TIGER BRANDS 2022 KING IV PRINCIPLES REGISTER
REGISTER OF APPLICATION OF THE KING IV PRINCIPLES SET OUT IN THE KING CODE ON CORPORATE GOVERNANCE FOR SOUTH AFRICA 2016
Tiger Brands Limited (“Tiger Brands or the Company”) is a public company listed on the Johannesburg Stock Exchange operated by the JSE Limited (JSE). The following table has been developed to provide a summary assessment of the application of the specific applicable recommendations of King IV, which illustrate how Tiger Brands applied all the principles of King IV during the financial year ended 30 September 2022.
LEADERSHIP, ETHICS AND CORPORATE CITIZENSHIP
Leadership
Principle
1. The governing body should lead ethically and effectively
Application of the principle by Tiger Brands
The group’s Code of Conduct is the foundation for ethical leadership and serves as a reference point to guide the standards of ethical conduct, integrity, accountability and fairness in the group. The board sets the ethical tone in the group consistent with the Company values. The board recognises that sound corporate governance practices effect value creation for all stakeholders and exercises effective and ethical leadership based on the requirements of the Company’s memorandum of incorporation, board charter, the Companies Act 71 of 2008 and the JSE Listings Requirements. Tiger Brands is committed to the highest standard of integrity and corporate governance.
Organisational Ethics
Principle
2. The governing body should govern the ethics of the organisation in a way that supports the establishment of an ethical culture
Application of the principle by Tiger Brands
The board charter and the group Code of Conduct (the Code) confirm the principles by which the board defines and leads the ethical culture in the group. 2 The board has delegated the responsibility for implementation and execution of the Code to the Tiger Brands executive committee, which reports to the social, ethics and transformation committee and audit committee of the board. The latter committees monitor the development of the Code and a culture of ethical leadership in the group. Executives and senior management are required to acknowledge their appreciation of the content of the Code in writing annually and new employees are also obliged to acknowledge the Code and to confirm their agreement to be bound by the Code upon joining. Annual Ethics E-Learning is undertaken with employees having access to computers. Face to face training on the Code has also been rolled out at sites. Reporting on ethical calls received and action taken is provided in the 2022 supplementary sustainability report.
Responsible corporate citizenship
Principle
3. Ensure that the organisation is and is seen to be a responsible citizen.
Application of the principle by Tiger Brands
Good corporate citizenship is intrinsic to Tiger Brands. The Company’s commitment to responsible corporate citizenship is reflected through the work undertaken primarily by the Corporate Affairs Function and monitored and supported by the board through the social, ethics and transformation committee, risk and sustainability committee and the remuneration committee. The social, ethics and transformation committee oversees the Company’s performance through the adoption of good corporate citizenship as the mechanism to create value for all stakeholders, while generating value for the business. The Company’s sustainability report describes the group’s focus areas and progress against its priorities and sustainability agenda. Reporting on our social and community projects is provided in the same report. Tiger Brands’ commitment to being a responsible corporate citizen is also entrenched in the group strategy.
STRATEGY, PERFORMANCE AND REPORTING
Strategy and performance
Principle
4. The governing body should appreciate that the organisation’s core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process.
Application of the principle by Tiger Brands
The board is responsible for aligning the strategic objectives, vision and mission with performance and sustainability considerations, in line with the legitimate expectations of its stakeholders. The board reviews the Group’s performance against the strategic pillars of building a growth pipeline, meeting the needs of the consumer, optimising our supply chain, being obsessed about cost savings and efficiencies, igniting our people and investing in a sustainable future. In assessing the strategy, the board considers various aspects including the external environment, local and global developments that may impact the business directly or indirectly as well as active and passive risks. Priorities may be adjusted to ensure long-term sustainable value creation for all stakeholders. The board has approved key performance measures and targets for management. With the support of its committees, the board monitors the implementation and execution of the strategy by management.
Reporting
Principle
5. The governing body should ensure that reports issued by the organisation enable stakeholders to make informed assessments of the organisation’s performance, and its short, medium and long-term prospects
Application of the principle by Tiger Brands
The integrated annual report provides a consolidated view of Tiger Brands’ financial, social and environmental performance, prospects and strategy in the context of our operating environment to enable stakeholders to make an informed assessment of the group’s ability to create value in the short, medium and long-term. The integrated annual report is supplemented by the sustainability report and the annual financial statements. The audit committee and board ensure the integrity of Tiger Brands’ reporting publications, in the form of the annual financial statements, integrated annual report, sustainability report and financial results, which are published on the company’s website for easy access by our stakeholders.
