Board composition

At 30 September 2016, the Board comprised five non-executive directors. Tower's constitution currently requires a minimum of five directors and provides for a maximum of eight.

The Remuneration and Appointments Committee is responsible for identifying directors for appointment to the Board to ensure there is an appropriate blend of commercial skills and experience to govern and add value to Tower and to ensure the Board works effectively. The Committee is also responsible for the Board protocols which have been established to facilitate the effective operation of the Board. Current directors contribute significant commercial, financial, legal and investment skills to the Board.

Role of Chair

The Chair's role is to lead and manage the Board so that it operates effectively, and to facilitate interaction between the Board and the Chief Executive Officer. The Chair of the Board is elected by the directors. The Board supports the separation of the roles of Chair and Chief Executive Officer as recommended by the NZX Corporate Governance Best Practice Code, and these roles are separate at Tower. Michael Stiassny was appointed Chair of Tower on 21 March 2013.

Nominations, appointments and ongoing education

The Remuneration and Appointments Committee recommends to the Board suitable candidates for appointment as directors. The Committee will consider, among other things:

  • the candidate's experience as a director;
  • their skills, expertise and competencies (the Board aims to have a mix of skilled directors with particular competencies in the insurance and financial services sector);
  • the extent to which those skills complement the skills of existing directors;
  • the candidate's ability to devote sufficient time to the directorship, and;
  • the candidate's reputation and integrity.

To ensure that the Board appoints directors and officers who have appropriate skills, knowledge, experience and integrity to perform their duties, and to fulfil their roles, Tower has developed a Fit and Proper Policy benchmarked to the requirements of the Insurance (Prudential Supervision) Act 2010 and Fit and Proper Policy Guidelines for Licensed Insurers, along with the Fit and Proper Policy Guidelines for Licensed Insurers issued by the Reserve Bank of New Zealand. This policy is applied to all directors and relevant officers.

The Remuneration and Appointments Committee undertakes appropriate checks before appointing a person or putting forward to shareholders a new candidate for election as a director. Such checks have been undertaken in relation to all current Board members, and will be undertaken prior to the appointment or election of any new Board candidate. 

In the case of a candidate standing for election as a director for the first time, Tower will provide information to shareholders about the candidate to enable them to make an informed decision on whether or not to elect the candidate, including material adverse information revealed by any checks the Remuneration and Appointments Committee has performed on the candidate; details of any interest, position, association or relationship that might influence, or reasonably be perceived to influence in a material respect the candidate’s capacity to exercise judgement on board matters or to act in the best interests of Tower and its shareholders; the Board’s view on whether the candidate will be considered to be an independent director; and a recommendation by the Board in respect of the candidate’s election. Where directors are seeking re-election at a general meeting, Tower will provide information to shareholders to enable them to make an informed decision on whether or not to re-elect the director, including their relevant qualifications and experience and the skills they bring to the Board; details of any other material directorships currently held by the candidate; the term of office already served by the director; whether the director is considered to be independent; and a recommendation by the Board in respect of the re-election of the director.

On appointment to the Board, directors receive a formal letter of appointment outlining their duties, obligations and remuneration, and are provided induction information about Tower in the form of a Director’s Manual. The Director’s Manual contains historical background on Tower and its operations, information about how Tower and its subsidiaries are structured, details of the Company’s directors’ and officers’ insurance, the Board Charter and other Tower corporate governance policies. The induction process also involves one-on-one discussions with the Chair, other directors and briefings from senior management to help new directors participate actively in Board decision making at the earliest opportunity. 

Directors are expected to develop their skills, competencies and industry knowledge by taking responsibility for their continuing education. To ensure ongoing education, directors are regularly informed of developments that affect Tower’s industry and business environment, as well as company and legal issues that impact the directors themselves. Directors receive comprehensive board papers and briefing information before Board meetings, including a report from the Chief Executive Officer and reports from senior management. 

