1 H.E.S.T. Australia Limited (as Trustee for the Health Employees Superannuation Trust Australia) Governance Disclosures April 2016
2 Page 2 of 20 Contents 1. Overview Board Charter Introduction Role and Responsibilities Board membership Role of the Independent Chair Role of the CEO Role of the Company Secretary Board Committees Executive Committee Audit and Risk Committee Governance and Remuneration Committee Nominations Committee Board Assessment Board relationship with CEO and Executive Team Directors representing the Fund Code of Conduct Introduction Trustee Employees HESTA Directors Expectations of HESTA Directors General Expectations Board and Committee Meetings Director Nomination, Appointment and Renewal Process Introduction Nomination Eligibility Term of Appointments Board Appointment Principles Removal of Directors Introduction Board Determination of Non-Performance Executive Committee Terms of Reference Responsibilities Membership Meetings Authority Audit and Risk Committee Terms of Reference... 15
3 Page 3 of Responsibilities Membership Meetings Authority Governance and Remuneration Committee Terms of Reference Responsibilities Membership Meetings Authority Nominations Committee Terms of Reference Responsibilities Membership Meetings Authority... 19
4 Page 4 of Overview This document contains disclosure of key policy documents as required by the Superannuation Industry (Supervision) Regulations pertaining to the Fund and its Trustee. 2. Board Charter 2.1 Introduction The Trustee is the legal entity responsible for the management of HESTA. The Board is responsible for both the affairs of the Trustee and the subsequent prudent management and investments of the Fund. In the context of the Trustee as an RSE licensee, the Board is further ultimately responsible for the sound and prudent management of the Trustee s business operations. The Board has an overarching fiduciary duty to the members of HESTA and Directors act in accordance with this paramount obligation in discharging their duties and responsibilities. 2.2 Role and Responsibilities The Board is responsible for the overall management of the Fund and delegates certain responsibilities to the Trustee s Executive Team. Specifically, the Board is responsible for: the strategic direction of the Fund which is generally formulated on a three year cycle approving the operational Action Plan and Budget on an annual basis monitoring the performance of the Action Plan and Budget implemented by management on a quarterly basis the sound and prudent management of Fund investments approving the investment objectives for each investment option approving an investment strategy that achieves the Trustee s obligations to members of the Fund ensuring the Fund has an investment management framework for the selection, management and monitoring of investments to meet the Trustee s obligations to members of the Fund, and overseeing the application of this framework taking appropriate and timely action regarding information contained in reports to the Board on investment related matters approving and reviewing the Fund s investment managers overseeing the Trustee s compliance with regulatory and legal requirements ensuring the Trustee maintains an appropriate risk management framework and setting the risk appetite within which the Board expects the Trustee to operate overseeing the Trustee s financial and corporate reporting obligations appointing the external and internal auditors reviewing and assessing its performance and the performance of individual Directors appointing, reviewing the performance of, and replacing as necessary the Chief Executive Officer appointing all Directors, the Independent Chair and Deputy Chairs approving budget allocations for resourcing needs in each business unit within the Trustee office
5 Page 5 of 20 approving and overseeing the Trustee s remuneration framework in relation to both Trustee staff members and Directors ensuring that remuneration for the Executive Team reflects individual and Fund performance approving operating budgets and major capital expenditure; and maintaining and enhancing the Fund s reputation 2.3 Board membership The Board comprises six Directors nominated by the Union ( A ) Guarantors of the Trustee and six Directors nominated by the Employer ( B ) Guarantors and an Independent Chair who is also a Director. The list of Guarantors is as prescribed in the Trustee s Constitution. The Board monitors this structure in light of developments in the industry and broader corporate governance practices and strives to ensure its structure continues to meet HESTA s governance needs. The Chair and Deputy Chairs of the Board are selected on merit through a process conducted by the Nominations Committee which is a sub-committee of the Governance and Remuneration Committee. In addition to the ordinary selection process, the selection of the Independent Chair is undertaken with consideration of additional factors assessed by the Governance and Remuneration Committee to ensure and determine independence. 2.4 Role of the Independent Chair The Independent Chair is the principal liaison point between the Board and the CEO, and also acts as Chair of the Executive Committee. The principal role of the Independent Chair is to: act objectively in providing leadership and consultation to the Board facilitate co-operation and trust between the Board and the Executive Team facilitate the Board s role in providing leadership and vision to the Trustee and Fund guide the ongoing development of the Board as a whole and individual Directors represent to the Chief Executive Officer the views of the Board on matters of strategy and policy encourage, counsel and support Board members in the discharge of their duties encourage cohesion and lead discussions at Board meetings direct Board discussions so there is an effective use of time and material issues are addressed Where a Deputy Chair is appointed, the Deputy Chair resumes all the above responsibilities in place of the Independent Chair in instances where the Independent Chair is not available or unable to be present. 2.5 Role of the CEO The CEO is directly accountable and reports to the Board and is responsible for: the operation and financial performance of the Fund
