Principle 2 - Structure the Board to Add Value

DEXUS Place DEXUS Place, Sydney

2.1 DEXUS corporate governance structure

The following Committees support the Board in discharging its responsibilities:

  • Board Audit Committee
  • Board Nomination Committee
  • Board People & Remuneration Committee
  • Board Risk Committee

Board Committee membership and responsibilities are revised regularly to ensure maximum effectiveness. The Terms of Reference for the DEXUS Board and the Board Committees are reviewed at least annually.

Non-Executive Directors have a standing invitation to attend any or all Board Committee meetings. Each Board Committee meeting has a standing agenda item to identify improvements to reporting or processes that would benefit the Committee, as well as any items that require immediate reference to the Board or a regulator (where applicable).

The Board Nomination Committee oversees all aspects of:

  • Board renewal
  • Board and Board Committee performance evaluation
  • Director nominations

From 1 July to 28 October 2015, the members of the Board Nomination Committee were:

  • Chris Beare, Chair, Non-Executive Director (Chair)
  • John Conde AO, Non-Executive Director
  • Richard Sheppard, Non-Executive Director

Following Mr Beare’s departure from the DXFM Board, the members of the Board Nomination Committee for the 8 months ending 30 June 2016 were:

  • Richard Sheppard, Chair, Non-Executive Director (Chair)
  • John Conde AO, Non-Executive Director
  • Darren Steinberg, Chief Executive Officer & Executive Director

From 27 July 2016 the members of the Board Nomination Committee are:

  • Richard Sheppard, Chair, Non-Executive Director (Chair)
  • John Conde AO, Non-Executive Director
  • Penny Bingham-Hall, Non-Executive Director

The Board Nomination Committee met four times throughout the Reporting Period and all members attended all meetings. The Chief Executive Officer & Executive Director attends the Board Nomination Committee meeting by invitation. The Board Nomination Committee Charter can be found at www.dexus.com/boardcommittees. The Board and Board Committees are supported by Management Committees.

The Board and Board Committees are supported by Management Committees as set below (as at 30 June 2016):

Richard Sheppard
Chair

To lead and guide the Board
The Board

1 Non-executive Chair
5 Non-executive Directors
1 Executive Directors

To ensure that the fidcuiary and statutory obligations to its Investors are met. Meets at least eight times a year.
Board Risk Committee
T Dwyer (Chair)
Board Audit Committe
P St George (Chair)
Board Nomination Committee
R Sheppard (Chair)
Board People & Remuneration Committee
J Conde (Chair)
4 Non-executive Directors 4 Non-executive Directors

2 Non-executive Directors
1 Executive Director

3 Non-executive Directors
To assist the Board, DWPL and DEXUS's third party clients and capital partners in fulfillling their responsiblities as they relate to risk management (inclduing Work, Health & Safety), compliance managmenet, internal audit, and sustainability practices and procedures. Meets at least four times a year. To assist the Board in fulfilling its responsibilities by revieiwng the integrity and quality of the Group's (including DEXUS's capital partners) finanicial statements and disclosures including auditing, accounting and financial reporting processes. Meets at least four time a year. To assist the Board in fulfilling its responsibilities by overseeing all aspects of the Board nomination and performance evaluation. Meets at least twice a year. To assist the Board in fulfilling its responsiblities by overseeing all aspects of Director, Group Management Committee ('GMC') and Key Management Personnel remuneraiton and also oversees aspects of Human Resources management. Meets at least three times a year.
Group Management Committee
D Steinberg (Chair)

1 CEO & Executive Director
1 Chief Financial Officer
1 Chief Investment Officer
3 Executive General Managers
1 General Counsel & Company Secretary
     

2.2 Board skills matrix

The Board Nomination Committee is responsible for reviewing the size, composition, diversity, skill and desired competencies of the Board and Board Committees (and recommending approval by the Board). The Board Nomination Committee has identified the skills and expertise deemed necessary for the Board to fulfil its obligations.

The following outlines the required skills and expertise that the Board should possess.

Areas of Skills & Expertise

Leadership
  • Directorship experience (past & present)
  • Senior management experience (past & present)
Capital & Funds Management
  • Experience in the dynamics of raising capital and investment banking
  • Experience in the management of third party funds
Finance & Accounting
  • Experience in analysing accounting material & financial statements and assessing financial viability
  • Experience in understanding financial drivers/funding and business models
Governance
  • Experience with corporate governance and standards of complex organisations
  • Ability to assess and commitment to ensure the effectiveness of governance structures
People Management & Remuneration
  • Ability to manage people and influence organisational culture
  • Experience in relation to remuneration and the legislation/framework governing remuneration
Property Experience (Including Developments)
  • Experience and industry knowledge in the management of properties including property development
  • Understanding of stakeholder needs and industry trends
Risk management
  • Experience in managing areas of major risk to the organisation
  • Experience in workplace health & safety, environmental & community, social responsibility and technology matters affecting organisations
Strategy
  • Experience in mergers & acquisitions activities
  • Ability to guide and review strategy through constructive questioning and suggestions
  • Experience in developments and successful implementation of strategy

The Board has also determined that director tenure and diversity is integral to a well-functioning board.

The Board has reviewed the skills of the current directors against the skill categories in the table above and has determined that the current composition of the Board meets or exceeds the minimum requirements in each category.

2.3 Size and tenure

DEXUS has determined that the size of the Board should be small enough to be able to act quickly, but large enough to ensure a diverse range of views is provided on any issue.

At 30 June 2016, the Board comprised seven members including six independent Non-Executive Directors and the Chief Executive Officer & Executive Director. The DXFM constitution allows for the appointment of up to 10 directors.

