The board

Composition, responsibility and rotation of directors

Hospitality’s board is chaired by Mr Frank Berkeley, who is independent. The board comprises eight non-executive directors and three executive directors. Six of the eight non-executive directors are independent. The independence of the company’s directors is assessed in accordance with the requirements of King III and the JSE Listings Requirements (the JSE requirements). There exists a balance of power and authority at board level such that no one individual director has unfettered powers of decision making. Apart from the chairman, one-third of the non-executive directors retire from office by rotation at the company’s AGM and if eligible may offer themselves for re-election.

In accordance with the company’s MOI, the chairman may hold office for a maximum period of three years, upon expiry of which he shall be eligible for reappointment for a further three-year period.

Chairman, chief executive officer and executive directors

The roles of the chairman and the chief executive officer are separated. The chairman is responsible for the effective functioning of the board. The chief executive officer is the principal representative of the company. He is responsible for the operation of the business and for leading the executive team. The executive directors ensure the implementation of strategies and objectives as agreed and monitored by the board.

Meetings and conduct

Board meetings are held quarterly and additional meetings are convened when circumstances necessitate. Formal agendas and board reports are prepared for all meetings to ensure that matters that require attention are properly addressed and that directors are provided with the necessary information so as to prepare thoroughly and to make informed decisions. The board has a formal charter in place which sets out its objectives and commitments. All directors have access to the chairman, the executive management team and the company secretary.

Appointment, period of office and terms of employement

Appointments to the board are dealt with in a formal and transparent manner by the board as a whole. Appointments are made on recommendations by the nomination committee, following an assessment of any prospective board member’s qualifications, abilities and experience so as to make a meaningful contribution to the board and its committees.

Committees

Structure and reporting

The board has established a number of sub-commitees to give detailed attention to certain of its duties and to assist in the execution of its powers and authorities.

Each committee operates within defined written terms of reference, which are regularly reviewed by the board in order to ensure compliance with best practice and alignment with changing legislation.

Each sub-committee reports back to the board at least quarterly. The minutes of sub-committee meetings held during a quarter are distributedto directors and noted at the next quarterly board meetign following the sub-committe meeting. The chairmen of the sub-committees report back verbally at the quarterly board meetings on the activities of the committees.

Audit and risk committee
Membership: Willy Ross (Chairman), Kamil Abdul-Karrim, Linda de Beer
The committee comprises three independent non-executive directors following the recent appointment of Linda de Beer. Formal terms of reference have been adopted for the committee and were again reviewed during the 2011 financial year in order to ensure compliance with King III and the Act.

The committee has an independent role with accountability to both the board and shareholders. During the period under review, the committee has carried out its responsibilities in terms of statutory compliance and as set out in its terms of reference. These include:

• overseeing integrated reporting;
• ensuring that when required, a combined assurance model is applied to provide a co-ordinated approach to all assurance activities;
• reviewing the expertise, resources and experience of the company’s finance function and that of the financial director;
• the responsibility of deciding if an internal audit function is required;
• playing an integral part in the finance and IT risk management processes;
• taking responsibility for the external audit function, which includes the responsibility of recommending the appointment of the external auditor; overseeing the external audit process; approving the terms of engagement and remuneration of the external auditor and pre-approving any contracts for non-audit services; and
• the responsibility of the risk management function.
  • establishing a remuneration policy that will promote the achievement of strategic objectives and encourage individual performance;
  • evaluating the performance of the chief executive officer and the executive directors;
  • advising on the remuneration of non-executive directors; and
  • the annual benchmarking of remuneration against the industry and independent market data.

The committee met five times during the reporting period. The chief executive officer and financial director attend committee meetings by invitation. The external auditors have unrestricted access to the audit committe and its chairman. The external auditorsalso report their findings to the committee with members of executive management not in attendance.

The chairman of the board is not a member of the audit committee, but may attend meetings by invitation.

The committee, having assessed the independence of the external auditor, is of the opinion that KPMG Inc. is independent of the company and nominates their re-appointment as external auditors to shareholders.

The committee reviewed the expertise, resources and adequacy of resources of the finance function and experience of the financial director and considers it adequate.

