Hyprop Investments Limited Integrated annual report 2017

Corporate

governance

continued

Hyprop Investments Limited

Integrated annual report and consolidated financial statements

2017

The audit and risk committee

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The committee comprises independent non-executive directors with

the necessary financial literacy, skills and experience to execute their

duties effectively

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The committee is satisfied that it has fulfilled its responsibilities as per

its terms of reference

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Ensures that Hyprop has established appropriate financial reporting

procedures and that these are operating effectively

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Oversees cooperation between external and internal audit to avoid

overlapping audit scope

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Approves the external auditors’ terms of engagement and

remuneration

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Recommends to shareholders the appointment, reappointment and

removal of external auditors

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Has an independent oversight role, making recommendations to the

board for its consideration and final approval. It does not assume

the functions of management, which remain the responsibility of

executive directors and senior management

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Adopts and oversees an appropriate risk management policy, aligned

with industry practice

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The board’s responsibility for risk governance is expressed in its charter

as well as the risk policy and plan. The risk policy includes: the

company’s definitions of risk terms and risk management; risk

management objectives; risk approach and philosophy; and various

responsibilities and ownership for risk management in the company.

The committee monitors this process on behalf of the board and

assesses risks, supporting sustainable value creation for the company

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The board sets the company’s level of risk tolerance annually

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The risk matrix is prepared by the CEO, in conjunction with the FD

and investor relations executive, and tabled to the committee

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The risk assessment process addresses risks affecting Hyprop’s various

income streams, critical dependencies, sustainability, and the legitimate

interests and expectations of stakeholders.

For detail on the role and mandate of this committee, please refer to its

charter online.

The social and ethics committee

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The committee comprises three members, one independent

non-executive director and two executive directors

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Given Hyprop’s operations and size, the committee is satisfied with

its current composition. It may consider appointing an additional

non-executive director as member

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The committee is satisfied that it fulfilled its responsibilities in line

with its terms of reference.

The committee monitors the group’s activities in terms of social,

environmental and economic development, including:

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Good corporate citizenship

– promoting ethical leadership, integrity

and anti-corruption, sustainability and value creation, equality,

preventing discrimination and corporate social responsibility

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Environmental impact

– as a landlord, Hyprop has a low environmental

impact, and aims to reduce this further in its daily operations. The

committee reviews the environmental policy biannually and reports to

the board

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Stakeholder relations

– ensuring that all communication to

stakeholders is transparent, true and conforms to the Companies Act

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Human capital

– labour and employment, education and skills

development

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Transformation

– broad-based black economic empowerment and

employment equity.

Stakeholder value creation and sustainability drive Hyprop’s strategy and

daily operations. Management continuously reviews operations and seeks

innovative technologies to reduce an already low environmental footprint.

The group considers itself a good corporate citizen, as reflected in its

initiatives to preserve environmental resources for the wider community

through many Hyprop Foundation projects, as well as the low turnover of

our employee base.

Principle 15

The committee monitors compliance with Hyprop’s code of conduct and

ethics and other relevant social, ethical and legal requirements, as well as

best practice. It reports to shareholders on matters in its mandate at the

annual general meeting and via the integrated annual report.

For detail on the role and mandate of this committee, please refer to its

charter online.

The remuneration and nomination committee

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Chaired by an independent non-executive director, and comprises

non-executive directors with a majority of independent non-

executives

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Reviews and recommends to the board the company’s remuneration

philosophy and policies for directors and employees

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Oversees implementation of the remuneration policy on behalf of the

board

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Ensures that the remuneration strategy reflects the interests of

stakeholders, is comparable to the sectoral remuneration environment,

and complies with relevant principles of good governance

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Ensures that stakeholders can make informed assessments of reward

practices and governance processes

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Ensures that salary structures and policies motivate employees to

deliver on company strategies and goals, and are linked to realistic

performance objectives that support sustainable long-term growth

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Considers whether the objectives of the remuneration policy have

been achieved

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Ensures that the ratio of fixed and variable pay – in cash, benefits and

shares – is aligned with the company’s strategic objectives

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Reviews the effectiveness of recorded performance measures that

govern vesting of incentives

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Ensures that all benefits, including retirement benefits and other

financial arrangements, are justified and correctly valued

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Considers the performance of the chief executive officer and financial

director, when determining their remuneration

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Advises on the remuneration of non-executive directors

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Selects an appropriate peer group when comparing remuneration levels

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Oversees preparation of the remuneration report in the integrated

annual report, to ensure it is accurate, complete and transparent, and

clearly explains how the remuneration policy has been implemented.

New appointments and re-election of non-executive directors

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The board, supported by the remuneration and nomination

committee, is responsible for appointing non-executive directors

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Identifying and selecting candidates is conducted in a formal and

transparent manner. Non-executive directors and the committee

consider the required blend of skills and experience to drive the

company’s strategic objectives, operational progress and

transformation goals, considering diversity and regulatory compliance

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The appointment of new directors is confirmed by shareholders at

the first annual general meeting following their appointment

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The company’s MOI provides for one-third of the non-executive

directors to retire by rotation after a three-year term. If eligible and

available, these directors will offer themselves for re-election in line

with the MOI

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Interim appointees retire at the next AGM, when they may make

themselves available for re-election

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As appropriate, the board, through the nomination committee,

proposes their re-election to shareholders. There is no limit on the

number of times a non-executive director may seek re-election