Corporate Governance

• Introduction
• Composition of the Board
• Board Committees
  • Audit and Risk
  • Nomination and Succession Planning
  • Remuneration
• Board Processes
• Employee and Executive Equity Plans
• Company Policies
  

Introduction

In this Section:

• The term 'Board' is used to refer to the Asciano Board;
• The term 'Committee' is used to refer to a committee of the Asciano Board;
• The term 'Company' is used to refer to Asciano Limited and Asciano Finance Limited following its appointment as Responsible Entity of the Asciano Finance Trust;
• The term 'Director' is used to refer to an Asciano Director; and
• The term 'Security holder' is used to refer to the holder of Stapled Securities in Asciano.
  

Composition of the Board

The Board's composition is as follows:

• Malcolm Broomhead, Chairman
• Chris Barlow, Non-Executive Director
• Peter George, Non-Executive Director
• Bob Edgar, Non-Executive Director
• Geoff Kleemann, Non-Executive Director
• Mark Rowsthorn, Chief Executive Officer and Managing Director
  

Role of the Board

The Board's role and responsibilities are set out in the Board Charter.

This charter will be reviewed annually to determine whether any changes are necessary or desirable.

The major roles of the Board include:

• Reviewing and approving the strategic direction of the Company with management and monitoring management's implementation of that strategy;
• Monitoring financial outcomes and the integrity of reporting, and in particular approving annual budgets and longer term strategic and business plans;
• Setting specific limits of authority for management to commit to new expenditure, entering contracts or acquiring businesses;
• Monitoring the effectiveness of the Company's audit, risk management and compliance systems that are in place to protect the Company's assets and to minimise the risk of the Company operating beyond legal requirements or beyond acceptable risk parameters;
• Monitoring compliance with regulatory requirements (including continuous disclosure) and ethical standards, including reviewing and ratifying codes of conduct and compliance systems;
• Monitoring the performance of the CEO against established objectives;
• Ratifying the appointment (and, if appropriate, the removal from office) of the Chief Financial Officer and the Company Secretary;
• Approving conditions of service and performance monitoring procedures to apply to senior management;
• Regularly reviewing senior management succession planning and development; and
• Providing effective and timely reporting to Security holders.
  

Board Committees

To assist in carrying out their responsibilities, the Board has established the following standing Committees following the Restructure:

Audit and Risk Committee  
Nomination and Succession Planning Committee  
Remuneration Committee  

Each Committee has adopted a charter that outlines its responsibilities and is available by clicking on the Committee name. The intended roles and responsibilities of each of these Committees are set out below.

Audit and Risk Committee

The Board has established an Audit & Risk Management Committee, comprising non-executive Directors.

The CFO and other representatives of management and the external auditor attend Committee meetings, at the discretion of the Committee. The Committee also meets privately with the external auditor on general matters concerning the external audit, and other related matters, including when considering the half year and full year financial reports. The Committee will consider any appropriate matters relating to the financial affairs of the Company and its Subsidiary companies and to the Company's external audit. In addition, the Committee will examine any other matters referred to it by the Board.

The duties of the Committee are as follows:

• Monitor any matters outstanding with auditors, Australian Taxation Office, Australian Securities & Investments Commission, Australian Securities Exchange and financial institutions and monitor compliance with the Corporations Act 2001 and Listing Rules;
• Monitor corporate financial risk assessment and internal controls;
• Review and monitor compliance with the Company's Auditor Independence Policy;
• Liaise with external auditors;
• Review the annual audit plan with the auditors;
• Review information derived from the audit;
• Review interim financial information;
• Review accounting policies;
• Review effectiveness of internal audit and cross divisional reviews;
• Monitor risks relating to business continuity, disaster recovery, reputation, currency exposure and interest rate exposure;
• Review compliance with relevant government regulations;
• Assess the performance of financial management;
• Review adequacy of insurance coverage;
• Recommend to the Board the appointment, re-appointment or replacement of the external auditors;
• Review performance and compensation of the external auditors;
• Supervise special investigations as directed by the Board; and
• Establish and monitor procedures to protect the ethical and corporate governance standards of Asciano and its subsidiaries.
  

