Corporate Governance
The Board of Methven is responsible for the strategic direction of the Company and ensuring that the Company is managed properly and for the benefit of shareholders. Some of the key responsibilities of the Board include:
• Developing the strategic direction of Methven, in conjunction with Methven's senior management team;
• Monitoring the performance of management and the overall financial performance of the Company and the Methven Group;
• Monitoring Methven's regulatory and legislative compliance and risk management processes;
• Ensuring effective policies and procedures concerning disclosure to the market and shareholders.
The Board has adopted what it believes to be appropriate corporate governance policies and procedures, which it intends to review on an on-going basis. The principal corporate governance policies concern the appointment and retirement of Directors, Directors' access to independent professional advice and the constitution and operation of Board Committees - namely, the Audit, Compliance and Risk Management Committee and the Remuneration Committee.
DIRECTORS
PHIL LOUGH
Chairman
RICK FALA
Managing Director and Group CEO
GARY NEL
Executive Director and CEO New Zealand
PETER STANES
Non-Executive Director
RICHARD CUTFIELD
Non-Executive Director
DAVID MAIR
Non-Executive Director
Audit, Compliance and Risk Management Committee Charter
Scope
The Audit Committee is a Committee of the Board of Directors ("Board"). Its primary function is to assist the Board in fulfilling its responsibilities in the areas of:
• Review of financial statements provided to shareholders and other external parties;
• Internal control systems instituted by management;
• Review of the external audit process;
• Identifying and responding to significant business risks; and
• Providing an avenue of communication between the auditors and the Board, in particular in relation to matters requiring consideration by the Board which relate to financial reporting.
The Audit Committee shall have the power to conduct or authorise investigation into any matters within the Committee's scope of responsibilities. The Committee shall be empowered to retain independent counsel, accountants, or other external parties to assist it in the conduct of any investigation.
Responsibilities
1. To make recommendations to the Board on the appointment and remuneration of the external auditor and review the performance annually of the Auditor.
2. Review with management and the Auditor significant areas of risk and exposure facing the Group, and assess the steps taken to minimise such risks. Such risks include:
• Business continuity risk
• Treasury and foreign currency risk
• Cashflow risk
• Environment risk
• Legislative risk
• Fraudulent Activity
3. Consider with management, the audit scope and annual plan of the Auditor.
4. Review with management and the Auditor the co-ordination of audit effort to ensure completeness of coverage. Assess the working relationship between the external auditor and management.
5. Consider and review with management and the Auditor during the year:
a) the adequacy of internal controls; including computerised information systems control and security;
b) any related significant findings and recommendations of the Auditor, together with management's responses;
c) the appropriateness of accounting policies; including any changes, relevant accounting standards and legislation impacting on the preparation of financial statements;
d) written representations from management and lawyers;
e) whether the Group continues to meet the going concern assumption now and in the foreseeable future;
f) the treatment of transactions which are significant, unusual or require substantial judgement.
6. Review with management and the Auditor at the completion of the annual audit:
a) the Group and companies' financial statements and related note disclosures; including the assessment of significant estimates and judgments in the financial statements;
b) any significant findings or recommendations of the Auditor, and management's responses;
c) any disputes or difficulties encountered in the course of the audit; including any restrictions on the scope of the audit work or access to required information;
d) any changes required in the scope of the audit plan.
7. Review legal and regulatory filings associated with the financial statements and other reports required to be filed.
8. Meet with management or the auditors in separate sessions to discuss any matters that the Committee or these parties believe should be discussed privately with the Committee.
Membership
The Board shall be responsible for the appointment and removal of Committee members.
The number of members of the committee shall not be less than three. All members shall be non-executive Directors. A majority of the Committee must be Independent Directors.
At least one member of the Committee shall have such accounting or financial experience and/ or qualifications as is deemed satisfactory by the Board.
The Board shall appoint a chairperson of the Committee, who shall not be the chairperson of the Board.
Secretarial and Meetings
The Committee may meet at the request of any one Committee member, but in any event hold no less than three meetings during a year.
A quorum of members of the Committee shall be a majority of the Committee.
The Committee shall seek the attendance of management and the Auditor as it deems necessary, for the conduct of its business.
Minutes of all meetings of the Committee shall be kept
Relationships with Other Parties
a) The Board of Directors
The Audit Committee is a committee of the Board of Directors and as such will seek approval of its scope, objectives, functions and responsibilities from the Board as recorded herein and report to the Board on its activities including recommendations.
b) Management
Management is to promptly advise the Audit Committee of any matters requiring its attention.
