The members are appointed by the Board and include Executive and Independent Directors.
Main responsibilities
The main functions of the NC are: > reviewing the structure, size and
composition (including the skills, knowledge, experience and diversity) of the Board and making recommendations to the Board with regard to any changes; > making recommendations to the Board
concerning succession planning for both Executive and Non-Executive Directors and in particular for the key roles of the Chairman of the Board and the Chief Executive Officer (if appointed) and senior managers of the Group; > identifying and nominating, for the
approval of the Board, candidates to fill Board vacancies and evaluating the balance of skills, knowledge, experience and diversity (gender)
on the Board, and, in the light of this evaluation preparing a description of the role and capabilities required for a particular appointment; and
> reviewing the results of the Board performance evaluation process that relate to the composition of the Board; and
> making recommendations to the Board on re-election by shareholders of Directors under the annual re-election provisions of the UK Corporate
Governance Code and the retirement by rotation provisions in NWR’s Articles of Association.
Activities undertaken during the year
In 2013, the NC met four times, mostly to discuss the succession planning for > monitoring interactions between the
Mining Division and the Real Estate Division and all transactions affecting the assets of the Real Estate Division with third parties and advising the Board in respect thereof;
> developing and interpreting the Divisional Policy Statements, proposing amendments, providing guidance on provisions and overseeing its implementation; and
> overseeing NWR subsidiaries’ compliance with the Divisional Policy Statements.
Activities undertaken during the year
The REC met five times in 2013. All meetings were held as joint meetings with the Real Estate Committee of NWR NV. NWR’s Chief Financial Officer attended all meetings.
In line with its responsibility for supervising transactions between the Mining Division and the Real Estate Division, the REC continued to monitor real estate transactions of NWR’s core operations, including transactions with third parties (mainly sales of property outside the NWR Group). In line with the Divisional Policy Statements
(as described below), the values of all real estate transactions have been set by independent experts and such transactions have been approved by the Board as well as by the holder of the B shares. The REC regularly reviews the list of valuation experts to ensure their independence. The REC further reviews, on a regular basis, the P&L accounts of the Real Estate Division. In connection with the disposal of OKK in December 2013, the REC considered the allocation of proceeds from the sale between the Divisions.
The REC regularly reports to the Board and the ARMC on its activities and findings.
Divisional Policy Statements
The Divisional Policy Statements were adopted by the Board on 8 April 2011 with effect from 6 May 2011. They refer to the Mining Division and the Real Estate Division that were originally created within the NWR Group on 31 December 2007.
The Divisional Policy Statements have been prepared and adopted on the basis that the Mining Division has the right to: (i) the undisturbed continuation of its mining, coking and related operations that are conducted on certain assets of the Real Estate Division; and (ii) unrestricted access to such assets of the Real Estate Division in connection with such mining, coking and related operations.
The Divisions operate separately for accounting and reporting purposes. Under the Divisional Policy Statements, OKD and the other subsidiaries of NWR carry out the day-to-day operations of the Real Estate Division. In carrying out such day-to-day operations, they are required to seek prior approval from the Board, after the REC has provided its advice to the Board, when proposing to enter into transactions which: (i) are not considered by the Board to be in the ordinary course of business of the Real Estate Division; or (ii) relate to assets of the Real Estate Division, which have a book value of 5 per cent or more of the total book value of the assets of the Real Estate Division.
The Divisional Policy Statements as well as the Book of Procedures dealing with the accounting aspects of the Divisional Policy Statements have been implemented by NWR’s core operations. Compliance is monitored by the REC through monthly reports received from the Company Secretary, who has been designated to act as an intermediary between the REC, NWR and its subsidiaries.
The Divisional Policy Statements are available on NWR’s website at http://www.newworldresources.eu/en/ corporate-governance/policies. The REC believes that it has carried out all the responsibilities set out in the REC’s charter.
Directors and senior managers of the NWR Group. The NC also followed up on the recommendations resulting from the 2012 Board evaluation and identified and recommended for the Board’s approval the appointment of Dr Alyson Warhurst as the first female Director. With her appointment the NC achieved the 2013 diversity target. Given the limited pool of candidates meeting the criteria and the desired unique profile, neither an external search consultancy nor open advertising was used in the search for the female candidate contrary to provision B 2.4 of the UK Corporate Governance Code.
Dr Warhurst joined the Board on 26 April 2013, thus bringing different perspectives into the meeting room. In support of diversity, the NC also prepared and recommended for approval by the Board a diversity policy, which is available on Company’s website. Based on the data on gender diversity collected throughout the NWR Group for 2013, the NC will assess the current situation and set measurable diversity targets for 2014 and onwards. The NC further acknowledged the 2017 business strategy and the split of management roles throughout the NWR Group. While doing so, the NC considered the terms and conditions of the new Group Head of Sales and Marketing and reviewed the organisational chart of OKD. With respect to Mr Fabián stepping down as Executive Director of NWR and OKD CEO (effective as of 31 December 2013), the NC held a conversation with Dale Ekmark, who took over the management of OKD, and expressed its support for Mr Ekmark and his engagement terms. In that instance, the NC reviewed the structure and composition of the Board and concluded that half the Board, excluding the Chairman, comprises Independent Non-Executive Directors, which is fully in line with provision B 1.2 of the UK Corporate Governance Code. The NC also discussed the outcomes of the 2013 Board in-house evaluation, as described in more detail in the ‘Board Effectiveness’ section.
