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Role of the Board
The Board of Directors is accountable to shareholders for the performance of the Company and the Group, and is responsible for the corporate governance practices of the Group.
The Board’s principal objective is to increase shareholder value while ensuring that the Group’s overall activities are properly managed.
Sonic Healthcare’s corporate governance practices provide the structure which enables the Board’s principal objective to be achieved, whilst ensuring that the business and affairs of the Group are conducted ethically and in accordance with the law.
The Board’s overall responsibilities include:
The Board delegates authority for operational management of the business to the Managing Director and senior executives. The Managing Director also oversees the implementation of strategies approved by the Board, and is responsible for providing accurate and relevant information to enable the Board to perform its responsibilities. Senior Executives reporting to the Managing Director have their roles and responsibilities defined in specific position descriptions. The Board uses a number of Committees to support it in matters that require more intensive review and involvement.
As part of its commitment to good corporate governance, the Board regularly reviews the practices and standards governing the Board’s composition, independence and effectiveness, the accountability and compensation of Directors (and senior executives) and the Board’s responsibility for the stewardship of the Group.
The role and responsibilities of the Board, the functions reserved to the Board and those delegated to management, have been formalised in the Board Charter.
The Company Secretary is appointed by the Board and is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. Each Director is able to communicate directly with the Company Secretary.
Composition of the Board
The composition of Sonic Healthcare's Board is consistent with the principle of medical management and leadership, which has been a core strategy of Sonic Healthcare since 1993. Sonic Healthcare's Managing Director is a qualified pathologist, and the Board also includes a radiologist and a general practitioner, ensuring that it has the capacity to understand complex medical issues and be in close touch with the medical marketplace. The presence of medical practitioners on Sonic's Board also gives comfort both to referring doctors (Sonic Healthcare’s customers) and to owners of diagnostic practices which Sonic Healthcare seeks to acquire.
Sonic Healthcare’s non-executive directors, including the Chairman, are considered independent and perform major roles in the Board Committees.
The Board has resolved that the position of Chairman of the Board be held by an independent Director, and the position of Chairman and Managing Director will be held by different persons. The Board has also resolved that the mere fact that a Director has been in office for a period greater than 10 years does not change that Director’s status as an independent. The independence of each of the Non-Executive Directors is assessed annually, and it is the view of the Board that each should continue to be regarded as independent.
The size and composition of the Board is determined by the full Board acting on recommendations of the Remuneration and Nomination Committee. Sonic Healthcare's constitution requires that the Board comprise no more than 12 and no fewer than 3 directors at any time. Sonic Healthcare’s constitution also requires all Directors other than the Managing Director, to offer themselves for re- election at an Annual General Meeting, such that they do not hold office without re- election for longer than three years. From July 2014, the Board Charter requires that Non-Executive Directors who have already served for four three year teams must then offer themselves for re-election at each Annual General Meeting.
The Board (with input from the Remuneration and Nomination Committee) regularly reviews its succession planning. A skills matrix is used to guide the assessment of the current Directors, and to identify desirable characteristics for future appointments. The matrix reflects the Board's objective to have an appropriate mix of medical leadership, industry experience, listed entity experience, management skills, financial expertise, legal expertise, governance expertise, strategic focus, and tenure and gender diversity.
Before appointing a Director, Sonic undertakes comprehensive reference checks including education, employment, character reference, criminal record, and bankruptcy checks. Potential existing or foreseeable future conflicts of interest are also considered.
New Directors receive a letter of appointment and a deed of access and indemnity. The letter of appointment outlines Sonic's expectations of Directors with respect to their participation, time commitment and compliance with Sonic policies. An induction process for incoming Directors is coordinated by the Company Secretary. To assist Directors to understand relevant developments, the Board receives regular updates at Board meetings, workshops, and site visits, along with timely relevant reading materials.
The Board meets formally at least 6 times a year to consider a Broad range of matters, including strategy, financial performance reviews, capital management and acquisitions. Details of meetings (both full Board and Committees) and attendances are set out in the Annual Reports.
Independent professional advice and access to information
Each director has the right to seek independent professional advice at the Company’s expense. However, prior approval of the Chairman is required, which is not unreasonably withheld. All Directors have unrestricted access to Company records and information and receive detailed financial and operational reports from senior management during the year to enable them to carry out their duties. Directors also liaise with senior management as required, and may consult with other employees and seek additional information on request.
Conflicts of interest of Directors
The Board has guidelines dealing with disclosure of interests by Directors and participation and voting at Board meetings where any such interests are discussed. In accordance with the Corporations Act, any Director with a material personal interest in a matter being considered by the Board does not receive the relevant board papers, must not be present when the matter is being considered, and may not vote on the matter.