If management becomes aware of any fraudulent activity in the companies then this will be notified to the Chairman of the Audit Committee immediately.
c) Auditors
The Chairman may deal directly with the auditors on behalf of the Audit Committee or through the Committee Secretary in relation to meetings and the content thereof. The Committee will require of the auditors:
• a summary of the audit approach including audit risks
• a summary of audit staffing
• a summary of control weaknesses
• recommendations on changes to accounting policies and disclosures
The auditors will be instructed to advise the Committee on any matter requiring its attention. The Chairman or any member can be contacted individually on a formal or informal basis.
Remuneration Committee Charter
1. OBJECTIVES
The Remuneration Committee (Committee) of Methven Limited (Company) has been established to assist the Board of directors of the Company (Board) to independently ensure that the Company adopts and complies with remuneration policies that:
1.1 attract, retain and motivate high calibre executives and directors so as to encourage enhanced performance by the Company;
1.2 are consistent with the human resource needs of the Company;
1.3 motivate directors and management to pursue the long-term growth and success of the Company within an appropriate control framework; and
1.4 demonstrate a clear relationship between key executive performance and remuneration.
2. COMPOSITION OF THE COMMITTEE
2.1 The Committee shall be a committee of the Board and the appointment and removal of Committee members will be the Board's responsibility.
2.2 The Committee shall have a minimum of three members, a majority of whom shall, wherever possible, be non-executive directors.
2.3 The Board shall appoint a chairperson from among the independent members of the Committee.
2.4 The Chief Executive Officer will attend meetings of the Committee, except where conflicted for personal reasons.
3. SECRETARIAL AND COMMITTEE MEETINGS
3.1 The Committee shall meet at least two times a year having regard to when director and executive remuneration is due for review in terms of the Company's remuneration policies.
3.2 Reasonable notice of meetings and the business to be conducted shall be given to the members of the Committee and all other members of the Board.
3.3 A quorum shall be two members of the Committee, at least one of whom must be a non-executive director.
3.4 All directors shall be entitled to attend meetings of the Committee provided that executive directors, including the Chief Executive Officer, shall not be entitled to attend meetings where they are conflicted for personal reasons.
3.5 The Committee may have in attendance at its meetings members of management and any other persons (including external advisers) as it considers necessary to provide appropriate information and advice.
3.6 Any member of the Committee or the Chief Executive Officer may request a meeting at any time if they consider it necessary.
3.7 Unless the context of this Charter requires otherwise, the Company's constitution shall govern the regulation and proceedings at the Committee's meetings.
3.8 The secretary of the Committee shall be appointed by the Board.
3.9 Minutes of all meetings of the Committee shall be kept.
4. RESPONSIBILITIES OF THE COMMITTEE
The Committee does not take action or make decisions on behalf of the Board unless specifically mandated.
Subject to the limitations set out in paragraph 5 of this Charter, the Committee is responsible for:
4.1 ensuring that effective remuneration management systems are in place and that they support the Company's wider objectives and strategies;
4.2 ensuring that the Company's remuneration policies and procedures comply with relevant legislation and the New Zealand Stock Exchange Listing Rules; and
4.3 undertaking an annual review to ensure the Company's remuneration practices are consistent with the Board's policies.
Subject to the limitations set out in paragraph 5 of this Charter, the Committee is responsible for reviewing and making recommendations to the Board on the following:
4.4 the remuneration policies and practices of the Company;
4.5 all components of the remuneration of the Chief Executive Officer, executive directors and such other senior executives as the Board may from time to time determine. The components shall include base salary, reimbursable expenses, bonuses, entitlements under employee incentive plans, Company share schemes and Company option schemes, and all other entitlements and benefits arising from their employment. The remuneration of senior executives who report directly to the Chief Executive Officer is subject to prior recommendation from the Chief Executive Officer;
4.6 the terms of employment contracts for the personnel referred to in paragraph 4.5;
4.7 the terms of the Company's short and long term incentive plans including any share and option schemes for employees and/or directors;
4.8 the terms of the Company's superannuation and/or pension schemes;
4.9 all components of the remuneration of the non-executive directors. Such components shall include base fees, supplemental fees for undertaking additional duties, reimbursable expenses, entitlements on retirement from or termination of board membership, and all other benefits and entitlements arising from their directorships; and
4.10 considering such other matters relating to remuneration issues as may be referred to it by the Board.
5. AUTHORITY OF THE COMMITTEE
5.1 The Committee will make recommendations to the Board on all matters requiring a decision. The Committee does not have the power or authority to make a decision in the Board's name or on its behalf.
