Corporate Governance Statement

This statement outlines the main corporate governance practices at Flat Glass Industries Ltd. These practices comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.

Role of the Board

The board's primary role is the protection and enhancement of long-term shareholder value. To fulfil this role, the board is responsible for the overall corporate governance of the Group including formulating its strategic direction, approving and monitoring capital expenditure, setting remuneration, appointing, removing and creating succession policies for directors and senior executives, establishing and monitoring the achievement of management goals and ensuring the integrity of internal control and management information systems.

It is also responsible for approving and monitoring financial and other reporting.

The board has delegated responsibility for operation and administration of the Company to the Chief Executive Officer and executive management.

Board processes

To assist in the execution of its responsibilities, the board has established a number of board committees including, a Remuneration Committee and an Audit Committee. The Board as a whole manages the nomination process for new directors.

The full board currently holds 11 scheduled meetings each year, plus any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise.

The agenda for meetings is prepared in conjunction with the chairperson, chief executive officer and company secretary. Standing items include the CEO's report, finance director's report, OH&S reports, strategic matters, governance and compliance. Executives are regularly involved in board discussions and directors have other opportunities, including visits to business operations, for contact with a wider group of employees.

Director education

The Group has a process to educate new directors about the nature of the business' current issues, the corporate strategy and the expectations of the Group concerning performance of directors. Directors also have the opportunity to visit Group facilities and meet with management to gain a better understanding of business operations.

Independent professional advice and access to company information

Each director has the right of access to all relevant Company information and to the Company's executives and subject to prior consultation with the chairperson, may seek independent professional advice from a suitably qualified adviser at the Group's expense. The director must consult with an advisor suitably qualified in the relevant field, and obtain the chairperson's approval of the fee payable for the advice before proceeding with the consultation. A copy of the advice received by the director is made available to all other members of the board.

Composition of the Board

The composition of the board is determined using the following principles:

  • a minimum of 3 directors, with a broad range of expertise both nationally and internationally
  • the inclusion of at least one independent non-executive director
  • a majority of directors having extensive knowledge of the Company's industries and those which do not, have extensive expertise in significant aspects of auditing and financial reporting, or risk management of large companies
  • a non-executive director as chairperson
  • enough directors to serve on various committees without overburdening the directors or making it difficult for them to fully discharge their responsibilities
  • re-election every three years (except for the chief executive officer).

Nominations to the Board

As a consequence of the small size of the Board there is not a separate nomination committee.
The appointment and induction process for directors and committee members, and the selection, appointment, and succession planning process of the Company's chief executive officer is overseen collectively by current directors.

The directors ensure that the board comprises directors with the appropriate skill mix, personal qualities, expertise and diversity for each position. When a vacancy exists or there is a need for particular skills the board determines the selection criteria based on the skills deemed necessary.

Remuneration committee

The remuneration committee reviews and makes recommendations to the board on remuneration packages and policies applicable to the executive officers and directors themselves of the Company and of other Group executives for the Group. It is also responsible for incentive performance packages, superannuation entitlements, retirement and termination entitlements, fringe benefits policies and professional indemnity and liability insurance policies.

The members of the remuneration committee are:

- Mr Lindsay Phillips

- Mr Konn Palonis

The board policy is that the remuneration committee will comprise entirely of non-executive directors. The CEO, Mr Walter Carpenter, is invited to remuneration committee meetings, as required, to discuss senior executives' performance and remuneration packages but does not attend meetings involving matters pertaining to himself. The remuneration committee meets as required. The committee met once during the year and committee members' attendance record is disclosed in the table of directors' meetings on page 4.

Principles of compensation

Compensation levels for key management personnel of the Company and key management personnel of the Group are appropriately set to attract and retain appropriately qualified and experienced directors and executives. The remuneration committee can obtain independent advice on the appropriateness of compensation packages of both the Company and the Group should this be appropriate.

The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account:

  • the capability and experience of the key management personnel
  • the key management personnel's ability to control the company's performance
  • the Group's performance including:
    - the Group's earnings
    - the growth in share price and delivering constant returns on shareholder wealth
    - the amount of incentives within each key management person's compensation

Compensation packages comprise fixed compensation and allowances.

Other than statutory superannuation obligations no contributions for directors or key management personnel are made to post-employment defined benefit superannuation plans.

Fixed compensation

Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles), as well as employer contributions to superannuation funds.

Compensation levels are reviewed annually by the remuneration committee through a process that considers individual, segment and overall performance of the Group. When deemed necessary, external consultants may be engaged to provide analysis and advice to ensure the directors' and senior executives' compensation is competitive in the market place. A senior executive's compensation is also reviewed on promotion.

Service contracts

It is the Group's policy that any service contracts for key management personnel are both limited in term to three years and capable of immediate termination in circumstances of serious misconduct or breach of the Agreement that is not rectified. The contracts are not able to be terminated by either party for convenience, only for due cause.

The key management personnel are entitled to receive on termination of employment payment in lieu of any specified notice period and their statutory entitlements of accrued annual and long service leave, together with any superannuation benefits.

The service contract outlines the components of compensation paid to the key management personnel but does not prescribe how compensation levels are modified year to year. Compensation levels are reviewed each year to take into account cost-of-living changes, any change in the scope of the role performed by the senior executive and any changes required to meet the principles of the compensation policy.

Non-executive directors

Total compensation for all non-executive directors, as stated in the company's prospectus, is not to exceed $150,000 per annum. Directors' base fees are presently up to $30,000 per annum.

The chairperson receives $30,000 per annum. Non-executive directors do not receive performance related compensation. Directors' fees cover all main board activities and membership of any committees.