Composition of the Board
The Board shall comprise of Directors with a range of qualifications, expertise and experience. The selection of the Board members shall always be for the purpose of their ability to add value to the Company.
For the purpose of efficient working, the preferred number of Directors in office at any one time is between 3 and 10.
To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the Board. Any proposed new Director is nominated by the Nomination and Remuneration Committee and approved by the Board prior to being appointed. The appointment is until the next General Meeting of shareholders at which time the shareholders are required to approve the appointment.
The Board consists of a Non Executive Chairman, an Executive Director (who is also the Chief Executive Officer) and currently 5 Non Executive Directors.
The Board is conscious of its responsibility to add value for all shareholders and considers that this is best served (among other things) by having a balanced Board. The Board is made up of experienced Directors from different sectors that are relevant to Austal and its shareholders, and the remuneration structures of both the Managing Director and the Non-executive Directors ensure that Board members develop a substantial investment in the Company. The Board is confident that each Boar member is fully capable of bringing an unbiased perspective to matters before the Board and while the Company will seek to adhere to ASX Corporate Governance Council recommendations (ASX Recommendations) to the extent practicable, the integrity, experience and expertise of Board members is considered more important than always having a majority of Independent Directors to ensure that management act in the best interests of the Company.
Independence
The ASX Recommendations provide that Directors are considered to be independent when they are free of any interest, position or relationship that might influence, or reasonably be perceived to influence, in a material respect, their capacity to bring an independent judgement to bear on issues before the Board and to act in the best interests of the Company as a whole rather than in the interests of an individual security holder or other party.
In the context of Director independence, the Board considers ‘materiality’ from both the Company’s and the individual Director’s perspective. The determination of materiality is based on but not necessarily mandated by guidance issued by the Council in connection with the ASX Recommendations, which include:
- whether a Director is a substantial shareholder of the Company, or affiliated with a substantial shareholder of the Company,
- whether the Director is, or has been, employed in an executive capacity by the Company or any of its child entities and there has not been a period of at least three years between ceasing such employment and serving on the Board;
- whether the Director has been a member or principal of an organisation that has provided services or consulted to the Company or a substantial holder within the last 3 years;
- whether the Director is, or has been within the last 3 years, in a material business relationship (eg as a supplier, professional adviser, consultant or customer) with the Company or any of its child entities, or is an officer of, or otherwise associated with, someone with such a relationship;
- whether the Director receives performance-based remuneration (including options, or performance rights) from, or participates in an employee incentive scheme of the Company;
- whether the Director has a material contractual relationship with the Company other than as a Director;
- whether the Director has close personal ties with any person who falls within any of the categories described above; or
- whether the Director has been a Director of the Company for such a period that their independence from management and substantial holders may have been compromised.
The above matters, along with any other qualitative factors which point to the actual ability of the Director to have an influence in shaping the direction of the Company, are considered when determining each Director’s independence.In accordance with the relevant considerations of independence, and the materiality thresholds set, the following Directors are considered to be independent:
The Hon. Richard Spencer – Non-executive Chairman
Lee Goddard CSC – Non Executive Director
Kathryn Toohey - Non Executive Director
Sue Murphy – Non-executive Director
There are procedures in place, agreed by the Board to enable Directors in furtherance of their duties, to seek independent professional advice at the Company's expense.
Outside interests
Specific requirements to declare and update external interests, including other directorships, apply for all Directors.
Nomination and Remuneration Committee
The Nomination & Remuneration Committee reviews and makes recommendations to the Board in relation to:
- candidates for vacant Board positions, as well as the remuneration of Directors and key executives;
- the implementation of a process for evaluating the performance of the Board, its committees and Directors;
- the process for recruiting new Directors, including evaluating the balance of skills, knowledge, experience, independence and diversity on the Board and, in light of this evaluation, considering the capabilities required for a particular appointment;
- the appointment and re-election of Directors;
- Board succession planning generally; and
- ensuring there are plans in place to manage the succession of the CEO and other senior executives.
Audit & Risk Committee
The Audit & Risk Committee’s functions are described in its charter, which is reviewed annually and updated as required, and is published on the Company’s website. These functions include:
- reviewing the adequacy of the Company’s corporate reporting processes and internal control framework;
- reviewing whether the Company’s financial statements reflect the understanding of the committee members of, and otherwise provide a true and fair view of, the financial position and performance of the Company;
- reviewing the appropriateness of the accounting judgements or choices exercised by management in preparing the Company’s financial statements;
- reviewing the internal controls, policies and procedures the Company uses to identify and manage business risks;
- reviewing and shaping the policies and procedures for ensuring compliance with relevant regulatory and legal requirements, and good corporate governance practice including ESG initiatives and compliance;
- ensuring compliance with statutory reporting responsibilities;
- assessing the effectiveness of the management of business risk and reliability of management reporting; and
- reporting any significant deficiencies in the above to the Board.
In addition to the above, the Audit & Risk Committee (in accordance with its charter) annually reviews the performance of the external auditor on behalf of the Board, focusing particularly on:
- the appointment or removal of the external auditor;
- the fees payable to the auditor for audit and non-audit work;
- the rotation of the audit engagement partner;
- the scope and adequacy of the external audit;
- the independence and performance of the external auditor; and
- any proposal for the external auditor to provide non-audit services and whether it might compromise the independence of the external auditor.
A separate Audit Committee also exists as a subcommittee of the Board of Austal USA. Its functions and charter align with those set out above, with its focus limited to the Company’s US operations.