The NC is of the view that its composition is appropriate and that its members have carried out all duties and responsibilities set out in the charter. The NC also considers its charter to be adequate.
Board Effectiveness
Director independence
The Board determines whether or not a Director is independent, based on the independence criteria contained in NWR’s Corporate Governance Policy. A Director shall not be deemed to be independent if the Director concerned (or his wife/ her husband, registered partner or other life companion, foster child or relative by blood or marriage up to the second degree) has been an employee of the NWR Group within the last five years; receives personal financial compensation from any NWR Group company other than the compensation received as Director; has had an important business relationship with NWR or a company associated with it in the year prior to the appointment; holds a cross-directorship or has any significant links with other Directors through involvement in other companies or bodies where these cross-directorships or links would materially interfere with the Director’s objective, unfettered, or independent judgment or ability to act in the best interests of NWR; holds directly or indirectly more than 10 per cent of the A Shares or B Shares; or is a member of the (management or supervisory) board or senior management of an entity, which holds directly or indirectly at least 10 per cent of the A Shares or B Shares.
Director appointment and re-appointment
Both the Company by ordinary resolution and the Directors have the power at any time to elect any person to be a Director, but the number of Directors shall not exceed the maximum number fixed by the Articles of Association of the Company (20). Any person so appointed by the Directors shall retire at the next Annual General Meeting and shall then be eligible for election. Under the Articles of Association each Director shall retire at the Annual General Meeting held in the fourth calendar year following the year in which he was elected or at such earlier Annual General Meeting as the Directors may decide. The office of a Director shall be terminated on the occurrence of any of the events listed in article 81 of the Articles of Association. The Company, by an ordinary resolution, may, in accordance with its Articles of Association, remove
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any Director from office and elect another person in place of a Director so removed. In accordance with the UK Corporate Governance Code, and in line with best practice, all Directors should be subject to annual (re-)elections. In any case, all Directors will retire at the forthcoming AGM on 24 April 2014 and will offer themselves for re-election.
To assist with the Directors’ appointment and re-appointment, NWR has a
Nomination Committee that is responsible for identifying suitable candidates for appointments to the position of Director and evaluating the balance of skills, knowledge, independence, experience and diversity of members of the Board. The Board believes that it has the right balance of Executive and Non-Executive Directors who have the desired skills, knowledge, independence and experience, and recommends the re-election of each of the Directors standing for re-election at the forthcoming AGM.
Board expertise
The Board has the appropriate skills and experience necessary to discharge its functions. Executive and Non-Executive Directors have the experience required to contribute meaningfully to the Board’s deliberations and resolutions, including international operational and financial experience, knowledge of the mining sector and capital markets, as well as command of health, safety and sustainability issues.
Gareth Penny is a recognised and experienced professional in the international mining sector and brings to the Board his deep experience in many aspects of the mining business. His particular contribution is in the area of strategic initiatives and operational restructuring. He provides the Board with strategic and organisational leadership at the Group level. Marek Jelínek, the CFO, continues to manage the capital financing of the Group. He has contributed his extensive knowledge of and experience with the international financial and capital
She discharges other responsibilities the Board has assigned to her and is accountable to the Board.
Board effectiveness and evaluation
At the end of 2013, the Company Secretary conducted an internal evaluation of Board’s performance, its work and functioning, and an assessment of its Chairman, the individual Directors, the Company Secretary, the Board committees and also the governance processes underpinning the Board’s work. The results of the evaluation were discussed by the Nomination Committee and presented to the Board. The process did not identify any major concerns. The Directors are of the view that the Board is well balanced in terms of expertise and skills, although there is still room for improving gender diversity. The Board appreciates the Chairman’s leadership, the effective committee structure and good governance. Directors’ performance is seen as effective and each Director is demonstrably committed to the role. The information coming to the Board is of good quality and the executive remuneration process is considered adequate. The Directors confirmed a very good understanding of key risks and appreciated the high quality of information on health, safety and sustainability. The Directors’ comments received during the self-evaluation will be implemented through the actions proposed by the Company Secretary. The 2012 external evaluation suggested an appointment of one more Independent Director and a gender diversity
consideration. Both suggestions have been addressed by appointing Alyson Warhurst as Independent Director in April 2013. The Nomination Committee regularly discusses succession planning on the management level. In 2013, the Nomination Committee considered, among other things, the leadership of each business unit created to support the Group’s strategy and the organisational chart of the principal operation, OKD.