Directors have unrestricted access to management and any additional information they consider necessary for informed decision making. Senior management also attend Board meetings in order to provide presentations to the Board and answer any queries directors may have. This allows the Board to understand the practical issues affecting Tower and the impact of these issues on its performance.

A director may obtain independent professional advice relating to the affairs of Tower or his/her responsibilities as a director or Committee member. Where the director has the approval of the Board Chair or Committee Chair to obtain independent professional advice, Tower will meet the reasonable costs of the advice.

Director Independence

The Board Protocols require that a majority of the Board will be independent directors. The Board assesses director independence upon each director's appointment and then regularly assesses the independence of each director based on the interests disclosed by them. For this purpose directors are required to immediately advise the Board of any new or changed relationships so the Board can make this assessment.

Based on the NZX Listing Rules, the Board Protocols define a director as being independent if he/ she is a non-executive director who does not have any direct or indirect interest or relationship that could, or could reasonably be perceived to:

  • influence, in a material way, his/her decisions relating to Tower; or
  • materially interfere with his/her ability to act in Tower's best interests and the interests of Tower's securityholders generally.

Examples of relationships that remove independence include relationships with a material Tower customer, supplier, professional advisor or substantial shareholder.

As at 30 September 2016, the Board considered that four of the five directors were independent, namely: Michael Stiassny, Steve Smith, Graham Stuart and Warren Lee. David Hancock’s two-year tenure as Chief Executive Officer concluded on 16 August 2015. David remains a non-executive director on the Board, and is not considered to be independent. Tower’s Board Protocols provide that being an executive of Tower within the last three years or being a director after ceasing to hold such employment is a relationship that removes independence.

The FMA Handbook recommends that the Chair should be an independent director. Michael Stiassny is considered to be an independent director.

In accordance with Tower's Constitution, directors with an actual or potential conflict of interest on particular issues are required to disclose the conflict and may still attend meetings but will abstain from voting on that issue.

TOWER's Constitution

Retirement and re-election

At least one-third of the total number of directors must retire from office each year by rotation and, if they choose, stand for re-election by shareholders at the Annual Shareholders' Meeting. Directors who retire each year are those who have been in office longest since their last election. If two directors have held office for equal terms and cannot agree who will retire, it is determined by lot. 

In addition, all directors appointed by the Board since the last Annual Shareholders' Meeting to fill a casual vacancy must stand for election. Shareholders will be provided with relevant information on the directors standing for re-election and election prior to the Annual Shareholders' Meeting to enable them to make informed decisions when voting.

Performance reviews of the Board, Board Committees and individual directors

The Board recognises that the performance of the directors and Board Committees is crucial to Tower's success and to the interests of its shareholders. The Board regularly reviews its own composition and performance and that of the Board Committees in accordance with the terms of the Board Charter (which also includes a review of the Board structure, policies, Board succession, delegations and the necessity for and composition of the Committees). The Remuneration & Appointments Committee is responsible for the regular performance management and annual appraisal of the Chief Executive Officer, individual directors and senior executives. Evaluations may be carried out by an external consultant.

Director share ownership

All directors are required by the Company's constitution to hold Tower shares. Directors and management are required to comply with Tower's Insider Trading and Market Manipulation Policy when purchasing and disposing of Tower securities. The number of shares held by each director and their dealings in Tower securities during the financial year are disclosed in the Annual Report.

Indemnities and Insurance

Tower has given Deeds of Indemnity to directors for potential liabilities and costs they may incur for acts or omissions in their capacity as directors. Directors' and Officers' liability insurance is in place for directors and employees acting on behalf of Tower and its subsidiaries. While the insurance covers risks arising out of acts or omissions of directors and employees acting for Tower, it does not cover dishonest, fraudulent or malicious acts or omissions, or criminal liability.

Attendance at Board and Committee Meetings

The Chief Executive Officer attends all Board and Committee meetings. The Chief Financial Officer (or equivalent) attends all Board meetings and the Audit and Risk Committee meetings, along with an appropriately qualified person who is responsible for taking accurate minutes of each meeting and ensuring that Board procedures are observed.

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