Details of directors as at 30 June 2016 are:

Name Independent Qualifications Date Appointed
Richard Sheppard Yes   BEc Hons  Director since 1 January 2012 and Chair since 28 October 2015
Elizabeth Alexander AM Yes BComm, FCA, FAICD, FCPA Director since 1 January 2005
Penny Bingham-Hall Yes BA (Industrial Design), FAICD, SF (Fin) Director since 10 June 2014
John Conde AO Yes BSc, BE (Hons), MBA Director since 29 April 2009
Tonianne Dwyer Yes BJuris (Hons), LLB (Hons) Director since 24 August 2011
Peter St George Yes CA(SA), MBA Director since 29 April 2009
Darren Steinberg No BEc, FAICD, FRICS, FAPI Appointed Executive Director on 1 March 2012

 

2.4 Board independence

Non-Executive Directors must be free of any business or other relationship that could interfere materially with the exercise of their unfettered and independent judgement.

The Board has determined that each Non-Executive Director is independent as each Non-Executive Director:

  • Is not a substantial security holder of DEXUS, nor otherwise associated with a substantial security holder of DEXUS
  • Is not employed, nor within the last three years has been employed, in an executive capacity by DEXUS 
  • Has not been, within the last three years, a principal or an employee of a material professional adviser or a material consultant to DEXUS
  • Has not been a material supplier or customer of DEXUS, or otherwise associated with a material supplier or customer 
  • Has no material contractual relationship with DEXUS (other than as a Non-Executive Director of DEXUS)
  • Has not served on the Board for a period which could, or could reasonably be perceived to, interfere materially with the director’s ability to act in the best interests of DEXUS
  • Is free from any interest and any business or other relationship which could, or could reasonably be perceived to, interfere with the director’s ability to act in the best interests of DEXUS, and
  • Is free from family ties or cross-directorships that may compromise director independence

The Board regularly assesses the independence of its directors in light of interests disclosed to it and has determined that each Non-Executive Director has maintained independence throughout the year. The Board consists of a majority of independent directors and the Chairman is independent and not the same person as the Chief Executive Officer.

2.5 Induction programs for new Directors

The Induction Program for newly appointed directors is comprehensive and includes familiarisation with specific structures, policies and legal documents including (but not limited to):

  • Outline of the Corporate and Committee structure
  • Organisational charts providing details of business units
  • Terms of Reference for the Board and Board Committees
  • Minutes of the previous Board and Board Committee meetings
  • A copy of the Constitution
  • A copy of the business plan
  • DEXUS Compliance Management Framework
  • DEXUS Risk Management Framework
  • DEXUS Risk Appetite Statement
  • Key DEXUS policies including:
    • Directors’ Code of Conduct
    • Securities Trading (including inside information) Policy
    • Continuous Disclosure Policy

A newly appointed Non-Executive Director will meet with key members of management who will provide an overview of their areas of responsibility. Newly appointed Non-Executive Directors are encouraged to attend each of the Board Committee meetings to assist in understanding the DEXUS business model and approach to corporate governance.

2.6 Meetings

The Board generally meets monthly between February and November, with additional meetings held throughout the year as required. A Board Calendar is developed and agreed six months ahead of the new calendar year. The calendar provides dates of Board and Board Committee meetings.

Board meetings are normally held at the registered office of DEXUS, although some meetings may be held ‘offsite’ allowing directors to visit DEXUS owned and managed properties. To maximise participation, video conferencing facilities are utilised as required.

Each standard Board meeting includes a Non-Executive Director only session, led by the Chair, followed by a session in which the Executive Director joins the meeting. The remaining members of the Group Management Committee and Company Secretary then join the meeting.

Senior management is also available to provide clarification or answer questions directors may have either prior to the Board meeting or may be invited to attend and present at the Board meeting.

Board papers are provided to directors electronically at least three business days prior to the meeting.

Any Action Items identified by the directors are recorded in the minutes. The Company Secretary ensures that the Action Items are appropriately addressed.

Agenda items for Board meetings are set by the Chair in conjunction with the Chief Executive Officer and Company Secretary and include (but are not limited to):

  • Chief Executive Officer's report
  • Company Secretary's report
  • Minutes of Board Committee meetings
  • Reports on asset acquisitions, disposals and developments
  • Management presentations
  • Other business where directors can raise any topical matters

Some of the key issues addressed by the Board during 2016 include the:

  • On market securities buyback
  • Continued oversight of capital management
  • Acquisition and divestment of office and industrial properties
  • Enhancement of the Risk Appetite Statement
  • Cyber and Security Risk issues
  • Group Strategy

Directors are required to attend all scheduled meetings unless prior approval is provided by the Chair. For the year to 30 June 2016, there was 98% attendance of Non-Executive Directors at all Board and Board Committee meetings (for which they are a member).

2.7 Access to training and information

Directors receive regular presentations by management and external advisers regarding sector, fund, and industry specific trends. Non-Executive Directors are encouraged to seek additional information from management as necessary.

Non-Executive Directors also attend property tours and are encouraged to pursue professional development opportunities at the Group’s expense.

Should a Non-Executive Director wish to seek independent professional advice that they believe is necessary to discharge their responsibility as a director, the matter should initially be referred to the Chair. Where the Chair determines it is appropriate that advice be sought by the Non-Executive Director, DEXUS will pay for such advice.

2.8 Membership on other Boards

The Board acknowledges that concurrent service on multiple boards by DEXUS directors may impact their overall performance and ability to devote adequate time to each board/position. The Board recognises that the time required to fulfil each directorship role varies and as a result, has determined that it is not appropriate to set a limit on the total number of directorships held.

Directors will consider the number of directorships they hold to ensure they have sufficient time to attend to the affairs of DEXUS Property Group. Should a director wish to accept directorships in addition to those already held, the matter is referred to the Chair for approval.