5.2 The Committee is authorised by the Board, at the expense of the Company, to obtain such outside information and advice including market surveys and reports, and to consult with such management and executive search consultants and other outside advisers with relevant experience and expertise, as it thinks necessary for carrying out its responsibilities.
6. REVIEW OF THE COMMITTEE
6.1 The Committee will undertake an annual review of its objectives and responsibilities.
6.2 The objectives, responsibilities and performance of the Committee will also be reviewed by the Board, the Chief Executive Officer and any other person the Board considers appropriate.
7. REPORTING AND ACCOUNTABILITY
7.1 After each meeting the chairperson of the Committee will report the Committee's recommendations, findings and activities to the Board.
7.2 The minutes of all Committee meetings will be circulated to members of the Board. Extracts from the minutes will be made available to members of management, and to such other persons as the Board directs, as may be necessary to enable them to properly carry out their functions.
Insider Trading Policy
CODE FOR TRANSACTIONS INVOLVING METHVEN SECURITIES
Insider trading in Methven securities is illegal and carries heavy penalties, including heavy fines and requirements to pay compensation. Methven has adopted this Code (which includes an Approved Procedure for trading by directors and certain employees) as a means to reduce as much as possible the risk of insider trading by directors and employees.
If the Code applies to you, you must comply with it. Failure to comply may lead to disciplinary action and, in serious cases, dismissal. Any such disciplinary action is separate from any liability that may arise for insider trading under applicable legislation. Personnel should be aware also that the Code will continue to apply to all directors and particular employees for 6 months after their directorship or employment with Methven has ended.
If you are unsure whether you are able to trade Methven securities, or whether you should be following the Approved Procedure set out in this Code, please contact the Company Secretary for further assistance.
PART 1
INTRODUCTION TO THE CODE
1. PURPOSE
The purpose of this Code is to:
• explain the type of trading in securities issued by Methven (Methven Securities) by directors, senior management and employees of Methven that is prohibited by New Zealand's insider trading laws (set out in Part 2); and
• establish a procedure under which directors and senior management of Methven (the Officers) may buy or sell Methven Securities to protect against the incidence of insider trading (the Approved Procedure) (set out in Part 3).
A register of Officers is included as Appendix 3, which will be kept updated by the Group CEO. All people included on that register (or if notified by the CEO) must comply with the Code when buying or selling any Methven Securities.
2. WHO DOES THE CODE APPLY TO?
The information set out in the Code applies as follows:
• New Zealand's insider trading laws (summarised in Part 2) apply to all Methven employees.
• The Approved Procedure (set out in Part 3) applies to and is mandatory for all Officers.
• The Board also:
-strongly recommends and encourages holders of Senior Staff Options (issued at the time of the IPO) and those other persons listed in Appendix 3 to follow the Approved Procedure; and
-encourages all other employees of Methven to follow the Approved Procedure,
as a means to protect themselves against potential liability for insider trading.
All staff should be aware that if, despite following the Approved Procedure, they actually hold non-public Price Sensitive Information at the time they engage in any transactions involving Methven Securities, they will not be protected from potential insider trading liability.
PART 2
SUMMARY OF INSIDER TRADING RULES
New Zealand's insider trading laws apply to all employees and directors of Methven. What follows is a summary of those laws. Following these rules will reduce the possibility of you facing liability for insider trading.
This is a summary only, provided for your information, and does not provide all the details of the relevant rules. You should seek your own legal advice if you would like more details.
3. SUMMARY OF INSIDER TRADING RULES
3.1 Holding Non-Public Price Sensitive Information: If you have "non-public price sensitive information" (sometimes referred to as "inside information") in relation to Methven you must not:
-buy or sell Methven Securities;
-advise or encourage any person to buy or sell Methven Securities;
-advise or encourage any person to advise or encourage another person to buy or sell Methven Securities;
-communicate the information, or cause the information to be disclosed, to a person knowing or believing that person or another person will buy or sell Methven Securities or advise or encourage another person to buy or sell those securities (known as "tipping"); or
-otherwise deal in Methven Securities (eg enter into an agreement to sell or buy Methven Securities).
3.2 Non-Public Price Sensitive Information: "Non-public price sensitive information" is information in relation to Methven:
-which is not publicly available; and
-which would, or would be likely to, affect materially the market price of Methven securities if it was publicly available.
Types of information which are likely to be information which is likely to be "price sensitive, if it has not already been made public by Methven could include (but not limited to) the proposed launch of a new product, entry into arrangements with a high profile licensee and/or the sale or purchase of a major asset of Methven. If you are in any doubt as to whether you hold any "non public price sensitive information" you should consult the Group CEO.
