Board composition, structure and report back

Board of Directors

The Board directs the Group towards and facilitates the achievement of the Group's strategy and operational objectives. It is accountable for the development and execution of the Group's strategy, operating performance and financial results. Its primary responsibilities include determining the Group's purpose and values; providing strategic direction to the Group; appointing the joint Chief Executive Officers; identifying key risk areas and key performance indicators of the Group's businesses; monitoring the performance of the Group against agreed objectives; deciding on significant financial matters; approving policies and reviewing the performance of the Executive Directors against defined objectives. A range of non-financial information is also provided to the Board to enable it to consider qualitative performance factors that involve broader stakeholder interests.

The Board, which meets at least quarterly, retains full and effective control over all the operations. Additional ad hoc Board meetings are convened as circumstances require.

Board charter

Our Board Charter assists our Board in conducting its business according to legislative requirements and the principles of good corporate governance. It ensures that each Director is aware of his or her powers, duties and responsibilities when acting on behalf of the Blue Label Telecoms Group. The Board Charter is subject to the provisions of the Companies Act, JSE Listings Requirements, our Memorandum of Incorporation (MOI) and all other applicable legislation. The Board Charter covers the role and function of the Board; its detailed responsibilities; how it discharges its duties; the Board composition; and the establishment of Board Committees. The Board Charter as well as the terms of reference and work plans of the Board subcommittees, are aligned with the requirements of King IV.

The Board has concluded that it has collectively satisfied and fulfilled its responsibilities in accordance with the charter.

Governance framework

The Board regards governance as a fundamental essential for the success of the Group's business. It is committed to applying the principles of good governance in directing and managing the Group in order to achieve its strategic objectives. The Board is the focal point for and custodian of the Group's governance framework and is supported by its Committee structures, management, shareholders and other stakeholders of the Company. The Board is ultimately accountable for the performance and affairs of the Company.

The governance framework facilitates a balance between the Board's role of providing direction and oversight with accountability to support acceptable risk parameters and consistent compliance with regulations, standards and codes relevant to the Group. At the same time, the Board encourages entrepreneurship and innovation, which are recognised as key drivers of Group performance. At the operations, governance processes are aligned with the governance framework established by the Board. Each subsidiary company has its own board of directors and its strategy, business plan and performance criteria are clearly defined. Subsidiary boards comprise Executive and Non-executive Directors, some of whom are Executive and Non-executive Directors of Blue Label.

A delegation of authority framework has been developed and implemented across all Group companies. The Board is satisfied that the delegation of authority framework contributes to role clarity and the effective exercise of authority and responsibilities.

Following the acquisition of 45% of Cell C in August 2017, the Blue Label Board has been actively monitoring and advising on the alignment of governance structures and processes at Cell C with those of the Company.

Board composition

Blue Label has a unitary Board structure comprising 10 Directors. Six are Independent Non-executive Directors, while one is Non-executive and three are Executive Directors. A biography of each director appears in the Board of Directors.

The Board has a majority of Non-executive Directors. This is incorporated into our Board Charter, which promotes power and authority at Board of Director level, to ensure that no one Director has unfettered powers of decision-making. In line with King IV, the roles of the Chairman and the joint CEOs are separate. The Board is led by Larry Nestadt, an Independent Non-executive Chairman. The joint CEOs are Brett Levy and Mark Levy.

The Chairman's role includes setting the ethical tone for the Board and ensuring that the Board remains efficient, focused and operates as a unit. The Chairman provides overall leadership to the Board, without limiting the principle of collective responsibility for Board decisions. He also facilitates appropriate communication with shareholders and enables constructive relations between the Executive and Non-executive Directors.

The joint CEOs' principal roles are to provide leadership to the executive team in running the Group's businesses. The Board defines the Group's levels of authority, reserving specific powers for the Board, while delegating others to Senior Management. The collective responsibility of management vests with the joint CEOs who regularly report to the Board on the Group's progress in delivering its objectives and strategy.

The Group's Financial Director is Dean Suntup. The Audit, Risk and Compliance Committee is satisfied that he has the appropriate expertise and experience for this position.