6 Page 6 of 20 developing and implementing strategies in collaboration with the Board to achieve key Fund objectives providing leadership and strategic direction for the Fund leading and promoting the growth of the Fund overseeing the operation and management of the Fund through the Trustee s business units leading the Executive Team overseeing the implementation of key policies and ensuring the Trustee complies with all its legislative and regulatory obligations representing the Fund in public forums to maintain and enhance its reputation In circumstances where the CEO is absent or unavailable to perform their duties, an Acting CEO may be appointed by the CEO or Chair to act under the delegations as provided for in the Trustee s Delegations Register. 2.6 Role of the Company Secretary The Company Secretary is directly accountable to the Board and reports to the CEO. The Company Secretary is responsible for all matters relating to the effectiveness and proper functioning of the Board and its committees. The Company Secretary s role includes: advising the Board and its committees on relevant governance matters advising or procuring advice for the Board on material legal issues that arise ensuring Board and committee policies and procedures are followed coordinating the distribution of Board and committee papers maintaining relevant corporate records in accordance with all legislative requirements monitoring and facilitating the professional development of Directors providing guidance to the Trustee office on legal matters and engaging with external legal providers as necessary All Directors have direct unfettered access to the Company Secretary. The Company Secretary also has direct access to the Independent Chair. The CEO may also be appointed as an additional Company Secretary to cover situations where the Company Secretary is not available. 2.7 Board Committees The Board has established committees to assist in its decision making processes. These comprise of the Executive Committee, Audit and Risk Committee, Governance and Remuneration Committee, and Nominations Committee. All Board committees are subject to the overall authority of the Board. Each committee is governed by its own Terms of Reference, which are reviewed by the Governance and Remuneration Committee annually and any amendments referred the Board for approval. 2.8 Executive Committee The Executive Committee is generally responsible for making decisions on matters that arise between Board meetings that require the immediate attention of the Board, and
7 Page 7 of 20 other particular matters referred to it by the Board. The Executive Committee has further responsibilities in relation to remuneration recommendations and executive performance. Further responsibilities of the Executive Committee are prescribed in the committee s Terms of Reference. The Executive Committee comprises of the Independent Chair and Deputy Chairs. 2.9 Audit and Risk Committee The Audit and Risk Committee is generally responsible for overseeing the integrity of the Trustee s and Fund s financial reporting and monitoring the effectiveness and operation of the Risk Management Framework and Strategy. The Audit and Risk Committee also oversees and assesses the Trustee s internal risk and compliance controls to ensure these adequately respond to risk and compliance obligations of the Fund. Further responsibilities of the Audit and Risk Committee are prescribed in the committee s Terms of Reference Governance and Remuneration Committee The Governance and Remuneration Committee is generally responsible for overseeing the governance framework that the Trustee operates within and all broad-based remuneration policies relating to both Directors and the Executive Team. Further responsibilities of the Governance and Remuneration Committee are prescribed in the committee s Terms of Reference Nominations Committee The Nominations Committee is formed as a sub-committee of the Governance and Remuneration Committee and is responsible for the selection of the Chair and as required Deputy Chairs it comprises of four Directors from the Governance and Remuneration Committee. When formed, the Nominations Committee conducts the selection process in accordance with the requirements of the Director Nomination Process. Detailed responsibilities of the Nominations Committee and its formation are prescribed in the committee s Terms of Reference Board Assessment The Board is committed to regularly reviewing its own performance, including that of individual Directors and to increasing Board effectiveness. The Board conducts an annual assessment process alternating between an internal survey and an external review both of which encompass individual Director reviews. The outcomes of these assessments are also considered as part of the Director Nomination Process Board relationship with CEO and Executive Team The CEO attends and participates in each Board and Committee meeting.
