Good governance is the foundation upon which we build and sustain value. Integrity is fundamental to commercial sustainability and investor trust. Our Board of Directors and Executive Committee (ExCo) remain committed to the highest levels of corporate governance, ethical management and responsible control and regard this as being vital to our success and continued market leadership. We have developed a Governance Charter and regard the following as characteristics of good corporate governance:
- Discipline: The commitment by senior management to adhere to behaviour that is universally recognised and accepted to be correct and prudent.
- Transparency and disclosure: The ease with which an outsider is able to access information relating to the organisation and to make meaningful analysis of the actions of the company, its economic fundamentals and pertinent non-financial aspects.
- Independence: The extent to which mechanisms have been put in place to minimise or avoid potential conflicts of interest.Accountability: That individuals or groups within a company, who make decisions or take actions on specific issues, need to be accountable for their decisions and actions.
- Adherence to laws and regulations: The Board must act responsively and responsibly, complying with all relevant laws and regulations, and allowing for corrective action and the penalising of nonadherence or mismanagement.
- Fairness: The systems within a company must be balanced and take into account all those that have an interest in the company and its future. The rights of various groups have to be acknowledged and respected, and the company must continually focus on stakeholder value engagement.
- Social responsibility: A well-managed company will be aware of, and respond to, social issues, placing a high priority on ethical standards.
The Charter is not a substitute or a replacement of any laws and regulations that govern the running of the company. We foster a culture that values and rewards the highest ethical standards and personal and corporate integrity. All directors and employees are expected to act with honesty, integrity and fairness, in accordance with the laws of Kenya and with respect to the cultures of the Kenyan people. The constitution of the Board of the company is stipulated by the Articles of Association of the company. It is comprised of 10 directors of whom nine are non-executive directors and one is an executive director. Of the nine non-executive directors, we now have two independent directors. The nonexecutive directors, other than those appointed by Vodafone and the government of Kenya, are subject to retirement by rotation and must seek re-election by shareholders in accordance with the Articles of Association.
The Board is responsible for recommending independent directors for election by shareholders at the annual general meetings. Nominated directors undergo a formal screening process conducted by the Nominations and Remuneration Committee of the Board before they are formally appointed. The committee also considers and screens director nominees recommended by shareholders. Between annual general meetings, the Board may appoint directors to serve until the next AGM. Any such appointment of independent directors must be ratifi ed by the shareholders at the next AGM following their appointment.
The primary role of the Board remains to guide the company towards sustainable, long-term success through the exercise of objective and informed judgement in determining the strategy of the company, having the best team in place to execute that strategy, monitoring business performance and maintaining an effective framework of controls to mitigate risks facing the business.
The Board is solely responsible for its agenda; however, it is the responsibility of the Chairman and the company secretary, working closely with the Chief Executive Officer, to come up with the annual Board work plan and an agenda for the Board meetings.
The Safaricom Board meets at least four times a year and the meetings are structured in a way that allows for open discussions. Comprehensive Board papers are prepared and circulated to all directors for all substantive agenda items at least two weeks prior to the meeting. This allows time for the directors to undertake an appropriate review of the Board papers to facilitate full and effective discussions at the meetings. The submissions and notification period may be waived should any urgent and critical matters arise within the two-week period to the date of the meeting.
The senior leadership team members may be invited to attend the Board meetings, if deemed necessary. Where directors are unable to attend a meeting, they are advised on the matters to be discussed and given the opportunity to make their views known to the Chairman or the Chief Executive Officer prior to the meeting. The non-executive directors are responsible for ensuring that the business strategies proposed are fully discussed and critically reviewed, as they do not form part of the executive management team. This enables the directors to promote the success of Safaricom for the benefit of its shareholders, with consideration of, among other matters, the interests of employees, the fostering of business relationships with customers, suppliers and other stakeholders.
The non-executive directors oversee the operational performance of the business. To perform these tasks, they have full access to all relevant information, with updates provided on governance, regulatory and other matters affecting the company. The executive committee members and other senior executives can be invited, as appropriate, to Board meetings to make presentations on their areas of responsibility. This serves as an opportunity to give the directors greater insights into their business areas. Non-executive directors are also occasionally invited to attend the senior leadership’s strategic and operations review meetings to gain further insights into different aspects of the business.
A summary of the Board meetings and attendance during the period under review is shown in the table that follows.
Further information about our governance structures, including the committees of the Board, and our reporting processes can be obtained from ‘Our Corporate Governance Statement’ on page 72 of the 2017 Safaricom Annual Report at https://www.safaricom.co.ke/images/Downloads/Resources_Downloads/Safaricom_2017_Annual_Report.pdf