The Group has implemented a holistic succession planning process at Board, top level management and subsidiary management levels. The succession plans are reviewed and approved by the appropriate bodies annually and documented accordingly. Furthermore, the business continuity plan for the Group has been drafted such that it incorporates the subsidiary succession plans. The Group has influential joint CEOs who co-founded the business, both of whom have a vested interest in the long-term future of the Group. However, in unforeseen circumstances, the Group has robust succession planning in place for both CEOs.

Blue Label Group recognises the value of diversity and is committed to promoting gender and race equality in the Group. Our Board has introduced the policy on the Promotion of Gender and Race Equality in the Blue Label Telecoms Group, which is available online at www.bluelabeltelecoms.co.za. Our talent management processes, together with our policy, will enable us to improve diversity within the Group.

On an ongoing basis, the Board considers its structure, its gender, race and size composition, as well as the relationship between Executive and Non-executive Directors. It is committed to making sustainable progress towards ensuring that the Board is sufficiently gender and race diverse and has the necessary skills to competently discharge its duties, having regard to the strategic direction of the Group. No specific targets have been set in relation to the Board diversity policy. The Board has appointed Ms Nomavuso Mnxasana as an Independent Non-executive Director in September 2020 and Mr Lazarus Zim in October 2020.

The Board is actively pursuing the appointment of additional Independent Non-executive Directors to further enhance independence and diversity of skills, race and gender at Board level. The Board has developed and approved a policy on the promotion of broader diversity at Board level, specifically focusing on the promotion of the diversity attributes of gender, race, culture, age, field of knowledge, skills and experience.

The Remuneration and Nomination Committee (RNC) annually debates the independence of its Independent Non-executive Directors who have served on the Board for a period of nine years or more. Laurence Nestadt, Gary Harlow, Joe Mthimunye and Jerry Vilakazi have been assessed in this regard. The Committee has found them suitably independent, with continuing strong contributions, considering their experience within the Group and sector and they are considered to continue operating independently and objectively and have no conflicts of interest.

Messrs Lazarus Zim and Jerry Vilakazi were nominated and accepted such nominations, to serve on the Remuneration and Nomination Committees at the Board meeting held on 23 June 2021 and Mr Jerry Vilakazi will accordingly rotate off the Audit, Risk and Compliance Committee in 2022 to ensure appropriate representation across the Board sub-committees.

The Board wishes to assure all stakeholders that the tenure and independence of Non-executive Directors is vigorously debated and tested and that all Board meetings are robust in terms of their deliberation. Given the complexity of the industry within which Blue Label operates and the complexity of Blue Label itself, the Board believes that
long-term knowledge and understanding of the issues surrounding the business are invaluable. The RNC is managing the succession plan at Board level to ensure that a pipeline of new Independent Non-executive Directors is established and that the succession plan will be seamless and maintain a mixture of new appointees with experienced Directors.

Board appointments

One-third of the Directors retire by rotation every three years in terms of the MOI. If eligible, available and recommended for re-election by the RNC, their names are submitted for re-election at the AGM, accompanied by a short biography set out in the integrated annual report. In this regard, BM Levy, JS Mthimunye, SJ Vilakazi and PL Zim will be retiring at the forthcoming AGM and, being eligible, have made themselves available for re-election. A brief biography of each Director appears in the Board of Directors.

The RNC assists the Board with the assessment, recruitment and nomination of new Directors, subject to the whole Board approving these appointments. Board members are also invited to interview potential appointees.

A formal and transparent procedure applies to all new Board appointments, which are subject to approval by shareholders at the first AGM following that Director's appointment. Prior to appointment, candidates are required to complete a fit and proper test, as per the JSE Listings Requirements.

A policy requiring Directors to observe a "cooling-off" period before accepting appointments to other Boards, which may present a conflict of interest, has been included in the Board Charter.