8 Page 8 of 20 The CEO is the spokesperson for the Trustee and Fund, attends each Board meeting and participates as appropriate. Members of the Executive Team attend Board and committee meetings as required. All Directors have access to the Executive Team, provided such access does not distract from the operations of the Fund Directors representing the Fund The Trustee manages all its public and media relations through its Marketing and Communications Unit to maintain control and consistency on all statements represented in public forums. For this reason, Directors are in general not permitted to speak on behalf of HESTA in public communications unless specifically requested or authorised to do so by the Trustee. Where Directors represent HESTA on external boards, they should remain cognisant of the Trustee s policies, practices and strategies when discharging their duties as a director of that external board. 3. Code of Conduct 3.1 Introduction The Code of Conduct outlines how Directors and employees of HESTA are expected to act in performing their duties. The Code of Conduct aims to ensure the Trustee effectively discharges its duties in managing the Fund with regard to the regulatory requirements applicable to it, ensuring the reputation of the Fund is enhanced and its commitment to the ethical and social responsibilities of a profit-to-members superannuation fund. In meeting its objectives, the Trustee is committed to fostering and maintaining an effective culture and as such, both staff and Directors exercise their responsibilities having regard to the cultural objectives and values articulated through the Trustee s strategic planning process. 3.2 Trustee Employees Must at all times: during the course of their employment act in the best interests of the Fund and its members and ensure that this interest is prioritised against those of any others act honestly, in good faith and with a high standard of integrity ensure all members, employers and guarantors are treated equally and fairly be committed to ensuring their behaviours and actions comply with the relevant laws and regulations applicable to the Fund act with high ethical standards and not engage in activity or behaviours that could be construed as improper 3.3 HESTA Directors In addition to the above standards at 3.2, HESTA Directors must also:
9 Page 9 of 20 be aware of and sensitive to the physical, political and social environment in which the Trustee operates use due care, skill and diligence in fulfilling the duties of a Director and exercising the powers attached to that position not make improper use of information acquired as a Director always give priority to the duties to and interests of the Fund and its members over any relevant duties to and interests of other parties should a potential conflict arise make reasonable inquiries to satisfy themselves in their capacity as Director that the Fund is managed appropriately The Trustee has a number of policies and procedures in place to ensure the standards of conduct for employees and Directors are effectively managed and monitored. These include but are not limited to policies to manage conflicts of interest, training obligations, whistleblowing, fraud and fitness and propriety. 4. Expectations of HESTA Directors 4.1 General Expectations This section outlines what is expected of a HESTA Director in the discharge of their duties. General expectations include: acting in accordance with the Code of Conduct attendance at all Board and where applicable committee meetings, or obtaining a leave of absence if attendance is not possible actively participating as appropriate in Board committees contributing to decision-making and discussions at Board and Committee meetings undertaking prescribed education and training programs and initiatives in accordance with the Directors Education and Training Policy dedicating the appropriate time commitment to undertake their role diligently being appropriately prepared for each meeting participating in Board and Director review processes 4.2 Board and Committee Meetings The Trustee generally holds ten Board meetings per annum however may from time to time call additional meetings as necessary. The general expectation is that Directors attend at least 80% of all Board meetings. If a Director is unable to attend two or more consecutive Board meetings, they must request a leave of absence from the Board. A leave of absence request is not automatically granted as the Board will determine if the reason for the request is justified. In the event a Director is not in attendance at two or more consecutive meetings and has not sought and been granted a leave of absence from the Board, the Chair may elect to commence the process for Non-Performance. If a Director is incidentally unable to attend a Board meeting, their absence will be recorded as an apology. In any event, a Director should notify the Chair or Company Secretary as soon as practicable if they are unable to attend a meeting.
