King III requires the board to be led by an independent non-executive chairman and makes a number of points pertinent to this matter:

• A chief executive officer should not also hold the role of chairman of the company
• The chairman of the board should be independent and free of conflicts of interest on appointment, failing which the board should consider appointing a lead independent director.
• If the board appoints a chairman who is a non-executive director but is not independent, this should be disclosed in the integrated annual report, together with the reasons and justification of the decision.

Mr Nestadt is the independent non-executive chairman of Blue Label and has held this position since the company’s listing in November 2007. For this reason the board has not appointed a lead independent director.

Board charter

The board has a formally approved charter which is reviewed annually to ensure its continuing compliance with local and international best practices and changes to the South African regulatory environment. The board charter provides, inter alia, an overview of the policies and practices of the board with regard to matters such as board composition, meeting procedures, board governance, dealings by directors in securities, disclosure and conflicts of interest and the nomination, appointment, induction, training and evaluation of directors and members of board committees.

The charter notes the following key board responsibilities in alignment with King III:

• ensuring that the company’s ethics are managed effectively by, inter alia, building and sustaining an ethical corporate culture in Blue Label and ensuring that a code of conduct and ethics related policies are implemented;
• ensuring the integrity of the company’s integrated annual report;
• responsibility for information technology (IT) governance, focusing on the governance of the information as well as the governance of technology, by establishing an IT governance framework that supports effective and efficient management and decision making around the utilisation of IT resources to facilitate the achievement of the company’s objectives and the management of IT-related risks;
• reporting on the effectiveness of the company’s system of internal controls;
• recognising that strategy, risk, performance and sustainability are inseparable and give effect to this by:
  
• retaining full and effective control over the company by contributing to and approving the strategic direction of the company,
• satisfying itself that the strategy and business plans proposed for the achievement of the group’s objectives do not give rise to risks that have not been thoroughly assessed by management,
• monitoring the implementation of the strategic plans and identifying key performance and risk areas,
• ensuring that the strategy will result in sustainable outcomes taking into account financial, environmental and social objectives as approved by the board,
• considering sustainability as a business opportunity that guides strategy formulation,
• ensuring that Blue Label is and is seen to be a responsible corporate citizen with regard to not only the financial aspects of the business, but also the impact that the business has on the environment and the society in which it operates, thus ensuring that the company acts responsibly towards all its stakeholders, and
• appreciating that stakeholders’ perceptions affect a company’s reputation and in this regard, identify, manage and monitor the gap between stakeholder perceptions and the performance of the company so as to enhance or protect Blue Label’s reputation.

Board meetings

A minimum of four board meetings are held during a financial year with additional board meetings convened as required. Where directors are unable to attend meetings personally, teleconferencing facilities are made available to enable their participation.

The non-executive directors bring leadership, judgement and insight to the board. They have access to management and may meet separately with management with or without the attendance of executive directors. A non-executive director has no fixed term of appointment and no service contract with the company. Fees are independent of the company’s financial performance and they receive no bonus and do not participate in the company’s Forfeitable Share Plan.

Executive directors are bound by a three-year employment contract, each of which commenced in November 2007. Contracts were renewed in November 2010 for a further three-year period.

Performance assessment of the board collectively, directors individually and the various board committees is conducted annually in November, with the next evaluation due to be done in November 2011. The assessment is conducted internally and focuses on strategy and planning, board structure and role, meeting process, independence of the board and its committees, performance monitoring, board and director responsibilities, board culture and relationship. The process is managed by the chairman, whose own performance is assessed by the Remuneration and Nomination Committee. The Chairman presents his report on the assessment to the Remuneration and Nomination Committee for their appropriate recommendation to the board, which in turn, then considers the recommendations of the Remuneration and Nomination Committee.