Board effectiveness

The Board Charter provides for assessment of the Board and its committees every other year. During 2021 an internal self-assessment of the composition and effectiveness of the Board, its subcommittees and individual Directors was performed. The overall results reflected that the Board, its subcommittees and individual Directors were performing effectively and above satisfactorily, in the categories surveyed. The improved diversity of the Board and progress on succession planning of Non-executive Directors was acknowledged and a number of continuous improvement areas were noted including continued scrutiny and objective oversight of conflict-of-interest positions, that can arise in related party transactions. The Board has carefully considered the outcomes of the self-assessment and agreed on actions that will be tracked to implementation. The Board is satisfied that the evaluation process improves performance and effectiveness of the Board as a whole.

Evaluations of individual Executive Director's performance take place annually, once during remuneration increase and performance bonus award periods and, as applicable, prior to the AGM regarding the re-election of Directors. Refer to the remuneration section for the performance evaluation of the CEOs and the CFO against agreed upon performance measures and targets.

Induction of a new Director is tailored according to the knowledge and experience of the Director in a listed company environment. Focus is placed on providing information on the Board structure, business operations and Group strategy. Ongoing training and development of Directors involve ad hoc presentations to the Board by professional advisers and Senior Management to ensure the Board is kept abreast of governance, regulatory, financial and operational developments.

Company secretary

Our Board remains satisfied with the competency and experience of our Group Company Secretary, Janine van Eden (BProc, LLB, Conveyancing). The performance appraisal of the Company Secretary for the year under review took into account the quality of support received and guidance provided to the Board. She maintains an arm's length relationship with the Board, providing guidance to Board members on execution of their duties and keeps up to date on the latest developments in corporate governance and regulation. All Directors have full access to the services and advice of the Group Company Secretary in all aspects of the Board's mandate and operations of the Group; the Board is satisfied that these arrangements are effective.

Board committees

The Board has delegated certain functions to well-structured committees, without abdicating its own responsibilities and accountability. Board Committees operate under written terms of reference approved by the Board.

Board Committees are free to take independent professional advice as and when deemed necessary, for which a formal policy is in place. The Group Company Secretary provides secretarial services for the Committees.

There is transparency and full disclosure from Board Committees to the Board. The minutes of Committees are submitted to the Board for noting and discussion. In addition, Directors have full access to all Board Committee documentation and Committee Chairpersons provide the Board with verbal reports on recent meetings.

The Board is of the opinion that all Board Committees have effectively discharged their responsibilities, as contained in their respective terms of reference.

Our Board subcommittees are structured and attendance at meetings during FY2021 is presented as follows:

Board     Special    
Board    
Audit,    
Risk and    
Compliance    
Remuneration  
and Nomination  
Special  
remuneration  
and  
Nomination  
Social, Ethics  
and   Transformation  
Investment
Total number of meetings held during the year 5     15     4     1   1   3   2
Actual attendance/possible maximum attendance of meetings
LM Nestadt 5/5     15/15     –     1/1   1/1   –   
KM Ellerine 5/5     14/15     –     –   –    3/3   2/2
GD Harlow 5/5     12/15     4/4     1/1   1/1   3/3   2/2
BM Levy 5/5     15/15     4/4*   1/1* 1/1* 3/3   2/2
MS Levy 5/5     15/15     4/4*   1/1* 1/1* –     2/2
N Mnxasana 2/2** 6/8** 2/2** –   –    –    
JS Mthimunye 5/5     15/15     4/4     1/1   1/1   –     2/2
SJ Vilakazi 5/5     15/15     4/4     –   –    3/3  
DA Suntup 5/5     15/15     4/4*   1/1* 1/1* –^ 2/2
DR Hilewitz –     –     –     –   –    –     2/2
PL Zim 2/2#     5/7#     –     –   –    –    

*   Attendee.

**   Appointed 18 September 2020.

#   Appointed 23 October 2020.

^   Alternate to BM Levy.

