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Annual report suite 2012

Corporate governance report

AngloGold Ashanti believes that adherence to best practice in corporate governance is the bedrock of a sustainable business and underpins the creation of long-term value for its shareholders. In that regard the company has consistently demonstrated this belief by applying best practice in corporate governance in managing the affairs of the group.

Corporate governance structure at 31 December 2012

The governance of the company is guided by internal policies and external laws, rules, regulations and best practice guidelines as detailed in the corporate governance structure alongside. Internal policies and external legislation, regulations, codes and guidelines are detailed on the company’s website at www.anglogoldashanti.com/sustainability, under Corporate Governance and Policies.

Internal policies

Group level internal policies are detailed in the diagram on the corporate governance structure shown overleaf; key among these is the Code of Business Principles and Ethics which incorporates a summary of key group policies and guidelines that have a bearing on the company’s ethics and values.

External legislation, regulations, codes and guidelines

These include:

  • the South African Companies Act No. 71 of 2008 (the Companies Act), as amended;
  • the US Sarbanes-Oxley Act of 2002 (SOX) and the Securities Act of 1933 and the Securities Exchange Act of 1934;
  • the listings requirements of the JSE Limited, the New York Stock Exchange and other stock exchanges on which the company’s stock is listed; and
  • applicable legislation and regulations in jurisdictions in which the company has operations.

In addition there are various corporate governance guidelines and best practice recommendations, key among which are those provided by King III, the Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance, the United Nations Global Compact and the Global Reporting Initiative guidelines.

Application of King III principles

Given that AngloGold Ashanti’s primary listing is on the JSE, adherence to the JSE Listings Requirements takes precedence. The JSE requires, among other things, adherence to King III. Following its promulgation on 1 March 2010, AngloGold Ashanti conducted a gap analysis to determine the extent to which it needed to comply with new principles included in King III and developed an action plan in that regard. As at 31 December 2012, the company had considered the principles of King III and will now continue to refine its governance processes and procedures as required.

A compliance register on the principles of King III is available on the company’s website www.anglogoldashanti.com from which shareholders will be able to evaluate how the principles have been applied but a summary of the application of the principles contained in Chapter 2 of King III as those principles link to the other chapters of King III are detailed below, under Summary of application of Chapter 2 principles of King III.

Corporate governance structure at 31 December 2012

Corporate governance structure
  1. (1) Committee chairman
  2. (2) RJ Ruston was appointed to the board on 1 January 2012 and MJ Kirkwood was appointed to the board on 1 June 2012. Both were appointed as independent non-executive directors.
  3. (3) Subsequent to year end, AM O’Neill was appointed to the board on 20 February 2013.
  4. (4) SM Pityana resigned from the Remuneration Committee on 19 February 2013.