Competing engagements
According to the Corporate Governance Policy, a Non-Executive Director should have no more than five board memberships markets and their practical impact
on the Group’s business. Based on his regular involvement with the broad range of investors, he has delivered to the Board market feedback on the Group’s performance. He is also extensively involved in the review of NWR’s capital structure and the relevant stakeholders’ discussions.
As experienced investors and shareholders’ representatives, Messrs Bakala and Kadas provide the Board with their know-how and valuable insights into shareholders’ requirements, in particular on further development projects, strategy and remuneration and allowing alignment of the Board with the shareholders’ interests. To cover the cross-border nature of the Group’s business and potential future growth opportunities, Mr Telička provides his knowledge of EU affairs and of the international political scene.
As Senior Independent Director, Mr Kok capitalises on his extensive managerial experience and knowledge of the CEE market, and brings to the Board an independent view on the situation in the region where the Group operates. As Chairman of the Audit and Risk Management Committee and together with the other Independent Directors, he has brought to the Board strong independent control of financial reporting and risk management.
Mr Rudloff is a renowned and experienced banker with detailed and accurate information about the global financial market, its developments and sentiments, which he shares with the Board.
With his extensive legal background, Mr Schuit contributes mainly in the areas of corporate governance, ethics (whistleblower procedure) and compliance, where he focuses on combating fraud and bribery.
Further to his numerous executive posts with BHP Billiton, Mr Everard provides his independent opinions on health, safety and sustainability risks which the Group is facing, as well as other challenges of its mining business.
Mr Rourke, as a former audit partner, brings to the Board his considerable expertise in the area of financial review and integrity. In his role as chairman of the Real Estate Committee, he makes sure that the interests of both A and B shareholders are adequately protected. Dr Warhurst has remarkable expertise in the area of corporate social responsibility and non-financial risk identification and management. With her strong academic background and business experience, she strengthens the Board’s independent review of these issues.
Full biographical details of each Director are given on pages 69 to 73.
Information and professional development
Directors receive a tailored induction upon joining the Board. They have full access to a regular supply of financial, operational, strategic and regulatory information to help them discharge their responsibilities. They regularly receive presentations by senior management and management reports, as well as market and legal updates. They also have access to training and education which they may require from time to time in respect of their responsibilities as Directors. In 2013, all Directors received a training on changes in Czech civil and commercial law.
Directors are also entitled to seek, at NWR’s expense, independent professional advice where they judge it necessary. To this effect, the Board and its committees have received various legal, mining and other advice in 2013.
Company Secretary
Lucie Vávrová acted as Company Secretary until November 2013. Ivona Ročárková took over this role in December 2013. The Company Secretary is responsible for advising the Board on all governance matters and ensuring that Board procedures and functions comply with relevant laws and regulations. The Company Secretary assists the Chairman in the organisation of the Board and committee meetings as well as the general meetings of Shareholders, prepares materials for these meetingns and drafts the meeting minutes.
in other companies (with chairmanship of a publicly listed company board counting double) not related between themselves, so that the proper performance of his/ her duties is assured. Full-time Executive Directors may not be members of the board of more than two listed companies unrelated to the Group, nor may they be chairmen of the board of a FTSE 100 company. The acceptance by an Executive Director of a board membership in a listed company requires the approval of the Board. Other important non-executive positions held by an executive director shall be declared to the Board. See the Remuneration Report on pages 98 to 110 for the Chairman’s other board positions.
Directors’ indemnity and insurance
The Articles of Association provide for the Directors, the Company Secretary and the directors and the company secretaries of associated companies to be indemnified, to the extent permitted by law (and subject to certain exemptions), against any liability incurred in
connection with any negligence, default, breach of duty or breach of trust by him in relation to the Company or any associated company of the Company. No amount has been paid under any of these indemnities during the year. In this respect, the Company has issued deeds of indemnity to the Directors.
The Company has purchased Directors’ and Officers’ insurance during the year. In broad terms, the D&O insurance policy protects, inter alia, private assets of directors and officers against financial losses from legal liability claims filed against such directors or officers arising out of alleged wrongful acts or omissions, either committed or attempted in the capacity as a director or officer of the company. D&O insurance typically does not cover claims relating to the IPO or other securities claims, arising out if or in connection with a public offer of securities and, therefore, the Company (and NWR NV) concludes stand-alone insurance policies for any Public Offer of Securities (POSI). In January 2014, NWR and NWR NV concluded a deed poll of indemnity with the Directors to indemnify them in respect of any loss resulting from claims made against them.
Accountability
Conflict of interest
The Corporate Governance Policy sets out the rules for dealing with conflicts of interest. Directors are required to immediately report any conflict of interest or potential conflict of interest that is of material significance to the Senior Independent Director, and to provide all relevant information, including information concerning a related party. If the Senior Independent Director has a conflict of interest or potential conflict of interest