Nomination and Succession Planning Committee

The purpose of the Committee is to assist the Board by:

• Monitoring the size and composition of the Board and its Committees;
• Recommending individuals for nomination as members of the Board and its Committees;
• Reviewing Board succession plans;
• Ensuring that the performance of the Board and its Committees is reviewed;
• Ensuring that the Board Chairman reviews the performance of each Board member;
• Establishing and monitoring the procedures to protect the ethical standards of the Group; and
• Reviewing succession plans for senior executives.

In addition to any other matters which may be delegated to the Committee by the Board (including special investigations), the Committee is responsible for:

Size and Composition of the Board

• regularly reviewing the size and composition of the Board and making recommendations to the Board with regard to any appropriate changes;
• overseeing the performance review process for senior executives;
• advising the Board regarding competencies required of Directors;
• establishing and using a criteria for membership selection; and
• making recommendations to the Board regarding re-election of Directors retiring by rotation.

New Directors

• administering the policy and procedures for the selection and appointment of Directors;
• identifying individuals potentially suited to become Directors; and
• ensuring that an effective orientation program for new Directors is in place, and reviewing as necessary its effectiveness.

Board Committees

• identifying Directors qualified to fill vacancies on Board Committees and making recommendations to the Board in relation thereto.

Succession Plans

• establishing and reviewing Board succession plans to maintain an appropriate balance of skills, experience and expertise on the Board and providing advice to the Board on those matters; and
• reviewing the succession planning process for the company's Senior Management Team.

Performance

• developing and implementing a plan for identifying, assessing and enhancing Director competencies; and
• establishing procedures for use by the Committee to evaluate the performance of the Board and each Director.

Board Guidelines

• considering and making recommendations to the Board on the Board's operating guidelines.
  

Remuneration Committee

The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the CEO, Executive Directors and non-executive Directors, and where considered appropriate, Senior Executives.

Remuneration levels are competitively set to attract and retain appropriately qualified and experienced Directors and Senior Executives.

The duties of the Remuneration Committee are as follows:

• Review remuneration, allowances and incentives of the CEO;
• Review non-executive Directors' fees;
• Review and make recommendations to the CEO on remuneration, allowances and incentives of other Executive Directors;
• Review and ratify senior executive remuneration, allowances and incentives;
• Oversee compliance with statutory responsibilities relating to remuneration disclosure;
• Review policies and reporting responsibilities relating to employee share and option plans;
• Review the Company's superannuation plan and compliance with relevant laws and regulations;
• Review senior executive and Director retirement and termination payments;
• Review and monitor fringe benefits; and
• Review adequacy of Directors and Officers liability insurance policies.
  

Board Processes

The Board processes of Asciano are governed by the Constitution of Asciano and by Asciano's various Corporate Governance Policies.

Constitution of Asciano Limited  
Constitution of Asciano Finance Limited  
Independence of Directors Guidelines  
Performance Evaluation Process  

Resources available to the Board
Directors have unfettered access to company records and information reasonably necessary for the fulfilment of their responsibilities. Directors also have access to the Company Secretary and other relevant senior management to seek explanations and information. They receive regular detailed reports on financial and operational aspects of Asciano's business and may request elaboration or explanation of those reports at any time. Each Director has the added right to seek independent professional advice at Asciano's expense.

It is the Chairman's responsibility to ensure that all Board members are well briefed and have access to information on all aspects of Asciano's operations. Directors and senior management are encouraged to broaden their knowledge of Asciano's business and to keep abreast of developments in business more generally by attendance at relevant courses, seminars and conferences. The Company meets the expenses involved in such activities.

Directors' fees
The maximum aggregate remuneration of the non-executive directors of Asciano Limited has been approved by securityholders to be A$1.5 million a year, inclusive of superannuation but exclusive of reimbursement of expenses. That maximum cannot be varied other than as is determined by Asciano Limited in general meeting from time to time.

