Principle 1 - Lay Solid Foundations for Management and Oversight
As Dexus comprises of four real estate investment trusts, its corporate governance practices satisfy the requirements relevant to unit trusts. The Board has determined that the governance framework will also meet the highest standards of a publicly listed company. This includes the convening of an Annual General Meeting, the appointment of directors by Dexus Security holders and their consideration of the remuneration report.
1.1 Board responsibilities
The framework adopted by Dexus ensures accountability and a balance of authority by defining the respective roles and responsibilities of the Board and executive management (as outlined in the Terms of Reference for the Board and the Group Management Committee). This enables the Board to maintain a focus on strategic guidance while exercising effective oversight.
Terms of Reference for the Board and its delegated Committees are available at www.dexus.com/boardcommittees
The Board’s responsibilities include (but are not limited to):
- Determining strategy, including reviewing and approving Dexus’s business objectives and strategies to achieve them. These objectives inform the setting of performance targets for the Chief Executive Officer and the Group Management Committee members. Performance against these objectives is reviewed by the Board People & Remuneration Committee and is a primary input to the remuneration review of Group Management Committee members
- Approving the annual business plan
- Approving periodic market guidance
- Approving the financial statements and disclosures
- Approving significant acquisitions and divestments and major developments
- Ensuring that Dexus has in place an appropriate Risk Management Framework (including a Risk Appetite Statement) to support Dexus’s approach to risk
- Ensuring that Dexus’s fiduciary and statutory obligations to stakeholders (including third party clients, and capital partners) are met
The Board is also responsible for appointing and monitoring the Chief Executive Officer and Company Secretaries and monitoring the performance of the Group Management Committee.
1.2 The Role of the Chair and appointment processes for directors
The role and responsibility of the Chair includes leading the Board, facilitating the effective contribution of all directors, and promoting constructive and respectful relations between directors and between the Board and management. The Chair is also responsible for promoting the interests of the Group to its Security holders and regulators.
On 1 November 2016, Mark Ford joined as an independent member of the Board bringing extensive property industry experience having been involved in Real Estate Funds Management for over 25 years.
The Board currently comprises seven independent, Non- Executive Directors and one Executive Director.
While directors of the Responsible Entity are not technically subject to the approval of Dexus Security holders, the Board has determined that all directors, other than the Chief Executive Officer, will stand for election by Dexus Security holders. If a nominated director fails to receive a majority vote, that director will cease to be appointed to the Board of DXFM. Dexus Security holders are provided all material information relevant to a decision on whether to elect or re-elect a director.
DXFM directors, other than the Chief Executive Officer, hold office for three years following his or her first appointment (or, if appointed by the Board between Dexus Annual General Meetings, from the date of the Annual General Meeting after the initial appointment).
At the time of appointment, each Non-Executive Director is required to sign a letter of appointment which sets out the terms and conditions of appointment. The letter outlines the term of office, independence, role and responsibilities of the director.
Executive Directors and other members of the Group Management Committee are also required to enter into an employment agreement setting out their terms of employment.
Background checks of newly appointed Non-Executive Directors are performed which include:
- National Police Check
- ASIC Banned and Disqualified Register check
- ASIC Authorised Representative search
- ASIC Enforceable Undertaking Register search
- APRA Disqualified Register check
- Directorships check
- AML/CTF Global Official Lists check (sanctions list)
- Public Record check
- Academic Qualification check
- Employment history check
- Bankruptcy Record check
The process for selecting and appointing new directors to the Board can be found at www.dexus.com/boardpolicies
1.3 Company Secretaries
Company Secretaries play an important role in supporting the effectiveness of the Board and Board Committees. Company Secretaries are responsible for ensuring the smooth running of the Boards and Board Committees and ensuring that governance matters are appropriately addressed. They are accountable to the CEO, the Chair of the Board and the Chairs of the Board Committees on all matters relating to the proper functioning of the Board and its Committees. A Company Secretary attends all meetings of the Board. All directors have direct access to the Company Secretaries for guidance and assistance.