 

Subcommittee structure and report back

The Board remains accountable for all matters where it has delegated responsibility to its subcommittees. The committees, their members and principal functions and focus areas are set out below:

Executive Committee

Members

MS Levy (Chairman) I Zwarenstein3
BM Levy B Le Sar4/5
DA Suntup A Greenblatt
M Nyawane1 A Roberts
A Kodesh2 G Levin6
J Smith J Newman7
DB Rivkind
EC de Villiers
DR Hilewitz
L Pogir
J van Eden

1     Appointed 1 January 2021.

2     Resigned 1 January 2021.

3     Resigned 31 March 2021.

4     Appointed 31 October 2020.

5     Resigned 14 June 2021.

6     Appointed 16 September 2020.

7     Appointed 15 September 2021.

Key objective and terms of reference

The Group Executive Committee is augmented beyond the Executive Directors, by the inclusion of operational and functional management to provide a forum for dissemination of strategies and policies to operating subsidiary levels and provide oversight and feedback from operations on strategic matters in a combined forum. Group-wide strategic and policy decisions are typically formulated by the Executive Directors and approved by the Board.

Certain Group Executive Committee members are represented on boards of operating subsidiaries and act as liaisons with operating subsidiary CEOs and/or management.

The Executive Committee has concluded that it has fulfilled its responsibilities in accordance with its terms of reference.

2021 focus areas

Key focus areas of the Executive Committee during FY2021 included concentrating on ensuring that a responsible and agile response to the ongoing Covid-19 pandemic was developed and executed while maintaining focus on growing the core distribution business of the Group, as well as deriving revenue from big data analytics and revenue assurance models.

As an ongoing practice, the Executive Committee is responsible for ensuring that subsidiaries:

  • adhere to the strategies and policies of the Group;
  • adhere to best management practices and functional standards;
  • adhere to legal compliance and internal control; and
  • are efficiently and competently managed.

2022 focus areas

Key focus areas of the Executive Committee during FY2022 shall include:

  • Inculcating the outcomes-based family values of the Blue Label culture;
  • Combating margin compression;
  • Strict management of costs;
  • Strategic deployment of cash;
  • Continued concentration on compliance and controls; and
  • Growth of the core South African distribution business.

Audit, risk and compliance

Members and attendees Number of meetings Member attendance
JS Mthimunye (Chairman) 4 100%
Member attendance
GD Harlow
SJ Vilakazi
N Mnxasana**
BM Levy*
MS Levy*
DA Suntup*

*   Attendee.

** Appointed 18 September 2020.

Key objective and terms of reference

Provides governance over internal controls, compliance, performance of internal and external audit, appropriateness of accounting and adequacy of external reporting.

The Audit, Risk and Compliance Committee concluded that it has fulfilled its responsibilities in accordance with its terms of reference.

2021 focus areas

  • Effectiveness of governance, risk management, control environment, liquidity and cost management at Blue Label and at Cell C, through its nominees;
  • Engagement with management on the Covid-19 risk exposure and the continuing steps taken to minimise risk to the business and protect all staff, suppliers and customers as far as possible;
  • Focus on internal controls and raising the role of internal audit to improve governance and compliance during the current challenging COVID-19 environment;
  • Oversight of JSE Listings Requirements pertaining to internal financial reporting controls;
  • Review and monitor developments in governance and JSE Listings Requirements updates; and
  • Plan for mandatory audit firm rotation, which is effective for the year commencing 1 June 2023.

Refer to governance of risk, technology and information governance, combined assurance and to the Audit, Risk and Compliance Committee report for further details.

2022 focus areas

  • Complete the Cell C recapitalisation and assess its impact on the Blue Label Group;
  • Mandatory audit firm rotation plan;
  • Review internal audit function;
  • Appointment of internal and external auditors at Cell C through its nominees;
  • Continue to improve governance and compliance processes at Cell C through its nominees;
  • Appoint new members to ARCC and plan for Chairmanship rotation; and
  • Review fraud mitigation strategies and internal controls in the Group.

Remuneration and Nomination Committee

Members and attendees Number of meetings Member attendance
GD Harlow (Chairman of Remuneration Committee) 2 100%
LM Nestadt (Chairman of Nomination Committee)
JS Mthimunye
BM Levy*
MS Levy*
DA Suntup*
SJ Vilakazi**
L Zim**

*   Attendee.

