Corporate Governance

Good corporate governance creates and sustains an ethical and legal environment which recognises the interests of all stakeholders in a Corporation. The Board of Sydney Ports is responsible for overall corporate governance of the Corporation and has adopted corporate governance practices and procedures that are appropriate to manage Sydney Ports in the best interests of the Shareholding Ministers and other stakeholders.

The Board has adopted the NSW Treasury Guidelines for Boards of Government Businesses (Guidelines) and this corporate governance section outlines Sydney Ports’ governance practices during 2010/11. Sydney Ports complies with each of the recommendations.

The role of the Board

The Board is responsible for overseeing the business and commercial affairs of Sydney Ports including:

• approving strategy
• approving business and financial objectives
• monitoring business and financial performance
• reviewing performance and remuneration of executive management
• reviewing the risk management and internal control framework
• recommending to the Portfolio Minister the appointment and removal of the Chief Executive Officer
• reviewing any reporting to Shareholding Ministers.

The Chief Executive Officer is responsible for the day to day management of the operation of Sydney Ports in accordance with the general policies and specific directions of the Board. It is the responsibility of the Board to oversee the activities of management in carrying out these delegated duties.

The Board’s role and responsibilities to each key stakeholder are set out in the Sydney Ports’ Board Charter.

Code of Conduct

Sydney Ports’ Code of Conduct outlines the general business ethics and acceptable standards of professional behaviour we expect of all our Directors, employees and contractors. The Code of Conduct, which is given to all new staff as part of their induction, makes everyone at Sydney Ports accountable for their own decisions and conduct.

The Code of Conduct covers general behaviour expectations, fraud and corruption responsibilities, including policies on acceptance of gifts, benefits, ethics and conflicts of interest requirements. Staff are encouraged to report any suspected breaches and, if they do so, will be protected as detailed in Sydney Ports’ Protected Disclosures Policy.

The Code is available to all staff on the Sydney Ports intranet. The Code also interacts with other more detailed policies concerning Reporting Fraud and Corruption, Disciplinary Policy, Protected Disclosures Policy and Sponsorship, Gifts and Memberships Policy.

The Board receives a summary of any breaches and resulting actions on an annual basis, however any significant breaches must be immediately reported to the CEO.

You can access the Code of Conduct here.

Board committees

To assist the Board in discharging its functions and to allow a more detailed analysis of the specialised areas of finance, risk, audit, human resources, governance, remuneration and major projects, the following committees have been established:

• Audit and Risk Committee
• Remuneration, Human Resources and Governance Committee
• Nominations Committee
• Major Projects Committee

Each Committee has a clear Charter setting out the Committee’s roles, responsibilities and delegated authority from the Board. The Charter of the Board and all Board Committee Charters are reviewed on a regular basis and updated as required.

Audit and Risk Committee

The Chairman of the Audit and Risk Committee is Michael Braham. Michael is an independent non-executive Director, who is not the Chairman of the Board. Other members of the Committee are John Brogden, Rene van der Loos and Talal Yassine, who are each independent, non-executive Directors.

Each of the members of the Committee is financially literate and has knowledge of the business. Michael Braham has qualifications and experience in accounting. The Board considers the mix of skills and experience on the Audit Committee appropriate to meet the responsibilities of its Charter.

The Committee is responsible for oversight and review of:

• financial control and reporting
• risk management
• debt structure and debt instruments
• accounting policies
• the evaluation of all major capital expenditure proposals
• business ethics, policies and practices
• internal controls
• compliance with taxation and other applicable laws and regulations
• integrity and performance of the internal audit function, including appointing the Internal Auditor
• external auditor’s audits, management letter and management’s responses
• corporate governance.

Please refer to the Audit and Risk Committee Charter.

Remuneration Human Resources & Corporate Governance Committee

The Chairman of the Remuneration Human Resources & Governance Committee is Rene van der Loos. Rene is an independent non-executive Director, who is not the Chairman of the Board. Other members of the Committee are Michael Braham and Talal Yassine, who are each independent, non-executive Directors.

