The role of the Board
The Board of Directors is elected by shareholders to govern in their interests. The Board is the overall and final body responsible for all decision-making within the Company. The Board Charter, which is on the bottom of this page, describes the Board’s role and responsibilities and regulates internal Board procedure.
The Board has the responsibility to work to enhance the value of the Company in the interests of the Company and its shareholders.
Delegation of authority framework
To enhance efficiency, the Board has delegated some of its powers to Board Committees and other powers to the Chief Executive Officer. The terms of the delegation by the Board to the Chief Executive Officer are clearly documented.
Membership, size and composition
The Board is comprised of six Directors, being a Non-executive Chairman, two Executive Directors, and three Non-executive Directors. The Board has the broad range of IT, financial, sales, business and other skills and expertise necessary to meet its objectives.
Selection and role of Chairman
The Chairman is elected by the Board from the non-executive Directors. The Board supports the separation of the role of Chairman and Chief Executive Officer. The Chairman’s role is to manage the Board effectively, to provide leadership to the Board and to facilitate the Board’s interface with the Chief Executive Officer.
Director independence
The Board Charter requires that a majority of Directors be “independent”.
As required by the NZX listing rules, the Company’s approach to director independence is to have regard to relationships that could (or could be perceived to) materially interfere with the exercise of the unfettered and independent judgement of a director. The NZX listing rules provide guidance as to the types of relationships which constitute ‘material relationships’, affecting independence or the perception of independence.
The Board will review any determination it makes as to a Director’s independence on becoming aware of any information that indicates the Director may have a relevant material relationship with the Company. For this purpose, Directors are required to ensure that they immediately advise of any new or changed relationships to enable the Board to consider and determine the materiality of the relationship.
The Board considers that Guy Haddleton, Phil Norman, Graham Shaw and Sam Morgan were independent and that Rod Drury and Hamish Edwards were not independent by virtue of their executive responsibilities.
Conflicts of interest
The Board Charter outlines the Board’s policy on conflicts of interest. Where conflicts of interest do exist at law then Directors excuse themselves from discussions and do not receive the relevant paper in respect of those interests, and in accordance with the NZX listing rules do not exercise their right to vote in respect of such matters.
Nominations and appointment
The procedures for the appointment and removal of Directors are ultimately governed by the Company’s Constitution. The suitability of candidates for appointment is based on pre-established criteria. When recommending candidates to act as Director, the Board takes into account such factors as it deems appropriate, including the experience, qualifications, availability and judgement of a candidate and the candidate’s ability to work with other Directors.
Directors receive formal letters of appointment setting out the arrangements relating to their appointment.
Board Committees
The Board operated two Committees during the year, the Audit and Risk Management Committee and the Remuneration Committee. The Charters of each Committee are on the Xero website. The membership of each Committee is as follows:
Audit and Risk Management Committee – Graham Shaw (Chair), Sam Morgan, Phil Norman
Remuneration Committee – Phil Norman (Chair), Guy Haddleton, Graham Shaw
In May 2008 the Board established a Nominations Committee comprising the non-executive directors of the Board. A Charter for the Committee will be produced during the coming financial year.
Retirement and re-election
The Constitution provides that a Director is required to stand for re-election at the third Annual Meeting following the Director’s appointment or three years, whichever is the longer.
Director remuneration
Directors' fees have been previously set at $250,000 for the non-executive Directors. The fees for the past year were $180,000, in line with planned levels.
Board access to information and advice
The Directors generally receive materials for Board meetings five days in advance, except in the case of special meetings for which the time period may be shorter due to the urgency of the matter to be considered. The Company Secretary is responsible for supporting the effectiveness of the Board by ensuring that policies and procedures are followed and co-ordinating the completion and dispatch of the Board agenda and papers.
All Directors have access to Executives, including the Company Secretary, to discuss issues or obtain information on specific areas in relation to items to be considered at the Board meeting or other areas as they consider appropriate. Further, Directors have unrestricted access to company records and information.
The Board, the Board Committees and each Director have the right, subject to the approval of the Chairman, to seek independent, professional advice at the Company’s expense to assist them to carry out their responsibilities. Further, the Board and Board Committees have the authority to secure the attendance at meetings of outsiders with relevant experience and expertise.
Director education
All Directors are responsible for ensuring they remain current in understanding their duties as a Director.
Directors’ share ownership
All Directors and employees are required to comply with the Company’s Insider Trading Policy and Guidelines, in undertaking any trading in the Company’s shares.
Details of the Directors’ shareholdings are included in the Disclosures sections of this Annual Report.
Indemnities and insurance
Deeds of Indemnity have been given to Directors in relation to potential liabilities and costs they may incur for acts or omissions in their capacity as Directors.
The Directors and Officers liability insurance covers risks normally covered by such policies arising out of acts or omissions of Directors and employees in their capacity as such. Insurance is not provided for dishonest, fraudulent, malicious or willful acts or omissions.
Board meetings
Board meetings are held each month and additional meetings are held when necessary. At each meeting the Board considers items of key financial and operational information as well as matters of strategic importance.
Executives and other senior people regularly attend Board meetings and are also available to be contacted by Directors between meetings.
Directors who are not members of the Committees may attend the Committee meetings.
Board performance
Board and Committee performance is subject to regular discussion at meetings of the Board and Committees.
Audit independence
One of the main purposes of the Audit and Risk Management Committee is to ensure the quality and independence of the audit process. The Chairman of the Committee and General Manager Finance work with the external auditors to plan the audit approach. All aspects of the audit are reported back to the Committee and the auditors are given the opportunity at Committee meetings to meet in executive session with the Board.
Ethics
The Board maintains high standards of ethical conduct and the Chief Executive Officer is responsible for ensuring that high standards of conduct are maintained by all staff, although no formal code of ethics is documented at this time.