10 Page 10 of 20 The Board reserves the right to exercise its discretion in adjusting a Director s remuneration as determined appropriate in the event of nonattendance (including partial attendance at meetings). Board papers are distributed to Directors in the week prior to the Board meeting, except in exceptional circumstances. This is to ensure Directors have sufficient time to review all papers in preparation for the Board meeting; Directors are expected to have read through all papers prior to meetings to enable effective discussions and decision-making. Committee meetings are held on the day prior to Board meetings, along with any relevant training or investments related presentations. Directors are expected to be in attendance at these meetings also. Time is allocated at each Board meeting for the Directors to meet without the Trustee s management team present. The time commitment for Board and committee meetings together with relevant education and training is typically days per year. Directors are also expected to dedicate additional reading and preparation time leading up to meetings. 5. Director Nomination, Appointment and Renewal Process 5.1 Introduction This section outlines the process to be undertaken for appointment and reappointment to the Trustee s Board. The nomination process for Directors is conducted in accordance with the Trustee s Constitution and all applicable laws. Guarantors are to nominate a specified number of directors in accordance with the provisions of the Trustee s Constitution. This process is undertaken by the Governance and Remuneration Committee. 5.2 Nomination The Trustee s Board follows the equal representation model and consists of nominees from member representatives and employer representatives, A and B Guarantors, respectively. In respect of B Guarantors, those employer organisations eligible to nominate a representative on the Trustee s Board are those determined by the Directors as being within the top six national organisations with the most employees who are members of the Fund. At the conclusion of a Director s term of office or in the case of a casual vacancy, the relevant Guarantor will be provided with information pertaining to the Trustee s expectations of Directors and its fitness and propriety requirements. The Board will further determine particular attributes, experience and qualifications that it deems required and enter into discussions with the relevant Guarantor to ensure the nomination of suitable potential directors. In the case of B Guarantors, the employer organisation s eligibility to re-nominate a Director will be also reviewed having regard to the Guarantor s number of employees who are members of the Fund.
11 Page 11 of 20 The Guarantor organisation will be required to submit their nomination for candidates they deem suitable for the Board s consideration. The Board is responsible for all appointments and re-appointments of Directors. 5.3 Eligibility Directors must have an understanding of the fiduciary responsibilities of Trustees with the primary aim of prudentially investing funds in the interests of HESTA members. Directors must also meet the eligibility criteria under the Corporations Act, Superannuation Industry (Supervision) Act, APRA s Prudential Standards and the Trustee s Fit & Proper Policy in order to be appointed. In addition, individuals who wish to take up the role as a HESTA Director must further demonstrate that they possess the following attributes: a basic understanding of key sources of legislation and regulation relevant to superannuation working knowledge of the SIS Act and Regulations an understanding of investments an understanding of information technology and its applications including digital software an understanding of the fiduciary duties of trustees to beneficiaries an interest in superannuation knowledge and understanding of the health and community services industry capability in working effectively in a collaborative environment expertise in superannuation, finance, management, law, industrial relations or a related discipline either by virtue of extensive experience or qualifications For existing Directors, to be eligible for reappointment at the end of their term, they must also have: an attendance record of at least 80% at Board meetings (or extenuating circumstances to justify a lower attendance record) demonstrated full compliance with the Expectations of HESTA Directors not been involved in any areas where HESTA has suffered, or had the potential to suffer, reputational damage maintained prompt and efficient communication with the Trustee as required In determining an existing Director s attendance record, Directors who have sought and had approved a leave of absence from meetings will not have such an absence attributed to their attendance record. 5.4 Term of Appointments Directors are appointed for an initial five year renewable term and re-assessed at the end of this term for reappointment. The Independent Chair is appointed for an initial three year renewable term and is also reassessed at the end of this term for reappointment. Directors will be appointed for a maximum of 2 five year terms and the Independent Chair for a maximum of 3 three year terms.
