. A profile of each current director, including details of their skills, expertise, relevant experience, term of office and Board committee memberships can be found on the
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The Chairman of the Board, John Shine, is an independent, non-executive director. He is responsible for leadership of the Board, for ensuring that the Board functions effectively, and for communicating the views of the Board to the public. The Chairman sets the agenda for Board meetings and manages their conduct and facilitates open and constructive communication between the Board, management, and the public. 1.3 Independence
The Board has determined that all of its non-executive directors are independent, and were independent for the duration of the reporting period.
All CSL directors are aware of, and adhere to, their obligation under the Corporations Act to disclose to the Board any interests or relationships that they or any associate of theirs may have in a matter that relates to the affairs of the Company, and any other matter that may affect their independence. As required by law, details of any related party dealings are set out in full in Note 28 of the financial report. All directors have agreed to give the Company notice of changes to their relevant interests in Company shares within five days to enable both them and the Company to comply with the ASX Listing Rules. If a potential conflict of interest exists on a matter before the Board then (unless the remaining directors determine otherwise), the director concerned does not receive the relevant briefing papers, and takes no part in the Board’s consideration of the matter nor exercises any influence over other members of the Board.
In addition to considering issues that may arise from disclosure by directors from time to time under these obligations, the Board makes an annual assessment of each non-executive director to determine whether it considers the director to be independent. The Board considers that an independent director is a director who is independent of management and free of any business or other relationship that could, or could reasonably be perceived to, materially interfere with the exercise of their unfettered and independent judgment.
Information about any such interests or relationships, including any related financial or other details, is assessed by the Board to determine whether the relationship could, or could reasonably be perceived to, materially interfere with the exercise of a director’s unfettered and independent judgment. As part of this process the Board takes into account a range of relevant matters including:
- information contained in specific disclosures made by directors pursuant to their obligations under the CSL Board Charter and the Corporations Act;
- any past employment relationship between the director and the Company;
- any shareholding the director or any of his or her associates may have in the Company;
- any association or former association the director may have with a professional adviser or consultant to the Company;
- any other related party transactions whether as a supplier or customer of the Company or as party to a contract with the Company other than as a director of the Company;
- any other directorships held by the director;
- any family or other relationships a director may have with another person having a relevant relationship or interest; and
- length of service.
In determining whether an interest or relationship is considered to interfere with a director’s independence, the Board has regard to the materiality of the interest or relationship. For this purpose, the Board adopts a conservative approach to materiality consistent with Australian accounting standards.
If a director has a current or former association with a supplier, professional adviser or consultant to the CSL Group, that supplier, adviser or consultant will be considered material:
- from the Company’s point of view, if the annual amount payable by the CSL Group to the supplier, adviser or consultant exceeds 5% of the consolidated expenses of the CSL Group; and
- from the director’s point of view, if that amount exceeds 5% of the supplier’s, adviser’s or consultant’s total revenues.
Similarly, a customer of the CSL Group would be considered material for this purpose:
- from the Company’s point of view, if the annual amount received by the CSL Group from the customer exceeds 5% of the consolidated revenue of the CSL Group; and
- from the director’s point of view, if that amount exceeds 5% of the customer’s total expenses.
In addition to assessing the relationship in a quantitative sense, the Board also considers qualitative factors, such as the nature of the goods or services supplied, the period since the director ceased to be associated and their general subjective assessment of the director.1.4 Nomination Committee
The functions and responsibilities of the Nomination Committee are documented in a formal charter approved by the Board. The Nomination Committee comprises all of the independent non executive directors. The Nomination Committee is chaired by the Board Chairman.
The Nomination Committee is responsible for reviewing the Board’s membership and making recommendations on any new appointments. In making recommendations for new directors, the Nomination Committee seeks to ensure that any new director will complement or maintain the skills, experience, expertise and diversity of the Board necessary to enable it to oversee the delivery of the Company’s objectives and strategy. The Board is looking to maintain an appropriate mix of skills and diversity in the membership of the Board. This includes diversity of skills, experience and background in the pharmaceutical industry, international business, finance and accounting and management. In relation to gender diversity, in line with Board succession plans, one of the Board’s objectives for the 2012-2013 financial year is to increase the participation of females on the Board by appointing a new female director with appropriate skills, experience and expertise to commence on or before the 2013 Annual General Meeting.
The Nomination Committee is also responsible for:
- setting and following the procedure for the selection of new directors for nomination;
- conducting regular reviews of the Board’s succession plans to enable it to maintain the the mix of skills, experience, expertise and diversity that the Board is looking to achieve;
- regularly reviewing the membership of Board committees; and
- conducting annual performance reviews of the Board, individual directors, and the Board committees.
Details of Nomination Committee meetings held during the year and individual directors’ attendance at these meetings can be found on page 38 of the Directors’ Report attached to the financial report.
The Nomination Committee Charter is available on the Company’s website -
.1.5 Director Appointments
One new director was appointed to the Board during the financial year. Bruce Brook, was appointed to the Board on 17 August 2011. Two directors retired from the Board during the financial year. Elizabeth Alexander (Chairman) and David Simpson retired as of the conclusion of the 2011 Annual General Meeting. Christine O’Reilly and Bruce Brook were elected as directors, and John Shine was re-elected as a director, at the 2011 Annual General Meeting.
Before their nomination for election or re-election, it is the Company’s policy to ask directors to acknowledge to the Board that they have sufficient time to meet the Company’s expectations of them. The Board requires that all of its members devote the time necessary to ensure that their contribution to the Company is of the highest possible quality. The CSL Board Charter sets out procedures relating to the removal of a director whose contribution is found to be inadequate.
The Company provides an induction program to assist new directors to gain an understanding of:
- the Company’s financial, strategic, operational and risk management position;
- the culture and values of the Company;
- the rights, duties and responsibilities of the directors;
- the roles and responsibilities of senior executives;
- the role of the Board committees;
- meeting arrangements; and
- director interaction with each other, senior executives and other stakeholders.
In addition to the briefing papers, agenda and related information regularly supplied to directors, the Board has an ongoing education program designed to give directors further insight into the operation of the Company’s business. The program includes education on key developments in the Company and in the industry and environment within which it operates. As part of this program, directors have the opportunity to visit Company facilities, including all major operating sites in the US, Europe and Australia, and to attend meetings and information sessions with the Company’s local management and employees.1.6 Performance Evaluation
As mentioned above, the Nomination Committee meets annually to review the performance of the Board, individual directors and the Board committees. The Chairman also holds discussions with individual directors to facilitate peer review. The Nomination Committee is responsible for evaluating the performance of the Managing Director, who in turn evaluates the performance of all other senior executives and makes recommendations in respect of their remuneration. These evaluations are based on specific criteria including the Company’s business performance, whether the long term strategic objectives are being achieved and the achievement of individual performance objectives. These performance evaluations took place in accordance with these processes during the last financial year.