** Appointed 11 June 2021.

Key objective and terms of reference

Ensure competitive remuneration and incentive policies aligned with strategy to drive performance and value creation that attract and retain the right talent. Review design and targets of incentive schemes and remuneration packages, Executive and Non-executive Director appointments and succession planning, annual evaluation of independence of Non-executive Directors and composition of Board and its Committees.

The RNC concluded that it has fulfilled its responsibilities in accordance with its terms of reference.

The RNC continues to ensure that total rewards are set at levels that are competitive and drive performance in the short and long term, ensuring alignment with shareholder interests and at the same time promoting an ethical culture and responsible corporate citizenship.

2021 focus areas

  • Monitoring the implementation of the revised remuneration policy across the organisation to demonstrate our commitment to attracting and retaining critical skills and talent;
  • Continue to champion the fair and responsible pay of our talent, support the transformation agenda and eliminate any unfair bias or practices;
  • Monitor and assess the remuneration landscape within South Africa, particularly relative to other telcos and similarly sized organisations;
  • Review of our peer group applicable to the long-term incentive plan;
  • NED benchmarking assessment;
  • Alignment of metrics to value creating behaviour and hence shareholder interests and rewarding performance accordingly; and
  • Attracting female black talent onto our Board of Directors for Blue Label.

2022 focus areas

  • Continue to evaluate our policy in terms of market and peer reviews and our success in attracting and retaining key talent to deliver our strategic goals and shareholder returns;
  • Review performance metric goals as appropriate in the context of prevailing economic conditions in South Africa;
  • Attract and appoint a further black Non-executive Director to the board, preferably with Telco and/or audit experience. This is in terms of our plans to ensure an orderly rotation and or replacement of Non-executive Directors who have served on the Board for longer than nine years, as well as achievement of our race and gender diversity goals on the Board;
  • ESG goals are aligned with best practices, ensuring they are not only measurable but also verifiable;
  • Benchmark NED fees and review accordingly;
  • Continue to engage with our institutional shareholders for their input on our remuneration policy and report and consider any recommendations for improvement;
  • Continue to focus on equality through reviewing employment equity strategy and targets as well as diversity and inclusion initiatives;
  • Review growth opportunity strategy, which includes conditions of employment, management, leadership development programmes and long-term employee development through succession planning; and
  • Drive and monitor our policy of equal pay for equal work across gender and race.

Social, Ethics and Transformation Committee

Members Number of meetings Member attendance
SJ Vilakazi (Chairman) 3 100%
KM Ellerine
GD Harlow
BM Levy (alternate DA Suntup)

Key objective and terms of reference

Monitor the Group's activities and compliance with legislation relating to equality, black economic empowerment, good corporate citizenship, the environment, health, public safety, and consumer and labour relations, as well as advise the Board where necessary and appropriate. Review ethical business conduct, including any activity on the ethics hotline.

The Social, Ethics and Transformation Committee concluded that it has fulfilled its responsibilities in accordance with its terms of reference.

2021 focus areas

  • Continue to evolve Blue Label's CSI approach in pursuit of shared value by leveraging Trust Blu Foundation to ensure that our initiatives are aligned to deliver on RITE;
  • Increase integration of the Group's institutional capabilities to further support our CSI, enterprise and supplier development programmes;
  • Continue to support the integration of socio-economic and enterprise development initiatives with marketing campaigns to increase synergy;
  • Oversee the implementation of the approved stakeholder management programme, which is in line with the principles of King IV;
  • Continue to review and assess stakeholder relations;
  • Continue to provide oversight on the activities related to global diversity and inclusion;
  • Oversee the development of a Group enterprise and supplier development policy to transform the supply chain by introducing 51% black-owned entities, 30% black women-owned entities as well as exempt microenterprises and qualifying small enterprises;
  • Ensure the embedding of ethics is done in an ethical, safe and responsible way;
  • Monitor and evaluate the implementation of ethics management; and
  • Consolidating and scaling our CSI initiatives, as well as continued collaboration with our non-profit organisation and implementation partners.