12 Page 12 of 20 The Board may resolve to extend the tenure of a Director and the Independent Chair beyond the maximum terms above under extraordinary circumstances, where the Board determines it would be disadvantageous and detrimental to the best interests of the Fund and its members, for the particular Director to leave the Board. This is not ordinary practice and the Board only makes such decisions on Director reappointments upon detailed deliberations. A situation which may give rise to such extraordinary circumstances may be where the Board has experienced significant turnover in a short period of time, and it would therefore be detrimental to the skills and experience possessed by the collective Board, should it lose the services of a long-serving Director. All reappointments including extensions of maximum tenure periods are considered by the Board having regard to the below Board Appointment Principles to ensure good corporate governance practice. 5.5 Board Appointment Principles The Board recognises the importance of ensuring an appropriate balance between Director renewal and continuity of knowledge, and generally takes into account the following principles when managing board appointments: all appointments must be made in the best interests of the Fund s members the value of fresh insights and reinvigoration of a board the importance of adequate experience and corporate knowledge particularly through market cycles the value of effective board dynamics and decision making ability that comes from board stability and shared experience the importance of diversity in board membership e.g. gender, age, geographic representation In addition to the above considerations, the Board also has regard to the following matters when determining reappointments of Directors at the expiry of each of their terms of appointment: the overall balance of the existing Board with respect to tenure, skills and diversity any particular skills or expertise that the Board may require whether a replacement is more appropriate and available The Board takes the view that continuity of Fund knowledge is of particular importance in the context of a Trustee managing a superannuation fund. Investments undertaken by superannuation funds are long-term in nature. This emphasises the particular need to maintain ongoing Fund knowledge and experience of the Board as carefully balanced against any appetite to introduce levels of change and invigoration to the Board at the expense of such knowledge. 6. Removal of Directors 6.1 Introduction
13 Page 13 of 20 There may be circumstances that arise resulting in a Director ceasing to hold office as a Director of the Trustee Board, these of which generally include: formal resignation from their position by the Director expiration of the term of appointment and no reappointment is made removal by written notice from the Guarantor who nominated that Director failing to meet their Fit and Proper regulatory obligations, or any other Director obligations and responsibilities in accordance with the Governance Framework the Board making a determination that the Director has failed to perform their duties of an acceptable standard and therefore no longer capable of carrying out the responsibilities of a Director 6.2 Board Determination of Non-Performance Directors are encouraged to be open and discuss any concerns around meeting the Trustee s expectations of them. Where the Board holds the view that a Director is not meeting the Trustee s expectations, or concerns around performance become evident through the Board review process, the following procedure will be followed: the Chair and if required a Deputy Chair, will address the issues with the Director in question the Chair will seek a commitment from the Director to improve their performance or behavior as appropriate to address the issues raised the performance of the Director will be reviewed three months after this commitment is given if after three months, there has been little or no improvement in performance or behavior then the Chair will hold a second discussion with the Director with consideration of customised training or professional development to address the areas of concern if the Director agrees to undertake the relevant training, their performance will continue to be reviewed over an additional three month period if the Director refuses to undertake the training or they do so without any improvement in performance over the second three month review period, the Chair will recommend to the Board that the Director be removed the Board on such a recommendation from the Chair will resolve to remove the Director in accordance with the Trustee s Constitution, unless exceptional circumstances prevail the Board will then commence discussions with the nominating organisation to appoint a replacement If a Director is found to be in serious breach of their obligations to the Trustee the Director will be removed as soon as practicable in accordance with the Trustee s Constitution, and the above steps may be dispensed with as appropriate. Directors are expected to adhere to the requisite time commitments in fulfilling their role on the Board. Should a Director not attend two consecutive Board meetings without having prior sought and been approved with a leave of absence from the Board, the above procedure may be adopted by the Chair to address the matter.