Information Technology
The Fund has implemented stringent policies and procedures to mitigate the risks associated with its IT infrastructure and to ensure the integrity of its data. The Fund runs its own IT infrastructure including its own server and security precautions to safeguard its information.

The risks associated with IT have been evaluated as being more material at the operational level. In order to mitigate the inherent risks, an integrated Information and Communications Technology platform has been implemented across all the hotels. The systems are audited quarterly and the findings are reported centrally to ensure the compliance of each hotel with the requirements. Because the hotels are in possession of extensive customer information, stringent policies and procedures have also been implemented to protect this data.

BEE committee
Membership: Brenda Madumise (Chairman), Zuko Kubukeli, Gerald Nelson
The committee comprises two independent non-executive directors and one executive director. The committee met on four occassions during the period under review.

The committee makes recommendations to the board on how to best achieve its transformation targets; it oversees general compliance with transformation legislation; and monitors ongoing Corporate Social Investment (CSI) and traing projects.

The committee is of the view that, during the period under review, it has achieved its goals and carried out its responsibilities as set out in its written terms of reference.

C-Corp restructure committee
Membership: Willy Ross (Chairman), Kamil Abdul-Karrim, Brenda Madumise, William Midgley
In May 2010, the board appointed the C-Corp restructure committee, a specialist committee tasked with investigating alternatives to a view to implementing a model which is more robust, equitable and financially sustainable while at the same time achieving a longterm balance of risk and reward between all parties and eliminating certain conflicts of interest.

Java Capital (Java) was appointed as independent professional advisors in this regard and at least one representative of their corporate finance team attended all meetings of the committee. The committee met four times during the period under review.

The committee comprised four non-executive directors of whom three are independent. The chairman of the board had a standing invitation to attend all meetings of the committee.

The committee made a final recommendation to the board during the financial year and has sine been dissolved.

The board agreed to the restructure of the existing C-Corp leases from 1 July 2011. The sale of Grapnel Property Asset Manager’s (GPAM) interests in C-Corp has eliminated the conflicts of interest for Mr Gerald Nelson, who is a director and shareholder of GPAM.

Investment committee
Membership: Kamil Abdul-Karrim (Chairman), Zuko Kubukeli, Andrew Rogers, Willy Ross
The investment committee currently comprises four members of whom three are independent non-executive directors and one is an executive director. Meetings are held when required to consider the viability of capital investments in properties, acquisitions and disposals of properties, together with related strategic and operational plans and funding alternatives. The committee met on four occasions during the period under review. Mr Nelson attends these meetings by invitation.

Matters which fall outside of executive management’s approved authority limits are presented to the committee for consideration.

Mr Nelson, supported by a team of analysts, prepares proposals for submission to the committee and based on recommendations and agreements reached by the committee, represents the company in negotiations with third parties.

Each transaction is considered individually in line with the Fund’s strategies and objectives and proposals that are believed to be feasible are, based on the siza of the transaction, recommended to the board for ratification for approval.

Remuneration committee
Membership: Brenda Madumise (Chairman), Youseph Aminzadeh, Willy Ross
The committee comprises three non-executive directors of who two are independent. The committee is chaired by Ms Madumise.

The committee met three times during the period under review.

The committee oversees the settings of remuneration policies for the group and ensures that the company remunerates directors and executives fairly and responsibly.

The committee is confident that it has fulfilled its role as set ou in its terms of reference, which includes:

Evaluation

The board performs regular self-evaluations, which are done in the form of questionnaires. The performance and conduct of the respective committees, their chairmen and the chairman of the board and chief executive officer are also rated. Completed questionnaires are assessed by the audit committee chairman and the company secretary and the board is presented with the results. Any specific matters or concerns are addressed and dealt with by the audit committee chairman.

Any subjects of concern relating to the audit committee or its chairman is dealt with by the chairman of the board.

Risk management

Assisted by the audit and risk committee, the board takes ultimate responsibility for the company’s risk management process and the
monitoring of its effectiveness. Areas of risk are reported on quarterly to the board by the audit and risk committee. These are closely monitored and appropriately managed.

The company has and maintains an efficient process of risk management to manage key risks and, accordingly, the board is not aware of any key risk current, imminent or forecast, that may threaten the sustainability of the company.