The Remuneration, Human Resources and Governance Committee is responsible for assisting the Board in fulfilling its corporate governance responsibilities in regard to:

• recommendations regarding Board composition, taking into account the future skills needs of the Board
• co-ordinating the performance review of the Board
• overall remuneration strategy and remuneration policies for the Chief Executive Officer and Executive Management, including review of remuneration trends across the marketplace
• performance of the Chief Executive Officer and Executive Management
• employment terms and conditions of the Chief Executive Officer and Executive Management.

Please refer to the Remuneration Human Resources & Governance Committee Charter.

Nominations Committee

The Chairman of the Nominations Committee is Bryan T Smith. Bryan is an independent non-executive Director. The other member of the Committee is Rene van der Loos. Rene is an independent non-executive Director.

The Nominations Committee meets on a regular basis and is responsible for assisting the Sydney Ports Board in fulfilling its corporate governance responsibilities with regard to Board composition. This includes assessing the necessary and desirable skills and experience of directors, ensuring directors have the appropriate mix of competencies and identifying skills and experience to fill those gaps and overseeing induction and continuing education of directors.

Please refer to the Nominations Committee Charter

Major Projects Committee

The Chairman of the Major Projects Committee is Bryan T Smith. Bryan is an independent non-executive Director.  The other member of the Committee is Grant Gilfillan, Director and Chief Executive Officer.

The Major Projects Committee is responsible for reviewing the development and delivery of Major Projects in a timely, efficient and cost effective manner being those projects with a total project value of greater than $20M and / or projects of high significance to Sydney Ports. The Major Projects Committee will review new, proposed and completed projects. The Major Projects Committee will meet no less than four times per year.

Please refer to the Major Projects Committee Charter

Board Composition

Under the State Owned Corporations Act (NSW) 1989, Sydney Ports Board is required to have a minimum of three (3) Directors and a maximum of seven (7) Directors. One of these Directors is required to be a staff Director, elected by the staff of Sydney Ports.

Directors are appointed by the Governor, on the recommendation of the Voting Shareholders.

The Voting Shareholders appoint the Chairman, who is currently Bryan T. Smith. Bryan is an independent Director and his role is clearly separated from the role of the Chief Executive Officer, Grant Gilfillan.

Bryan is currently on the board of one (1) other organisation, which is not a government board. The Chairman is responsible for leading the Board and facilitating its effective functioning.

Chief Executive Officer (CEO)

The Chief Executive Officer, Grant Gilfillan, was appointed in January 2008 and was re-appointed for a second term in March 2011. As set out in the State Owned Corporations Act (NSW) 1989, the Chief Executive Officer was appointed by the Governor on the recommendation of the Portfolio Minister, following a recommendation from the Board. The Board’s recommendation of Grant Gilfillan came after an extensive recruitment process.

The Chief Executive Officer is responsible for the day to day management of the operation of Sydney Ports in accordance with the general policies and specific directions of the Board.

Board Independence

All Directors are expected to exercise independent judgment when making Board decisions. It is the approach and attitude of each non-executive Director which is critical to determining independence and this must be considered in relation to each Director while taking into account all other relevant factors, which will include an assessment against the independence recommendations in the guidelines which cover whether the Director:

• is employed, or has been employed in a senior management position by the business, and there has not been a period of at least three years between ceasing that employment and serving on the Board
• has within the last three years been a principal of a material professional adviser or consultant to the business, or an employee materially associated with the service provided
• is a material* supplier or customer of the business, or an officer of or otherwise associated directly or indirectly with a material supplier or customer
• has a material* contractual relationship with the business other than as a Director of the business.

* Material means greater than 5% of the Corporation’s gross revenues.

The independence of each Director is reviewed on an annual basis to ensure circumstances that may affect the independent status of a Director have not changed.

Michael Sullivan is the staff elected Director, and due to his employment by Sydney Ports is not considered independent.  All other Directors are considered independent.

