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CORPORATE GOVERNANCE STATEMENT (CONTINUED)
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4. RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED) 4.3 INTEGRITY OF FINANCIAL REPORTING
THE BOARD ALSO RECEIVES A WRITTEN ASSURANCE FROM THE CHIEF EXECUTIVE OFFICER OR EQUIVALENT (CEO) AND THE CHIEF FINANCIAL OFFICER OR EQUIVALENT (CFO) THAT TO THE BEST OF THEIR KNOWLEDGE AND BELIEF, THE DECLARATION PROVIDED BY THEM IN ACCORDANCE WITH SECTION 295A OF THE CORPORATIONS ACT IS FOUNDED ON A SOUND SYSTEM OF RISK MANAGEMENT AND INTERNAL CONTROL AND THAT THE SYSTEM IS OPERATING EFFECTIVELY IN RELATION TO FINANCIAL REPORTING RISKS.
THE BOARD NOTES THAT DUE TO ITS NATURE, INTERNAL CONTROL ASSURANCE FROM THE CEO AND CFO CAN ONLY BE REASONABLE RATHER THAN ABSOLUTE. THIS IS DUE TO SUCH FACTORS AS THE NEED FOR JUDGEMENT, THE USE OF TESTING ON A SAMPLE BASIS, THE INHERENT LIMITATIONS IN INTERNAL CONTROL AND BECAUSE MUCH OF THE EVIDENCE AVAILABLE IS PERSUASIVE RATHER THAN CONCLUSIVE AND THEREFORE IS NOT AND CANNOT BE DESIGNED TO DETECT ALL WEAKNESSES IN CONTROL PROCEDURES.
4.4 ROLE OF EXTERNAL AUDITOR
THE GROUPÕS PRACTICE IS TO INVITE THE AUDITOR (WHO NOW MUST ATTEND) TO ATTEND THE ANNUAL GENERAL MEETING AND BE AVAILABLE TO ANSWER SHAREHOLDER QUESTIONS ABOUT THE CONDUCT OF THE AUDIT AND THE PREPARATION AND CONTENT OF THE AUDITORÕS REPORT.
5. PERFORMANCE REVIEW
THE BOARD HAS ADOPTED A SELF-EVALUATION PROCESS TO MEASURE ITS OWN PERFORMANCE AND THE PERFORMANCE OF ITS COMMITTEES (IF ANY) DURING EACH FINANCIAL YEAR. ALSO, AN ANNUAL REVIEW IS UNDERTAKEN IN RELATION TO THE COMPOSITION AND SKILLS MIX OF THE DIRECTORS OF THE COMPANY.
ARRANGEMENTS PUT IN PLACE BY THE BOARD TO MONITOR THE PERFORMANCE OF THE GROUPÕS EXECUTIVES INCLUDE: ¥ A REVIEW BY THE BOARD OF THE GROUPÕS FINANCIAL PERFORMANCE;
¥ ANNUAL PERFORMANCE APPRAISAL MEETINGS INCORPORATING ANALYSIS OF KEY PERFORMANCE INDICATORS WITH EACH INDIVIDUAL TO ENSURE THAT THE LEVEL OF REWARD IS ALIGNED WITH RESPECTIVE RESPONSIBILITIES AND INDIVIDUAL CONTRIBUTIONS MADE TO THE SUCCESS OF THE GROUP;
¥ AN ANALYSIS OF THE GROUPÕS PROSPECTS AND PROJECTS; AND ¥ A REVIEW OF FEEDBACK OBTAINED FROM THIRD PARTIES, INCLUDING ADVISORS.
THE REMUNERATION REPORT DISCLOSES THE PROCESS FOR EVALUATING THE PERFORMANCE OF SENIOR EXECUTIVES, INCLUDING THE MANAGING DIRECTOR.
IN 2009, PERFORMANCE EVALUATIONS FOR SENIOR EXECUTIVES TOOK PLACE IN ACCORDANCE WITH THE PROCESS DISCLOSED ABOVE AND IN THE REMUNERATION REPORT.
6. REMUNERATION ARRANGEMENTS
THE BROAD REMUNERATION POLICY IS TO ENSURE THAT REMUNERATION PROPERLY REFLECTS THE RELEVANT PERSONS DUTIES AND RESPONSIBILITIES, AND THAT THE REMUNERATION IS COMPETITIVE IN ATTRACTING, RETAINING AND MOTIVATING PEOPLE OF THE HIGHEST QUALITY. THE BOARD BELIEVES THAT THE BEST WAY TO ACHIEVE THIS OBJECTIVE IS TO PROVIDE EXECUTIVE DIRECTORS AND EXECUTIVES WITH A REMUNERATION PACKAGE CONSISTING OF FIXED COMPONENTS THAT REFLECT THE PERSONÕS RESPONSIBILITIES, DUTIES AND PERSONAL PERFORMANCE.
