QIC Board
Foundations of management and oversight
In accordance with the GOC Act, QIC’s Board is appointed by the Governor-in-Council. The Board comprises eight non-executive directors, all of whom are considered by the Board to be independent, as measured generally against the ASX Corporate Governance Principles and Recommendations with 2010 Amendments (Second Edition). In assessing the independence of directors, the following factors are considered:
- Whether, in the last three years, the director has been employed in an executive capacity by QIC.
- Whether, in the last three years, the director has been a principal of a material professional adviser, or a material consultant to QIC or an employee materially associated with a service provided to QIC.
- Whether the director is a material supplier, a customer of QIC or associated with a material supplier or customer.
- Whether a material contractual relationship exists between QIC and the director, other than in their capacity as a director.
- Whether the director has any interest and any business or other relationship that could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of QIC.
Family ties and cross-directorships may be relevant in considering interests and relationships that may compromise independence and directors must disclose these to the Board. The Board determines materiality thresholds relevant for the purposes of assessing independence on a case-by-case basis. In supporting this view, but not in isolation, the Board refers to accounting standard AASB1031 Materiality. In line with this standard, a relationship may generally be considered material when, over a 12-month period, it represents more than ten per cent of fee revenue or more than ten per cent of costs (excluding salary expense) of either QIC or the entity/person being considered. When applying this test, less than five per cent is presumed not to be material unless there is evidence or convincing argument to the contrary. When the quantum represents between five and ten per cent, the Board will judge materiality based on the facts and circumstances associated with the relationship. The independence of each director is reviewed on each occasion a new disclosure of interest is given.
QIC’s Board is responsible for overseeing QIC’s activities. The Board operates in accordance with the principles set out in its Charter and QIC’s Constitution. These documents outline the key governance principles adopted by the Board including:
- role, responsibilities and powers of the Board
- delegation of certain responsibilities to management
- directors’ duties and interests
- Board structure
- remuneration
- meeting procedures
- Board committees and subsidiaries
- external communication guidelines
- access to independent advice
- professional conduct, including conflicts of interest and independence
- performance assessment.
Directors, the Chief Executive and any other person who takes part in the management of QIC (officer) are also bound under the provisions of the GOC Act and the Corporations Act that relate to the duties and liabilities as officers of a company GOC. Officers also have common law duties, which they must adhere to.
In addition to attending Board and committee meetings, the directors are required to allocate sufficient time to prepare for meetings and consult with management as required. The Chairman commits further time and meets with the Chief Executive on a regular basis.
The responsibility for the day-to-day operation and administration of QIC is delegated (in accordance with Board direction and policies such as Corporate Delegations and Investment Delegations) by the Board to the Chief Executive and the Executive Leadership team (ELT). The Chief Executive is appointed by the QIC Board with the prior written approval of the shareholding Ministers. Senior executives are appointed by the QIC Board. In accordance with the GOC Governance Arrangements for Chief and Senior Executives (February 2009), candidates must disclose any shareholdings or trading and property ownership that may create a conflict of interest. An independent probity review, insolvency check and criminal history are also undertaken. The Board ensures that this team is appropriately qualified and experienced to discharge its responsibilities, and has in place procedures to assess the performance of the Chief Executive and the ELT, which are outlined in the ‘Alignment of Performance with Remuneration’ section of this report.
QIC has established policies and procedures designed to ensure that directors, management and staff meet high standards of professionalism and integrity and adhere to relevant industry standards and legal requirements. QIC’s expectations are clearly articulated and documented in its Code of Conduct and Ethics. This code is supported by specific procedures outlined in more detailed policies including:
- Conflict of Interest Policy (including procedures governing the receipt of gifts and benefits, the making of personal investments and the holding of outside business interests by QIC employees and contractors)
- Fraud and Corruption Policy
- Corporate Procurement Plan
- Breaches and Incidents Policy
- Sensitive Information Policy
- Entertainment Policy
- Employee Complaints, Grievances and Disputes Policy.
Employees confirm that they understand and will comply with these policies at the start of their employment and annually thereafter via electronic confirmation. Training on specific policies is also provided as required. An overview of these policies is included in the Compliance Induction Program. The policies apply to directors, employees of QIC and its subsidiary companies, and contractors.
To identify and resolve any conflicts of interest, directors must disclose actual, perceived and potential conflicts and may be excluded from participating in Board matters where a conflict exists. QIC’s trading policy is incorporated in the Code of Conduct and Ethics and the Conflict of Interest Policy. QIC, on behalf of its clients, takes holdings in listed securities and, while security selection decisions are made by QIC’s investment boutiques (within the guidelines of investment mandates) and not the Board, the directors disclose trading in listed securities where QIC (as a group) holds more than four per cent.
All staff must disclose and obtain prior approval for personal investments in property (excluding their private residences unless the transaction might possibly affect any asset in QIC’s property portfolio), shares, fixed interest securities, and derivatives of shares, fixed interest securities and currencies to ensure there is no actual, potential or perceived conflict of interest. Where the staff member exercises significant influence over the investment activities of another person (involving both advice and investment execution), those transactions must also be disclosed and pre-approved. The policy also provides for declaration of gifts, benefits and other business interests by staff.
Board Performance Evaluation
The Board Charter details the process for the performance evaluation of the Board, Board committees and directors. A formal performance evaluation is required at least every two years, with the last review undertaken during 2010-11. This evaluation is undertaken through a formal questionnaire completed by each director, one-on-one discussions between each director and the Chairman and a full Board discussion encompassing the following topics:
- role of the Board, strategy and planning
- Board structure
- meeting processes
- subsidiary and committee reporting
- performance monitoring
- induction and continuing education
- Board and senior management behaviour and relationships
- individual competencies and contribution to the role
- suggestions to improve Board effectiveness.
The Chairman provides each director with feedback on their individual performance.
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