Access to Information and Independent professional advice

Each Director has the right of access to all Sydney Ports’ information and employees. Further, the Board and each individual Director, subject to informing the Chairman, has the right to seek independent professional advice from a suitably qualified advisor, at the Sydney Port’s expense, to assist them to carry out their responsibilities. Where appropriate, a copy of this advice is to be made available to all other members of the Board.

Conflicts of interest

Sydney Ports maintains a conflicts register which registers any interests of Directors which may potentially conflict with their duties as a Director of Sydney Ports, including, other board positions.

Directors are required to update this register on an ongoing basis as circumstances change.

In addition, Directors are required to advise NSW Treasury of any interests or changes in interest.

Directors advise Treasury of any potential conflicts on appointment and the Company Secretary provides Treasury with any updates to these details.

In relation to specific Board decisions, the Board complies with Clause 2, Schedule 10 of the State Owned Corporations Act (NSW) 1989. A Director cannot take part in discussions or vote on a matter in which that Director has a material personal interest, unless the Board resolves that the interest does not disqualify the Director. There have been no related-party transactions between Sydney Ports and any Director during the year.

Other board memberships

The guidelines recommend that Directors should not hold directorships of more than three Government boards. None of Sydney Ports’ Directors have exceeded this limit. Directors inform the Chairman prior to accepting any new appointments.

Board meetings and their Conduct

The Board of Directors of Sydney Ports meets on a monthly basis and more regularly as circumstances require.

Company Secretary

The Company Secretary is responsible for providing administrative and corporate governance support to the Board of Directors. This includes ensuring that the Board receives papers for Board and Committee meetings in advance of each meeting and attendance at Board and Committee meetings to take minutes.

The Company Secretary is appointed and removed by resolution of the Board. Sally Palmer, (Solicitor, Dip Law, ACIS, MAICD) is the Company Secretary of Sydney Ports Corporation.

Director remuneration, appointment and education

When appointed, Directors are provided with a letter of appointment from the Voting Shareholders specifying their term of appointment and remuneration.  In addition, Sydney Ports provides new Directors with a more specific appointment letter setting out expectation of Directors and including a pack of information to assist them in understanding Sydney Ports’ business and the requirements of the role. Information provided includes:

• previous Board minutes
• copies of relevant legislation
• Code of Conduct
• most recent annual report
• Board profiles and contact details
• Board and Committee charters
• Statement of Corporate Intent and Corporate Plan

New Directors are also provided with a Deed of Access and Indemnity in the form approved by NSW Treasury.

The remuneration for Directors of Sydney Ports is determined by the Voting Shareholders.

In addition, new Directors are provided with access to an induction program which includes a series of meetings with the Chairman, Chief Executive Officer and key executives to gain an understanding of Sydney Ports’:

• strategy, objectives and business
• industry in which it operates
• corporate governance practices
• current financial and business performance
• key executives
• remuneration strategy
• risk management framework

All other Directors are encouraged to continue their education. The Board approved and followed a continuing education program for 2010/11 covering practical director skills courses, site visits and briefing on issues relevant to Sydney Ports’ operations. During the year, the Directors' continuing education program included:

• an Enterprise Risk Management workshop
• a Corporate Governance Workshop – Duties of Directors and Officers
• visits to several of Sydney Ports' sites.

In addition, Sydney Ports funds Directors’ membership of the Australian Institute of Company Directors and attendance at specific courses or conferences if appropriate.

Board Performance

The Board believes it is important to evaluate its own performance and that of each Director on a regular basis. To facilitate this, the Chairman provides regular informal feedback to individual Directors.

During 2009/10 NSW Treasury conducted an extensive review of State-owned Corporation boards. The NSW Treasury report was released in the second half of 2010 and provided feedback on the performance of the Sydney Ports Board and its governance practices.

In 2011, the Board engaged an external consultant to conduct a performance evaluation of the Board, its Committees and individual Directors, to assess progress since the implementation of the outcomes and recommendations of the Treasury Board Review. This involved a thorough process of individual interviews, survey completion and Board workshops. The recommendations from this review are currently being assessed and implemented.