GOVERNING STRUCTURES AND DELEGATION
Primary roles and responsibilities of the governing body
Principle
6. The governing body should serve as the focal point and custodian of corporate governance in the organisation
Application of the principle by Tiger Brands
The board of Tiger Brands is committed to the highest standards of corporate governance. Its role and responsibilities and the way it executes its duties and decision-making are set out in the board charter and terms of reference of its committees. Through the delegations of authority, the board has set the direction and parameters for the powers which are to be reserved for itself, and those that are to be delegated to management via the chief executive officer.
Composition of the governing body
Principle
7. The governing body should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively
Application of the principle by Tiger Brands
TThe nomination and governance committee is responsible for the succession plan of the board, it assesses the board’s range of skills, knowledge, experience, diversity and independence to enable it to discharge its governance role and responsibilities. As at 30 September 2022, the board comprised 12 (twelve) directors. 10 (ten) independent non-executive directors and 2 (two) executive directors. The role of the chairman of the board is separated from that of the chief executive officer. The chairman of the board is an independent non-executive director. The board had set gender and race diversity targets for the year 2022 at 50% that it sought to achieve as vacancies occur on the board. For FY22 the board has exceeded the set target with 58% and 66% of women and black representation on the board respectively. The board is satisfied that there is a balance of skills, experience, independence, diversity and knowledge required to discharge its role and responsibilities. The company secretary coordinates training for directors where a specific need is required. The board composition is set out on pages 10 to 11 of the Integrated annual report. There is a clear balance of power to ensure that no individual has undue decision-making powers.
Committees of the governing body
Principle
8. The governing body should ensure that its arrangements for delegation within its own structures promote independent judgement, and assist with balance of power and the effective discharge of its duties
Application of the principle by Tiger Brands
The composition of the Board and its committees is in line with King IV. The committees of the board comprise the audit committee, risk and sustainability committee, nomination and governance committee, remuneration committee, social, ethics and transformation committee and investment committee. The board has delegated certain responsibilities to its committees to assist the board in discharging its oversight responsibilities. Each committee operates under the board approved terms of reference, which set out the committee’s role, responsibilities, authority and composition. The board annually reviews the board charter and terms of reference of its committees.
Evaluation of the performance of the governing body
Principle
9. The governing body should ensure that the evaluation of its own performance and that of its committee, its chair and its individual members, support continued improvement in its performance and effectiveness
Application of the principle by Tiger Brands
The board’s performance and effectiveness assessment are conducted regularly, either internally in the form of self-assessment or externally by an external service provider. To maintain accountability on the board’s performance in FY22, an external board’s performance and effectiveness assessment was conducted. The Board is rated as being effective overall in 2022. The nomination and governance committee, assisted by the company secretary drives the internal performance assessment of the board, its chairman and committees, as well as that of individual directors. The chairman of remuneration committee leads an assessment process in respect of the board chairman. The outcomes from this assessment are put to the attention of the board. The board chairman also engages with individual directors to address any area of improvement highlighted in the assessment feedback.
Appointment and delegation to management
Principle
10. The governing body should ensure that the appointment of, and delegation to, management contribute to role clarity and effective exercise of authority and responsibilities
Application of the principle by Tiger Brands
The board is responsible for the appointment of the chief executive officer and chief financial officer and evaluates the performance of these officers annually against agreed performance measures and targets. The board has approved a delegations of authority matrix, which details the powers and matters reserved for itself and those to be delegated to management through the chief executive officer. The chief executive officer is ultimately responsible for the implementation and execution of the group’s strategy, policies and operational plans and reports to the board. The board ensures that key management functions are led by competent and appropriately authorised individuals and are adequately resourced.