14 7. Executive Committee Terms of Reference 7.1 Responsibilities The Executive Committee will, subject to the overall authority of the Board, be responsible for: Making time critical business or investment decisions as they arise outside of Board meetings conducting the performance reviews for the CEO and Executive Team in accordance with the policies set by the Board recommending appropriate remuneration increases for the CEO to the Governance and Remuneration Committee reviewing the established Policy Guidelines for Executive Management Positions and recommending changes as appropriate The Executive Committee will also provide strategic leadership and guidance to the Board. 7.2 Membership The Executive Committee comprises of the Independent Chair and Deputy Chairs. The CEO will attend all meetings except when the terms and conditions for the CEO s appointment are being considered. The Deputy Chairs will nominate two proxies in designated order to act in their place on the Executive Committee in the event they are not available. Proxies will have the same decision making powers as the member of the Executive Committee that they are acting as proxy for. 7.3 Meetings Meetings of the Executive Committee do not occur regularly however where scheduled, will usually be held on the day prior to the Board meeting and on such other occasions as necessary. The Chair will provide a brief report of the findings and recommendations at an Executive Committee meeting to the Board. The Chief Executive Officer will be in attendance at meetings of the Committee. At least two Directors on the Committee must be present to form a quorum at a meeting. 7.4 Authority The Executive Committee may seek any relevant information it requires from any officers or employees of the Trustee or any external service provider. Such parties will be instructed by the Board or the Executive Team to respond to such enquiries to the extent
15 Page 15 of 20 they are made in accordance with any relevant policies, contractual arrangements, or applicable regulations. The Executive Committee is authorised to engage independent professional advice on matters as it considers necessary. Any such advice will be reported to the Board for consideration. There may be occasions when urgent decisions need to be made between Board meetings and as such the Executive Committee will make such a decision on authority from the Board. The Board acknowledges that such decisions are made on behalf of the Board as a whole. The Executive Committee makes decisions on authority delegated to it by the Board and as such reports to the Board on all decisions made under this delegation. Resolutions made by the Executive Committee will only pass if they are unanimous. 8. Audit and Risk Committee Terms of Reference 8.1 Responsibilities The Audit and Risk Committee assists the Board in discharging its duties in relation to the financial management, performance and reporting obligations of the Fund. It is responsible for the financial affairs of the Trustee and Fund and ensuring that appropriate controls and procedures are in place. The Audit and Risk Committee is required to report outcomes of its meetings to the Board. In particular, the Audit and Risk Committee is responsible for: oversight of all financial reporting requirements and APRA statutory reporting requirements reviewing the annual financial statements or any other financial information to be published before their submission to the Board for approval reviewing the effectiveness of the Trustee s financial reporting process and systems ensuring internal controls and procedures relating to risk management are appropriate and effective reviewing the Risk Management Framework and Strategy on an annual basis reviewing the Trustee s business continuity management protocols to ensure adequate disaster recovery and business continuity plans are in place reviewing the AML/CTF Compliance Program and annual report reviewing as required by the Board any relevant policies relating to the Trustee s compliance with APRA Prudential Standards monitoring and assessing the performance of the internal and external auditors appointing the external and internal auditors having regard to all relevant regulatory and prudential requirements reviewing and making recommendations to the Board concerning the terms of appointment and scope of engagement of external and internal auditors ensuring the auditors meet the relevant independence requirements prescribed in the APRA Prudential Standards and Corporations Act 2001 ensuring the objectives of the internal audit include an evaluation of the adequacy and effectiveness of the Trustee s financial and risk management framework