3.3 Applies to trading in all Methven Securities: The restrictions referred to above (in paragraph 3.1, and all other restrictions in this Code, apply to transactions involving all types of Methven Securities, both listed and unlisted, which include:
• ordinary shares;
• share options, including the exercise of share options, and
• shares in which you have beneficial interest or other rights in.
The restrictions also applies to securities of other listed companies if you come into "non-public price sensitive information" about that company in the course of your employment or directorship with Methven.
All of these types of securities are included in the term "Methven Securities".
3.4 Applies to Methven Securities held by others: The restrictions in paragraph 3.1 (and all other restrictions in this Code) on buying and selling Methven Securities should be regarded as equally applicable to any buying or selling of Methven Securities:
-by your spouse or dependent children;
-by a company in which you have a material interest;
-by a trust or a managed fund either where you have a beneficial interest or are a trustee or manager and can influence the decision of that trust or managed fund in the investment of funds; or
-by any other person or entity on your behalf.
3.5 Restrictions Apply to Employee Share and Options Plans: This restrictions in this Code apply to your decision to join any share or option employee plan, the subscription for shares or options under any such scheme and the exercise of any options acquired under any such scheme.
4. SHORT TERM DEALING
Employees and directors should not engage in short term speculative dealing. Generally speaking, engaging in transactions involving Methven Securities within 6 months of any previous transaction or dealings will be regarded as a breach of this restriction. The Board may determine (and will notify) the period which, in any given circumstance, constitutes a "short term".
PART 2
APPROVED PROCEDURE FOR OFFICERS
5. OFFICERS MUST FOLLOW APPROVED PROCEDURE
5.1 Officers: All Officers who propose to engage in any transaction involving Methven Securities must follow the Approved Procedure set out in this section of the Code. It is strongly recommended that all other staff who propose to engage in such a transaction follow it as well.
5.2 Requirements for Officers' shareholdings: Officers should be aware that the protection against insider trading liability you receive from following the Approved Procedure will only apply if the Methven Securities are bought or sold in your own name or in the name of or on behalf of your child or spouse.
Methven requires that you, as an Officer, only buy, sell or hold Methven Securities:
• in your own name; or
• in the name of, or on behalf of, your spouse or child; or
• in the name of a company or trust (provided you have notified the Board of Methven of the existence of that company or trust and your interest in it). Even though transactions in the name of a company or trust do not provide the same statutory protection.
If you hold Methven Securities other than as outlined here, you should (if practicable) transfer those Methven Securities so that you comply with the Code.
6. THE APPROVED PROCEDURE
6.1 Applies to All Methven Securities: As an Officer, you must comply with the Approved Procedure when dealing in any Methven Securities, including shares, options and the exercise of options.
6.2 Notice of Intended Transaction: As an Officer, you may only buy or sell or otherwise deal in Methven Securities if:
• you have given notice of that intended sale or purchase to Methven in the form set out in Form 1 of Appendix 1;
AND
• you have received written consent to the to proposed transaction from the Board (or a director nominated by the Board).
6.3 Board Consent: The Board consent procedure is designed as a means to check whether you are likely to hold non public price sensitive information. If the Group CEO or the Board reasonably forms the view that you have non-public price sensitive information and that you are using that information through the proposed transaction for personal gain, the Board may refuse to consent to the proposed transaction. Otherwise the Board will not unreasonably withhold its consent.
If the Board does consent to the proposed transaction, you will be notified in writing of the consent. If the Board does not give its consent, you should not proceed with the proposed transaction.
6.4 Trading Windows: If the Board has consented in writing to your proposed transaction, you must carry out that transaction:
• within 15 trading days after the consent is given; and
• during two trading "windows", being either:
(a) the period starting on the day after the annual announcement of Methven's results is made to the New Zealand Stock Exchange and ending on the day that is 5 months after the end of the financial year 31 August; or
(b) the period starting on the day after the half year announcement of Methven's results is made to the New Zealand Stock Exchange and ending on the day that is 4 months after the end of the financial half-year 31 January,
(described in the timeline attached as Appendix 2).
In practice, except in accordance with 6.6 (below), the Board will not give its consent outside one of the trading windows.
6.5 Further Request for Consent: If the Board does not consent to a proposed transaction, you may make further representations to the Board to approve the transaction. If the Board decides, on further consideration, to give its consent to the proposed transaction the trade must be undertaken within 15 trading days of that consent being given and within the "trading windows" set out above. If the Board still declines consent, you should not proceed with the proposed transaction.