GOVERNANCE FUNCTIONAL AREAS
Risk governance
Principle
11. The governing body should govern risk in a way that supports the organisation in setting and achieving its strategic objectives
Application of the principle by Tiger Brands
The board is the ultimate custodian of risk governance. To this end, the board has approved the risk management policy and framework upon the recommendations by the risk and sustainability committee. Management continuously identify, assess, mitigate and manage risks within the existing operating environment. Mitigating controls are put in place to address these risks. The board is apprised of the group’s top risks; the risk and sustainability committee is responsible for ensuring a comprehensive risk register is tabled at board meetings and lessons learnt are taken into consideration when formulating appropriate measures for mitigating potential negative impact of the top risks on the achievement of the group’s strategic objectives. We also disclose our risks and mitigating strategies as well as material issues and our response in the context of the strategy. See the risk management disclosure in the integrated annual report, pages 31 to 37.
Technology and information governance
Principle
12. The governing body should govern technology and information in a way that supports the organisation setting and achieving its strategic objectives
Application of the principle by Tiger Brands
The board understands the importance, relevance and inherent risks in information technology (IT). It oversees the governance of IT. The board delegated to the audit, and risk and sustainability committees the authority to ensure appropriate compliance structures are in place. The audit committee delegates the management of IT to the chief financial officer, who has further delegated this to the chief information officer through the Governance Framework. The risk and sustainability committee monitors IT risks. The committee approves the IT risk and security strategy and execution roadmap and monitors the progress thereof. The risk committee reviews significant IT risks as they relate to the IT environment and going concern assessments. The chief information officer is responsible to implement and execute effective technology and information management systems that are aligned to the business strategy.
Compliance governance
Principle
13. The governing body should govern compliance with applicable laws and adopted non-binding rules, codes and standards in a way that it supports the organisation being ethical and a good corporate citizen
Application of the principle by Tiger Brands
The Company continues to identify all the laws, regulations, codes and standards that impact its operations. Legal compliance systems and processes are continuously being put in place, to mitigate the risk of non-compliance with the laws in various jurisdictions in which Tiger Brands does business. Relevant toolkits have been sourced to track regulatory matters in our African areas of operations. A library of policies provides the necessary guidance to employees on the acceptable levels of conduct. The policy library is updated on a continuous basis with policies being amended to reflect the changes in the external environment, e.g. legislative updates. New policies are being created and sent to the Governance Forum for review, prior to approval by management and / or the governing bodies. The compliance universe is screened on a daily basis for updates to the laws and regulations. Relevant changes in the law are communicated to management and business representatives for further action to be taken. The board has delegated the responsibility for implementing compliance to management. The Tiger Brands Legal, Compliance and Governance function reviews the adequacy of controls to ensure full compliance coverage of legal and regulatory responsibilities.
Remuneration and governance
Principle
14. The governing body should ensure that the organisation remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives in short, medium and long term
Application of the principle by Tiger Brands
Remuneration is used as a tool to reward and motivate winning performance thereby ensuring that the business creates value in a sustainable manner within the economic, social and environment context in which the organisation operates. Therefore, the board established a remuneration committee to ensure that group’s remuneration policy and practices are built on principles of fair and responsible pay and promotes value creation in a sustainable manner. The company discloses the remuneration of each director and prescribed officer in the integrated annual report. The remuneration report, including the remuneration policy and the implementation report are set out on pages 70 to 87 of the integrated annual report.
Assurance
Principle
15. The governing body should ensure that assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision-making and of the organisation’s external reports
Application of the principle by Tiger Brands
The board has delegated to the audit committee the responsibility for overseeing that structures are in place for achieving an effective internal control environment. To this end, the audit committee delegates this responsibility to the internal audit function to assess the operating effectiveness of controls implemented by management to enable an effective internal control environment. The internal audit function is responsible for evaluating controls to determine the reliability and integrity of the information used for decision making by management, the board and its committees. The combined assurance plan that details the assurance coverage over significant risks and material matters is presented to the risk and sustainability committee on an annual basis for recommendation to the audit committee for approval.
STAKEHOLDER RELATIONSHIPS
Stakeholders
Principle
16.In the execution of its governance roles and responsibilities, the governing body should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time
Application of the principle by Tiger Brands
Tiger Brands recognises that robust stakeholder relationships and engagement, both within and outside of Tiger Brands are key to creating and unlocking real stakeholder value. The group code of conduct guides on how these stakeholder relationships may be established and managed. An overview of our stakeholder relationships and engagement are provided on pages 27 to 30 of the Integrated Annual Report.
Principle
17. The governing body of an institutional investor organization should ensure that responsible investment is practiced by the organization to promote the good governance and the creation of value by the companies in which it invests.
Application of the principle by Tiger Brands
Not applicable.