The maximum aggregate remuneration of the non-executive directors of Asciano Finance Limited has been determined by the Board of Asciano Finance Limited to be A$1 million a year, inclusive of superannuation but exclusive of reimbursement of expenses. This maximum aggregate amount is thought necessary in the case of Asciano Finance Limited because of the potential need to appoint additional independent directors to the board of that company. Because the role of Responsible Entity for the Asciano Finance Trust is currently performed by an external party, no fees are presently paid to the directors of Asciano Finance Limited.

Director indemnities
Asciano Limited has entered into deeds of indemnity, insurance and access with each of its directors.

Employee and Executive Equity Plans

Asciano has now finalised its Employee and Executive equity plans. These plans are intended to effectively align the interests of employees and executives of the Asciano Group with those of Security holders and to provide a competitive long-term incentive arrangement for those employees and executives.

Asciano has established the following plans:

• an options and rights plan ('Option Plan') for the senior management team; and
• a general security ownership plan(s) for all of its permanent employees ('Ownership Plan').

Company policies

Asciano's corporate governance policies meet the requirements of both the Corporations Act 2001 (Cth) (the Act) and the ASX Listing Rules and comply with the ASX Corporate Governance Principles and Recommendations (Principles), which were revised in August 2007.

Codes of conduct
Asciano has been largely created by bringing together two separate businesses, Pacific National and Patrick. Employees in both businesses are expected to comply with the relevant code of conduct for that business. Asciano has also adopted a set of Asciano values that communicate the values that Asciano expects all of its employees, including Directors, to abide by at all times.

It is expected that an Asciano corporate code of conduct will be adopted during the 2009 financial year.

Trading in securities
The Board of Directors has adopted and implemented a Securities Trading Policy that sets out the circumstances in which Directors and senior executives as well as other employees may deal in Asciano securities.

In accordance with the prohibition in the Act, the Securities Trading Policy states that Directors, senior executives and employees may not trade in Asciano securities at any time if they are in possession of "inside information" (as defined in the policy). In addition, the policy prohibits Directors and senior executives from trading or procuring trading in Asciano securities and from entering into transactions in financial products that operate to limit the economic risk of holding Asciano securities except during specified "trading windows", which are generally following the AGM, half and full year results announcements and other major announcements, unless they obtain special clearance

Under the Securities Trading Policy all Directors, senior executives and employees are also prohibited from dealing in the securities of other companies, with which Asciano may have a close commercial relationship, where they are in possession of inside information.

Securities Trading Policy  

Continuous disclosure
Asciano is committed to providing timely, open and accurate information to all of its stakeholders including securityholders, regulators and the investment community.

The Board of Directors has adopted a Continuous Disclosure Policy that sets out Asciano's approach to continuous disclosure and to external announcements generally. The policy provides an outline of Asciano's continuous disclosure obligations and sets out the measures Asciano has implemented to ensure compliance with these obligations, including listing the kind of matters that would generally require disclosure. The policy also provides guidelines for the management of external announcements and specifies Asciano's authorised spokespeople.

Disclosure Policy  

Auditor independence
The Board of Directors has adopted an Auditor Independence Policy that sets out Asciano's policy in relation to the engagement of the external auditor for audit and non-audit services. It outlines the process for the approval of certain non-audit services that are not prohibited but which are considered material.

The audit and risk committee is highly cognisant of the need for Asciano to maintain an independent auditor and has considered the issue on a number of occasions.

Auditor Independence Policy  

Shareholder communications
Asciano is committed to the delivery of timely and relevant information to its securityholders and to the broader investment community. Securityholders will be provided with access to online annual and half yearly reports with the option of receiving hard copies of these if required. The website also provides a broad range of information about Asciano and is updated regularly. All Asciano announcements are made available on the website and securityholder and investor events are webcast.

The Board of Directors encourages full participation by securityholders at its AGM to ensure accountability and transparency. The external auditor will attend the AGM to answer securityholder queries about the auditor's report.