6.6 Trading Outside the Trading "Windows": There are certain circumstances in which you may be permitted to trade in Methven Securities outside the trading "windows" (described above), as follows:
6.6.1 Exceptional Circumstances: In exceptional circumstances, (e.g. where a pressing financial commitment has to be met) you can ask for permission from the Board to sell Methven Securities outside of the "trading windows", provided that you are not in possession of any inside information at the time, of the proposed sale. The Board will decide, at its discretion, whether the circumstances justify departure from the usual procedure a case by case basis. If the Board does not give you permission to sell the Methven Securities, you should not proceed with the sale.
You should use the form in Appendix 1 for requesting permission to trade outside the trading windows.
(a) Exception only Applies to Sales: This exception applies to the sale of Methven Securities only. It does not apply to the purchase of Methven Securities.
(b) Approved Procedure: The protections against liability for insider trading conferred by following the Approved Procedure will not cover these types of sales.
6.6.2 Joining Employee Share or Option Schemes: As an Officer, may be invited to take part in (by accepting offers of shares or options) a Methven employee share or option scheme outside of trading windows. This will be permitted if that Officer does not hold non-public price sensitive information and the Approved Procedure described above is followed. (This exception relates to the acquiring of options, but not the exercising of options.)
7. TRANSACTION REGISTER
The Group CEO will keep an Officers' Dealing Register that will record:
• the time of receipt and particulars of each request for approval to trade from all Officers;
• the Board's decision to consent to or decline consent to the trade and the time it was notified to the Officer; and
• any other circumstances the CEO or board considers it appropriate to record.
8. PARTICULAR TRANSACTIONS
There are certain circumstances where, as an Officer intending to engage in any transaction involving Methven Securities, the Approved Procedure requires that you only have to give notice to Methven in the form set out in, and comply with, Form 2 in Appendix 1. Those circumstances are if the proposed sale or purchase relates to:
• a reorganisation or reconstruction of Methven's capital applying to all shareholders; or
• the selling or buying of rights to which the Officer is entitled under a registered prospectus issued by Methven; or
• the exercising of rights to subscribe for Methven Securities; or
• the sale of Methven Securities to enable the subscription for rights in Methven during the offer period under a rights issue prospectus issued by Methven; or
• the acquisition of securities pursuant to a bonus issue by Methven or under a dividend reinvestment plan of Methven open to all security holders of the same class in Methven; or
• the acceptance of an offer for all Methven Securities where the offer is made on the Stock Exchange and is open for acceptance for 21 days.
APPENDIX 1
FORM 1
Form of Notice where an Officer wishes to deal in Methven Securities Under Clause 6 of the Code (applies to all transactions involving Methven Securities other than those set out in Clause 8 of the Code - if clause 8 of the Code applies, see Form 2 of this Appendix)
To: Methven Limited
I, , of
[Name] [Address]
being a director/employee of Methven Limited (Methven) give notice of my intention to deal in securities of Methven as set out below:
Part I
1. The position held by me in Methven is
2. The class and number of securities held by me in Methven that will be the subject of the transaction are:
3. The intended transaction is the *sale/purchase of the securities set out in 2 above.
*[Delete one]*
4. The transaction *will/will not take place on a stock exchange. If not the transaction will take place as follows
*[Delete one]*
5. The likely date of the transaction is
6. I confirm that the decision to enter into the above transaction has not been made on the basis of inside information.
7. I confirm that I am not in the possession of inside information.
8. In the case of a purchase of Methven Securities, I hereby confirm that I do not intend to sell any securities so purchased within a period of 6 months following the above transaction.*
[Delete if not purchasing Methven Securities]
9. I hereby confirm that I believe the transaction will be at a fair value.
10. I request Methven to consent to the transaction as set out above.
Dated this day of
[Signature of Officer]
FORM 2
Form of Notice where an Officer wishes buy or sell Methven Securities under one of the circumstances set out in Clause 8 of the Code (if clause 8 of the Code does not apply, see Form 1 this Appendix)
To: Methven Limited
I, , of
[Name] [Address]
being a director/employee of Methven Limited (Methven) give notice of my intention to deal in securities of Methven as set out below:
Part I
1. The position held by me in Methven is
2. The class and number of securities held by me in Methven that will be the subject of the transaction are:
3. The intended transaction is the *sale/purchase of the securities set out in 2 above.
*[Delete one]*
4. The transaction *will/will not take place on a stock exchange. If not the transaction will take place as follows
*[Delete one]*
5. The likely date of the transaction is
6. I confirm that the decision to enter into the above transaction has not been made on the basis of inside information.
7. I confirm that I am not in the possession of inside information.
Dated this day of
[Signature of Officer]