16 Page 16 of 20 reviewing audit findings and ensuring issues are managed and rectified in an appropriate and timely manner ensuring that the Trustee has an appropriate Whistleblowing Policy in place and monitoring the Trustee s compliance with it adherence with any professional accounting requirements The internal auditor will have a direct reporting line to the Audit and Risk Committee however works with the Executive Team on a day-to-day basis as necessary. Both internal and external auditors are invited as appropriate to attend Audit and Risk Committee meetings. 8.2 Membership The Audit and Risk Committee will comprise of six Directors including at least one: Director nominated from the A Guarantors Director nominated from the B Guarantors of the Deputy Chairs It is preferred by the Board that there is an equal number of Directors from each of the Guarantor groups represented on the Audit and Risk Committee. Members of the Audit and Risk Committee are appointed by the Board. The Board will endeavour to ensure that at least one member of the Committee has accounting or related financial expertise. The Independent Chair will not be a member of the Audit and Risk Committee. The Board may appoint non-directors with voting rights to the Audit and Risk Committee in addition to the six Directors. The Executive Manager Finance and Investment Operations ( E-FIO ), on appointment by the Trustee, serves as a member of the Audit and Risk Committee. The Board will also nominate one of the Committee members to undertake the role of Chair for the Committee. The Director appointed as Chair of the Committee must possess accounting and finance expertise. Other Directors who are not members of the Audit and Risk Committee are welcome to attend meetings, but will have no voting rights. 8.3 Meetings Meetings of the Audit and Risk Committee are held at approximately quarterly intervals, or more frequently as required by the Committee or Board. Meetings of the Committee are usually held on the day prior to the Board meeting. Prior to the commencement of meetings, auditors in attendance will meet with members of the Committee if determined necessary, at the exclusion of Trustee staff. This provides an opportunity for auditors to raise any matters directly with the Committee that may require the Board s attention. The Company Secretary will together with the CEO and the E-FIO draw up an agenda which will be endorsed by the Committee Chair and circulated in the week prior to each meeting to the members of the Committee and the internal and external auditors.
17 Page 17 of 20 The Chair of the Audit and Risk Committee will provide a report on the findings and recommendations of the Committee to the Board after each Committee meeting. The Company Secretary will prepare minutes of all Committee meetings and these will be circulated to members of the Committee for endorsement at the next Committee meeting. The Chair will call a meeting of the Audit and Risk Committee if so requested by any Committee member, or the external auditors. The Committee will meet to consider the Trustee s and Fund s financial statements prior to their submission to the Board for approval. The CEO, Chief Operating Officer ( COO ), Company Secretary, E-FIO and GM-Risk and Compliance will be in attendance at meetings of the Committee. At least two-thirds of the total number of members of the Audit and Risk Committee must be present to form a quorum at a meeting. 8.4 Authority The Audit and Risk Committee may seek any relevant information it requires from any officers or employees of HESTA or any contracted service provider. Such parties will be instructed by the Board or the Executive Team to respond to such enquiries to the extent they are made in accordance with any relevant policies, contractual arrangements, or applicable regulations. The Audit and Risk Committee is authorised to engage independent professional advice on matters as it considers necessary. The Audit and Risk Committee makes decisions on authority delegated to it by the Board and as such reports to the Board on all decisions made under this delegation. Resolutions made by the Audit and Risk Committee will only pass if a majority of the Committee members present vote in favour of it. 9. Governance and Remuneration Committee Terms of Reference 9.1 Responsibilities The Governance and Remuneration Committee is responsible for: reviewing and monitoring the governance arrangements for the Trustee and Board reviewing and determining appropriate education and training courses for Directors in accordance with the Directors Education and Training Policy annually reviewing the Directors Education and Training Policy to ensure it is capable of adequately addressing the education and training requirements of Directors reviewing the expertise of the Board and identifying any areas of weakness in terms of its skill mix and capacity to perform the functions required of it determining and recommending processes by which the Board s performance can be reviewed and improved conducting an annual assessment of the Board as part of the Board review process