1.4 Group Management Committee Responsibilities
The Board has appointed a Group Management Committee responsible for achieving Dexus’s goals and objectives, including the prudent financial and risk management of the Group. The Group Management Committee generally meets weekly.
Members of the Group Management Committee during 2017 were:
- Chief Executive Officer & Executive Director (Chair)
- Chief Financial Officer
- Chief Investment Officer
- Executive General Manager, Customer and Marketing
- Executive General Manager, Funds Management
- Executive General Manager, Investor Relations, Communications and Research
- Executive General Manager, Office & Industrial
- Executive General Manager, Retail and New Fund Development
- General Counsel & Company Secretary
Dexus supports a diverse and inclusive workplace and has created a culture that is tolerant, flexible and adaptive to the changing needs of its industry. Dexus is committed to diversity and inclusion principles, and promotes a work environment conducive to the merit-based appointment of qualified employees, senior management and directors. Where professional intermediaries are used to identify or assess candidates, they are made aware of Dexus’s commitment to diversity and inclusion.
During 2017, the Corporate Responsibility, Inclusion & Diversity Committee, chaired by the Chief Executive Officer & Executive Director, continued to promote and encourage a work environment where diversity and inclusion are understood and valued.
Dexus publishes annual statistics on the diversity profile of its Board and senior management, including a breakdown of the type and seniority of roles undertaken by women. This information is available at www.dexus.com/boardpolicies. Dexus acknowledges and fulfils its obligations under relevant employment legislation including the Workplace Gender Equality Act 2012 (“WGEA”). Dexus has lodged its 2016-2017 WGEA report containing Dexus’s most recent Gender Equality Indicators and a copy is available on Dexus’s website at www.dexus.com
The Dexus gender diversity target for 30 June 2017 was that at least 33% of non-executive directorships and at least 33% of senior management roles were to be held by women. As at 30 June 2017, Dexus’s actual levels were 43% of Non-Executive Directors and 33% of senior manager roles. Women represent 51% of Dexus’s employees. Dexus’s definitions of ‘Senior Management’ and ‘Measurable Objectives’ are disclosed in its Diversity Target which is available at www.dexus.com/boardpolicies
Dexus undertakes Gender Pay Equity audits to gain insight into the effectiveness of its Diversity Principles and to review its position on diversity both internally and against external benchmarks. The results of this year’s audit were presented to the Group Management Committee as part of a calibration process at the end of the annual Dexus Compensation Review. In 2017 Dexus reached gender pay equity in like-for-like roles.
Diversity and flexibility is also a key focus of the Property Male Champions of Change (PMCC). Dexus’s Chief Executive Officer, Darren Steinberg is an active member of the PMCC and participates in a Flexibility sub-committee. The PMCC’s focus on driving gender equality in the property industry has resulted in members implementing initiatives relating to flexibility to improve the number of women in the industry and in leadership roles. Flexibility at Dexus provides every employee with the opportunity to have a say in when, how, or where their work is performed. Dexus supports flexible work practices to increase personal wellbeing and employee engagement, improve team performance and motivation, maximise productivity, retain talent, and encourage an organisational culture of diversity and inclusion.
Dexus’s Diversity and Inclusion Principles are available at www.dexus.com/boardpolicies
1.6 Performance of the Board
The Board Nomination Committee oversees the Board performance evaluation program. The evaluation process looks at the performance of the Board and its committees. Individual director performance is also evaluated. When appropriate, an independent expert is retained to conduct the evaluation. Any areas for improvement identified in the performance evaluation process are agreed by the Board Nomination Committee which oversees the implementation of process enhancements.
The process for Board performance evaluation can be found at www.dexus.com/boardpolicies
Dexus also has a process for periodically evaluating the performance of the Chief Executive Officer and its other senior executives. Please refer to the Remuneration Report which is contained in the 2017 Dexus Annual Report which is available at www.dexus.com
In 2017, the Board and Board Committees undertook an external performance review focusing on the effectiveness of the Board and Board Committees in supporting the execution of strategy and ensuring optimisation of organisational performance.
Individual feedback for each Director was also provided together with detailed feedback on the key strengths of the Board, including governance and development opportunities.