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2019 Corporate Governance Statement and Appendix 4G

ASX ANNOUNCEMENT DATE: 11 October Corporate Governance and Please find attached in accordance with Listing Rules 4.7.3, and , a copy of Pact Group Holdings Ltd s Corporate Governance
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ASX ANNOUNCEMENT DATE: 11 October Corporate Governance and Please find attached in accordance with Listing Rules 4.7.3, and , a copy of Pact Group Holdings Ltd s Corporate Governance and completed. For further information, contact: Jonathon West Company Secretary T PACT GROUP HOLDINGS LTD ABN Building 3, 658 Church Street, Cremorne VIC 3121 Australia T F W pactgroup.com.au Corporate Governance 2019 The Pact Group Holdings Ltd (the Company or Pact) Board recognises the importance of good corporate governance and its role in ensuring the accountability of the Board and management to shareholders. The Board is concerned to ensure that the Company and its subsidiaries (Group) are properly managed to protect and enhance shareholder interests and that the Company, its Directors, officers and employees operate in an appropriate environment of corporate governance. The Board has adopted a corporate governance framework comprising principles and policies that are consistent with the ASX Corporate Governance Council s Corporate Governance Principles and Recommendations (3rd edition) (ASX Recommendations). This Corporate Governance : outlines the key aspects of the Group s corporate governance framework; is structured and numbered in order of the principles set out in the ASX Recommendations; includes cross references to other relevant information in this Corporate Governance on the Company s charters, policies and codes, details of which are available in the Corporate Governance section of the Company s website at com.au/investor/corporate-governance/corporate-statement/; and should be read in conjunction with the Directors Report and the Remuneration Report (contained in the Directors Report) which is included in the 2019 Annual Report available at pactgroup.com.au/investor/investor-communications/reports-andpresentations/ as those reports also contain information required to be included by the ASX Recommendations. The Board has approved this Corporate Governance and considers that the Company s corporate governance framework and practices have complied with the ASX Recommendations for the financial year, except as otherwise detailed in this Corporate Governance. Principle 1: Lay solid foundations for management and oversight Role of the Board and Management The Board is responsible for the corporate governance of the Company. The Board provides strategic guidance for the Company and effective oversight of management. The principal role of the Board is to: represent and serve the interests of shareholders by overseeing and appraising the Company s strategies, policies and performance; protect and optimise Company performance and build sustainable value for shareholders in accordance with any duties and obligations imposed on the Board by law and within a framework of prudent and effective controls that enable risk to be assessed and managed; set, review and ensure compliance with the Company s values and governance framework; and ensure shareholders are kept informed of the Company s performance and major developments affecting its state of affairs. Pact Group Holdings Ltd ABN PACT CORPORATE GOVERNANCE STATEMENT Corporate Governance 2019 The Board s key responsibilities/functions include: selecting, appointing and evaluating the performance of, determining the remuneration of, and planning for succession of, the Chief Executive Officer (CEO); contributing to and approving management development of corporate strategy, including setting performance objectives and approving operating budgets; reviewing, ratifying and monitoring systems of risk management and internal control and ethical and legal compliance; monitoring corporate performance and implementation of strategy and policy; and approving major capital expenditure, acquisitions and divestitures, and monitoring capital management. The Company has established the functions reserved for the Board and these are contained in the Board Charter and the Group s Delegated Authority Policy. The CEO and senior executives, who are accountable to the Board, are responsible for matters that are not specifically reserved to the Board, primarily being the day-to-day operations and management of the Group. Matters which are specifically reserved for the Board or its Committees include: appointment of a chair; appointment and removal of the CEO and the Chief Financial Officer (CFO); appointment of directors to fill a vacancy or as an additional director; establishment of Board committees, their membership and delegated authorities; approval of dividends; approval of major capital expenditure, acquisitions and divestitures in excess of authority levels delegated to management; calling of meetings of shareholders; and any other specific matters nominated by the Board from time to time. Directors The Board has adopted a Policy which applies to a person who will be appointed as a casual vacancy, as an addition to the Board or to a candidate for election as a Director for the first time. The Policy involves undertaking appropriate checks of the candidate including checks as to the persons character and experience, criminal and bankruptcy history and any other relevant matters. The Board has also adopted a policy for the re-election of incumbent Directors. This includes the Nomination and Remuneration Committee considering the results of an individual Director s performance evaluation. Material information in the possession of the Company which is relevant to a decision on whether or not to elect or re-elect a Director of the Company will be provided in the explanatory memorandum which accompanies the Notice of Annual General Meeting. Directors eligible for election or re-election are also invited to address the meeting and provide details of the relevant experience and skills they bring to the Board. The Company has a written agreement with each Director and senior executive setting out the terms of their appointment. These agreements were put in place prior to the appointment of the Director or senior executive, other than in respect of the Chairman whose agreement was put in place during the 2014 financial year. The nature of the agreements differ between those for Non-executive Directors and those for the Executive Director and senior executives, recognising and reflecting that the latter are employees of the Company. Company Secretary The Company Secretary s employment agreement recognises