Refer to the human capital report, the Social, Ethics and Transformation Committee report, the effective and ethical leadership report and stakeholder relations sections for further details.

2022 focus areas

  • Drive a mindset of performance with purpose which includes:
    • Being responsive for the need of the communities we serve while building our business which includes
      • Quality education
      • Decent work and economic growth
      • Sustainable communities - socio-economic plans
      • Reduce inequalities
      • Reducing poverty
      • Improving the environment, health, and safety performance continuously.
  • Continue driving a growth mindset culture which includes:
    • Short and long-term objectives
    • Developing innovative solutions for long-term growth
    • Developing self and others to build careers as a retention strateg.
    • Driving long-term employee development for succession planning.
  • Continue to evolve Blue Label's CSI approach in pursuit of shared value by leveraging Trust Blu Foundation to ensure that our initiatives are aligned to deliver on RITE.
  • Increase integration of the Group's institutional capabilities to further support our CSI, enterprise and supplier development programmes.
  • Continue to support the integration of socio-economic and enterprise development initiatives with marketing campaigns to increase synergy.
  • Oversee the implementation of the approved stakeholder management programme, which is in line with the principles of King IV.
  • Continue to review and assess stakeholder relations.
  • Continue to provide oversight on the activities related to global diversity and inclusion.
  • Oversee the development of a Group enterprise and supplier development policy to transform the supply chain by introducing 51% black-owned entities, 30% black women-owned entities, as well as exempt microenterprises and qualifying small enterprises.
  • Ensure the embedding of ethics is done in an ethical, safe and responsible way.
  • Monitor and evaluate the implementation of ethics management.
  • Talent transformation and succession planning to enable improved diversity at Senior Management and Top Management occupational groups.

Investment Committee

Members Number of meetings Member attendance
GD Harlow (Chairman) 2 100%
KM Ellerine
DR Hilewitz
BM Levy
MS Levy
JS Mthimunye
DA Suntup

Key objectives and terms of reference

  • Review for approval the proposed acquisitions, investments and disposals of the Group recommended by the Executive Committee;
  • Reviewing, considering and recommending to the Board acquisitions and investments of the Group;
  • Annually review the performance of each investment and acquisition made over the past five years; and
  • Review and update Capital Allocation Policy of the Group.

The Investment Committee concluded that it has fulfilled its responsibilities in accordance with its terms of reference.

2021 focus areas

  • Continue to develop and apply revised risk and return parameters to new investments and monitor previous acquisitions and their performance;
  • Continue to look for buyers in order to dispose of the Indian asset;
  • Development of a new risk assessment metric to make target internal rate of return (IRR) goals more challenging before approval. The Investment Committee recognises that the risk appetite associated with the Cell C acquisition was exceeded;
  • The Investment Committee and the Board continues to impose a moratorium on new acquisitions, as we continue to consolidate, focus on the optimisation of our core businesses and strengthening of our balance sheet. Blue Label's strategy is to grow its businesses organically and to enhance its competitive advantage and offering to its customers, through strategic acquisitions. All new investments considered have to be motivated by alignment with Group objectives, strategic focus, and they have to enhance future profitability. Among the considerations are the requirements that the future returns exceed Blue Label's weighted average cost of capital adjusted with a risk profile metric, meet stringent IRR targets, enhance Blue Label's service and product offerings or complement existing ones, attract new skills and management and offer synergy benefits; and
  • Our other energies were focused on Cell C's refinancing and stabilisation initiatives. The Committee has requested certain interventions by the Blue Label-nominated Directors of Cell C, as well as bi-annual Cell C management reports back to the Committee.

2022 focus areas

  • Complete the new Capital Allocation Policy. These guidelines will enhance our investment approval processes, optimise our balance sheet structure, enhance profitability within our risk appetite and determine when dividends may be resumed and or shares repurchased;
  • Once Cell C has been recapitalised, the focus will be on supporting Cell C to achieve its turnaround goals and enabling Blue Label to claw back on its investment that was impaired in 2019.
  • Management of group debt levels within risk parameters and through core cash-generating activities as well as optimising costs through hedging where appropriate.