IN ADDITION TO THE ABOVE, THE GROUP HAS DEVELOPED A LIMITED EQUITY-BASED REMUNERATION ARRANGEMENT FOR KEY EXECUTIVES AND CONSULTANTS.
THE REMUNERATION OF NON-EXECUTIVE DIRECTORS IS DETERMINED BY THE BOARD AS A WHOLE HAVING REGARD TO THE LEVEL OF FEES PAID TO NON-EXECUTIVE DIRECTORS BY OTHER COMPANIES OF SIMILAR SIZE IN THE INDUSTRY.
THE AGGREGATE AMOUNT PAYABLE TO THE COMPANYÕS NON-EXECUTIVE DIRECTORS MUST NOT EXCEED THE MAXIMUM ANNUAL AMOUNT APPROVED BY THE COMPANYÕS SHAREHOLDERS.
COMPLIANCE WITH ASX CORPORATE GOVERNANCE RECOMMENDATIONS
DURING THE 2009 FINANCIAL YEAR, THE GROUP COMPLIED WITH THE ASX PRINCIPLES AND RECOMMENDATIONS OTHER THAN IN RELATION TO THE MATTERS SPECIFIED BELOW.
RECOMMENDATION REFERENCE
NOTIFICATION OF DEPARTURE
EXPLANATION FOR DEPARTURE
2.1
2.4
4.1, 4.2, 4.3
8.1
A MAJORITY OF THE BOARD ARE NOT INDEPENDENT DIRECTORS.
A SEPARATE NOMINATION COMMITTEE HAS NOT BEEN FORMED.
A SEPARATE AUDIT COMMITTEE HAS NOT BEEN FORMED.
A SEPARATE REMUNERATION COMMITTEE HAS NOT BEEN FORMED.
THE BOARD CONSIDERS THAT THE GROUP IS NOT CURRENTLY OF A SIZE TO JUSTIFY THE EXPENSE OF THE APPOINTMENT OF ADDITIONAL INDEPENDENT DIRECTORS. THE BOARD BELIEVES THAT THE INDIVIDUALS ON THE BOARD CAN MAKE, AND DO MAKE, QUALITY AND INDEPENDENT JUDGEMENTS IN THE BEST INTERESTS OF THE COMPANY ON ALL RELEVANT ISSUES. DIRECTORS HAVING A CONFLICT OF INTEREST IN RELATION TO A PARTICULAR ITEM OF BUSINESS MUST ABSENT THEMSELVES FROM THE BOARD MEETING BEFORE COMMENCEMENT OF DISCUSSION ON THE TOPIC.
THE BOARD CONSIDERS THAT THE GROUP IS NOT CURRENTLY OF A SIZE TO JUSTIFY THE FORMATION OF A NOMINATION COMMITTEE. THE BOARD AS A WHOLE UNDERTAKES THE PROCESS OF REVIEWING THE SKILL BASE AND EXPERIENCE OF EXISTING DIRECTORS TO ENABLE IDENTIFICATION OR ATTRIBUTES REQUIRED IN NEW DIRECTORS. WHERE APPROPRIATE INDEPENDENT CONSULTANTS ARE ENGAGED TO IDENTIFY POSSIBLE NEW CANDIDATES FOR
THE BOARD.
THE BOARD CONSIDERS THAT THE GROUP IS NOT OF A SIZE, NOR IS ITS FINANCIAL AFFAIRS OF SUCH COMPLEXITY TO JUSTIFY THE FORMATION OF AN AUDIT COMMITTEE. THE BOARD AS A WHOLE UNDERTAKES THE SELECTION AND PROPER APPLICATION OF ACCOUNTING POLICIES, THE IDENTIFICATION AND MANAGEMENT OF RISK AND THE REVIEW OF THE OPERATION OF THE INTERNAL CONTROL SYSTEMS.
THE BOARD CONSIDERS THAT THE GROUP IS NOT CURRENTLY OF A SIZE, NOR ARE ITS AFFAIRS OF SUCH COMPLEXITY TO JUSTIFY THE FORMATION OF A REMUNERATION COMMITTEE. THE BOARD AS A WHOLE IS RESPONSIBLE FOR THE REMUNERATION ARRANGEMENTS FOR DIRECTORS AND EXECUTIVES OF THE COMPANY.
AS THE GROUPÕS ACTIVITIES INCREASE IN SIZE, SCOPE AND/OR NATURE THE GROUPÕS CORPORATE GOVERNANCE PRINCIPLES WILL BE REVIEWED BY THE BOARD AND AMENDED AS APPROPRIATE.
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