that he is directly accountable to the Board through the Chairman on all matters to do with the proper functioning of the Board. Diversity Policy The Company recognises that people are its most important asset and is committed to the maintenance and promotion of workplace diversity to ensure a discrimination-free place of work. Encouraging diversity drives the Company s ability to attract, retain and develop the best talent. It also enables an engaged workforce, the delivery of the highest quality services to its customers and the continued growth of the business. The Company s vision for diversity incorporates a number of different factors, including gender, ethnicity, disability, age and educational experience. The Company s Diversity Policy can be accessed in the Corporate Governance section at corporate-governance/policies-and-standards/. The Board set its measurable objectives as required by the Diversity Policy. Those measurable objectives are: Each monthly staff recruitment assignment requires at least one female candidate to be recommended for interview and / or job ready process; PACT CORPORATE GOVERNANCE STATEMENT Corporate Governance 2019 The Remuneration process at Pact is required to deliver gender pay equity across same and similar roles; and Include specific questions in the next Group employee engagement survey to identify whether gender is a workplace issue for employees across the Group. Since setting the measurable objectives in April 2014, the Company has continued to focus on establishing the systems and processes required to ensure that the Group is able to manage, monitor and achieve the objectives. The progress towards reaching the objectives has been as follows: External recruiters have been requested to source female candidates for all salaried staff vacancies with the intention to: a) enable gender oversight of the recruitment process; and b) build the pool of job-ready female talent from which to source into the medium term. The annual salary review includes gender detail to identify any gender pay equity imbalance. Active management of salary review with a lens on gender has helped to identify and take steps to reduce inequity. Commencement salaries are reviewed against peers to ensure that there is not a discrepancy where the requirements of the role and the capabilities and experience of the candidate are the same or similar; The Group lodged its annual public report with the Workplace Gender Equality Agency (WGEA) including detail on gender pay equity. It has been confirmed by the WGEA that it achieved compliance status; and The next Employee Engagement Survey is planned to be completed in FY20. The following table shows the representation of men and women at various levels within the Group workforce as at 30 June 2019: Level Proportion of Women % Proportion of Men % Non-Executive Directors Senior Executives* Other Levels Total * Senior Executives are defined as the CEO and direct reports to the CEO. Board and Committee Performance Evaluation The evaluation of the Board and its Directors and the evaluation of the Committees will usually be assessed in alternating years with the evaluation of the Board and its Directors being completed during the 2019 financial year. Directors provided written feedback in relation to the performance of the Board against a set of agreed criteria. Each Director was also required to provide feedback on his or her own performance. Feedback was collected by the Chairman of the Board via the Company Secretary. The results of the Board evaluations have been discussed by the Directors. The results concluded that the Board is functioning in an appropriate manner. Senior Executive Performance Evaluation The performance of senior executives is formerly evaluated every six months by the CEO which also includes the establishment of their forward objectives. The CEO engages with each of his direct reports on an ongoing basis in relation to their performance and has regular discussions with each of them to facilitate a process of ongoing continuous improvement of their performance across technical, business and leadership criteria. At the mid-year review a discussion takes place between each senior executive and the CEO. The key purpose of the mid-year review is to track progress against the objectives and to determine action plans to ensure achievement of objectives to the extent considered necessary. The full year review, which occurs in July of each year, assesses the full year performance of the senior executives against their objectives as well as the corporate values of the Company. Performance evaluations for senior executives, which accords with the process described above, took place in July 2019 for the 2019 financial year. Principle 2: Structure the Board to add value Board Pact s Constitution provides that the Board not comprise of more than seven directors. During the 2019 financial year, the Board comprised of six Directors, being 5 Non-executive Directors and the CEO, for part of the year but only 5 Directors in the period between the resignation of Mr Bundey as CEO and the commencement of Mr Dayal as CEO. Subsequent to the end of the financial year, Mr Margin has retired as a Director of the Board, and so there are currently again five Nonexecutive Directors and the CEO. Board Committees To assist the Board in meeting its responsibilities, the Board currently has established the following two committees: the Nomination and Remuneration Committee (NRC); and the Audit, Business Risk and Compliance Committee (ABRCC). PACT CORPORATE GOVERNANCE STATEMENT Corporate Governance 2019 The members of these Committees are set out below: NRC ABRCC Chairman Jonathan Ling Jonathan Ling (since Peter Margin s retirement) Members Lyndsey Cattermole Lyndsey Cattermole Raphael Geminder Ray Horsburgh Each Committee is structured so that it: consists of a majority of independent directors; is chaired by an independent director; and has at least three members. The ABRCC is also structured so that it consists only of Non-executive Directors. The Charters for each of the NRC and ABRCC can be accessed in the Corporate Governance section at corporate-governance/board-and-committee-charters/. The responsibilities of the NRC are as follows: Board and Committee Meetings Details of the number of Board and Committee meetings held during the 2019 financial year and the attendance of Directors and members of the Committees respectively are contained on page 43 of the 2019 Annual Report. Board Skills Matrix The Board considers it important to maintain an appropriate mix of skills, experience, expertise and diversity in its membership to ensure that it is able to meet the present and future needs of the Company. The