18 Page 18 of 20 engaging external advisers every two years to conduct the Board assessment monitoring the outcomes of the Board Review and addressing areas of improvement managing the nominations process for appointments and reappointments to the Board annually reviewing and providing recommendations to the Board on the remuneration arrangements for the CEO making annual recommendations to the Board on the remuneration of the Trustee s responsible persons these of which include Directors, the Company Secretary and Executives conducting regular reviews of and making recommendations to the Board on the Trustee s Remuneration Policy making annual recommendations to the Board on the remuneration entitlements for individuals to which the Trustee Remuneration Policy applies electing the Deputy Chairs as appropriate or alternatively electing to form the Nominations Committee to undertake the selection process 9.2 Membership The Governance and Remuneration Committee will comprise of the Independent Chair and six Directors including at least one: Director nominated from the A Guarantors Director nominated from the B Guarantors of the Deputy Chairs It is preferred by the Board that there is an equal number of Directors from each of the Guarantor groups represented on the Governance and Remuneration Committee. The Independent Chair is also the Chair for meetings of the Committee. 9.3 Meetings Meetings are held at least twice per year or more frequently as required by the Board or Committee. Meetings of the Committee are usually held on the day prior to the Board meeting. Recommendations and/or reports are made to subsequent Board meetings. The CEO and Company Secretary will be in attendance at meetings of the Committee. At least one Director from each of the A Guarantors and B Guarantors must be present to form a quorum at a meeting. 9.4 Authority The Governance and Remuneration Committee may seek any relevant information it requires from any officers or employees of the Trustee or any contracted service provider. Such parties will be instructed by the Board or the Executive Team to respond to such enquiries to the extent they are made in accordance with any relevant policies, contractual arrangements, or applicable regulations. The Governance and Remuneration Committee is authorized to engage independent professional advice on matters as it considers necessary.
19 Page 19 of 20 The Governance and Remuneration Committee makes decisions on authority delegated to it by the Board and as such reports to the Board on all decisions made under this delegation. Resolutions made by the Governance and Remuneration Committee will only pass if a majority of Committee members present vote in favour of it. 10. Nominations Committee Terms of Reference 10.1 Responsibilities The Nominations Committee unlike the other Board Committees does not form and meet regularly, due to the limited scope and nature of its responsibilities. The role of the Nominations Committee is to select the Chair and Deputy Chairs in accordance with the Appointment of Independent and Deputy Chair process, where the Board determines that it is appropriate for the Nominations Committee to form and do so. The Nominations Committee will assess candidates for the role of Chair and Deputy Chairs and recommend the most suitable candidates to the Board Membership The Nominations Committee is a sub-committee of the Governance and Remuneration Committee. The Nominations Committee will consist of four Directors, two from each of the A and B Guarantors. No Director who is nominating for the position of Deputy Chair may be a member of the Nominations Committee. The Committee will appoint a Chair from amongst themselves. The Committee Chair will not have an additional casting vote. The Committee may seek staff secretarial support if required. In the event it is not possible to form the Committee in accordance with the above membership requirements, the Committee may draw upon the broader Board members to form the Nominations Committee Meetings All four Directors who are members of the Nominations Committee must be present to form a quorum for a meeting. The CEO will be in attendance at meetings of the Committee Authority As part of the appointment process, the Committee may, without limitation, consider: using an external search firm to identify candidates using Director Registers e.g. Australian Institute of Company Directors, CPA Australia calling for nominations from employer and union organisations canvassing superannuation industry association chief executives for potential candidates placing advertisements in appropriate publications The Committee has no decision-making authority however makes recommendations to the Board concerning the subject matter of their responsibilities. These recommendations are then tabled to the Board for resolution.
20 A recommendation of the Nominations Committee is only referred to the Board for resolution if a majority of the Committee vote in favour of it. Page 20 of 20
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