Board has developed a Board Skills Matrix which sets out the mix of skills, experience and expertise that the Board considers relevant to the membership of the Pact Board. The skills, experience and expertise and their relative importance to Pact are set out in the table below. Skill/Experience/Expertise Importance Manufacturing industry, business/ commercial, strategy, Very finance/ accounting, governance, human resources, and important good judgement As they relate to nomination matters: review, assess and make recommendations to the Board on the desirable size, composition, competencies and attributes of the Board; review and recommend to the Board succession plans regarding the Chairman and CEO; Entrepreneurship/innovation, risk management, investment/capital management, corporate social responsibility Legal, information technology, public relations/ communication/ investor relations, Important Relevant review and recommend to the Board membership of the Board including recommendations for the appointment and re-election of Directors; establish policies and procedures and make recommendations to the Board for the selection, appointment and removal of the CEO; and assist the Board to assess the performance of the Board, its Committees and its members. As they relate to remuneration matters: review and recommend to the Board remuneration and contractual arrangements for the CEO and executives reporting to the CEO; review, at least annually, the performance of the CEO against individual and Company targets; review the senior executives performance assessment processes and results and review and approve short term incentive strategy, performance targets and bonus payments; review and recommend to the Board the establishment of any employee equity incentive plan; and review and recommend to the Board remuneration arrangements for the Chairman and Non-executive Directors. Each member of the Board has undertaken a self- assessment against the skills, experience and expertise and rated themselves and this has then been reflected in the matrix and discussed with the rest of the Board. The Board is of the view that collectively each of these areas is currently well represented on the Board. The Board benefits from the combination of Directors individual skills, experience and expertise as well as the different perspectives and insights that each Director brings to the Board. In respect of diversity, the Board recognises the benefit of having, and looks to achieve in its membership, varying backgrounds, attributes and gender representation. Independence of Directors It is the Board s policy that there should be a majority of independent, Non-executive Directors. A review of each Non-executive Directors independence has been undertaken. The Board remains of the view that it has a majority of independent Directors with 4 (Ms Cattermole, Ms Chua, Mr Horsburgh and Mr Ling) of the 6 Directors considered independent. For more information on each Director (including their experience, expertise, qualifications and term of office) see pages 40 to 41 of the 2019 Annual Report. PACT CORPORATE GOVERNANCE STATEMENT Corporate Governance 2019 In general, Directors will be considered to be independent if they are not members of management and they: are not material shareholders of the Company, or officers of, or otherwise associated with, material shareholders of the Company; have not within the last three years been employed in an executive capacity by the Company or another Group member; have not within the last three years been a principal or senior employee of a material professional adviser or material consultant to the Company or another Group member; are not, or have not within the last 3 years been a material supplier to or customer of the Company or other Group member or an officer of, or otherwise associated, with a material supplier or customer; have no material contractual relationship with the Company or another Group member, other than as a Director of the Company; have no close family ties with any person who falls within any of the categories described above; have not been a Director of the Company for such period that his or her independence may have been compromised; and are free from any interest, business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director s ability to act in the best interests of the Company. The Board considers the materiality of any given relationship on a case-by-case basis and has adopted materiality guidelines to assist in this regard which are set out in Attachment 1 to the Board Charter which can be accessed in the Corporate Governance section at In general, the Board will consider holding 5% or more of the Company s shares to be material. The Board will also consider an affiliation with a business which accounts for less than 5% of the relevant base to be immaterial for the purposes of determining independence. The Board views independence of each Director in light of interests disclosed to the Board from time to time. The Chairman, Mr Raphael Geminder, holds approximately 40% of the issued capital of the Company. Accordingly, the Chairman is not an independent director. As outlined in the Prospectus dated 27 November 2013 and the Company s previous Corporate Governance s, the Board believes that Mr Geminder is the most appropriate person to lead the Board as Chairman and that he is able to and does bring quality of judgement to all relevant issues falling within the scope of the role of chairman and that the Group as a whole benefits from his long-standing experience of its operations and business relationships. The Board is conscious that there are a number of related party dealings between the Group and interests associated with Mr Geminder. These related party transactions are disclosed in the Financial s for the relevant years. As a consequence, the Board has put in place a Related Party Protocol to monitor and govern these transactions and to ensure compliance with the Corporations Act. During the 2019 financial year, the Board appointed Mr Geminder as Executive Chairman on an interim basis effective from 9 September 2018 until the appointment of Mr Dayal as Chief Executive Officer on 3 April Induction and Professional development The Company has an induction program for new Directors. On an ongoing basis, the Company provides the Directors with information to ensure the Directors have knowledge of current business performance and major issues. In addition, this is supported by periodic site visits in conjunction with Board meetings as well as the opportunity to hear from senior executives on a regular basis. The Directors are expected to undertake any necessary
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