Summary of application of Chapter 2 principles of King III

Area Requirement Status Comments
Role and function of the board 2.1 The board should act as the focal point for and custodian of corporate governance Applied The board has a documented charter in place that deals with the roles, responsibilities and accountabilities of the board. Meetings are conducted on a regular basis, at least quarterly, following a formal agenda. The board is supported by 11 subcommittees that have been delegated responsibility to deal with specific matters in more detail and provide feedback to the full board. These sub-committees include the Audit and Corporate Governance Committee (Audit Committee), Risk and Information Integrity Committee (RIIC) and the Executive Committee. To ensure that the board executes all its responsibilities, a full annual plan has been developed that is assessed at the end of each meeting to ensure that all the required business was taken care of.
2.2 The board should appreciate that strategy, risk, performance and sustainability are inseparable Applied The board is cognisant that its business strategies are not achievable without effectively managing its risk environment in a sustainable manner. It is for this reason that the board has established the risk management and sustainability frameworks.
2.3 The board should provide effective leadership based on an ethical foundation Applied Refer to Principle 1.1 under ethical leadership and corporate citizenship.
2.4 The board should ensure that the company is and is seen to be a responsible corporate citizen Applied Refer to Principle 1.2 under ethical leadership and corporate citizenship.
2.5 The board should ensure that the company’s ethics are managed effectively Applied Refer to Principle 1.3 under ethical leadership and corporate citizenship.
2.6 The board should ensure that the company has an effective and independent audit committee Applied The Audit Committee consists only of independent non-executive directors which meet quarterly and hold special meetings when required. It is considered one of the most effective committees as evidenced by the annual performance evaluations. All members, except one, are financial experts and the chairman, Prof. Nkuhlu is well respected within the financial community, both locally and internationally, and sits on accounting standard setting panels.
2.7 The board should be responsible for the governance of risk Applied The board is assisted by the RIIC in discharging its responsibilities for effective risk management. The company has a comprehensive risk register which is continuously updated. Refer to Principle 4 on the website register for a detailed explanation on the governance of risk.
2.8 The board should be responsible for information technology (IT) governance Applied The RIIC also assists the board in discharging its responsibilities relating to the effective and efficient management of IT resources and the integrity of information, in order to achieve corporate objectives. Refer to Principle 5 on the website register for a detailed explanation on IT governance.
2.9 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards Applied Refer to Principle 6.1 of compliance with laws, codes, rules and standards.
2.10 The board should ensure that there is an effective risk-based internal audit Applied An independent and objective group internal audit department (GIA) complies with the standards as set by the Institute of Internal Auditors for the Professional Practice of Internal Auditing and Code of Ethics. GIA activities are set out in the Internal Audit Charter approved by the Audit Committee. The charter is reviewed annually. The charter deals with the reporting lines of the Head of GIA, unrestricted access to information and resources of the company as well as roles and responsibilities.
2.11 The board should appreciate that stakeholders’ perceptions affect the company’s reputation Applied The board is cognisant that AngloGold Ashanti’s vision to become the leading mining company cannot be realised without the contribution of all stakeholders, including shareholders, employees, communities and governments. The board, CEO and other members of the Executive Committee continuously engage with stakeholders to explain the company’s activities.
2.12 The board should ensure the integrity of the company’s integrated report Applied The Annual Integrated Report is reviewed by the Audit Committee and recommended for approval by the board.
2.13 The board should report on the effectiveness of the company’s system of internal controls Applied The board (through the Audit Committee) assesses annually the adequacy of the company’s internal control system. A rigorous assessment of controls covering key governance areas including ethics, risk management, information technology, legal and regulatory compliance, is conducted, led by GIA through combined assurance. Management provides an assessment of the effectiveness of internal controls for review by the Audit Committee and a recommendation is made to the board for consideration and inclusion in the Annual Financial Statements.
2.14 The board and its directors should act in the best interests of the company Applied The board is aware of its fiduciary duties requiring it to act, collectively, and individually, in the best interests of the company. The board comprises an appropriate mix of skills, enabling it to interrogate all aspects of the company’s operations and provide the required leadership.
2.15 The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act Not applicable Note that the solvency and liquidity of the company is frequently monitored as well as bank balances, the debt maturity profile and other appropriate financial and cost metrics. The Audit Committee is presented with a quarterly going-concern analysis.
2.16 The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfil the role of chairman of the board. Applied The roles of the CEO and Chairman are separate. The Chairman’s role and responsibilities are clearly set out in a role description which was approved by the board. The Chairman is an independent non-executive.
2.17 The board should appoint the chief executive officer and establish a framework for the delegation of authority Applied Appointment of the CEO is one of the duties that the board has reserved for its sole authority. The board has in place a Delegation of Authority Policy detailing the authority levels of the CEO.
Composition of the board 2.18 The board should comprise a balance of power, with a majority of non-executive directors. The majority of nonexecutive directors should be independent Applied The unitary AngloGold Ashanti board comprises (since February 2013) 13 members: 8 independent non-executive directors, one non-executive director and three executive directors. One executive director will be leaving on 31 March 2013.
Board appointments process 2.19 Directors should be appointed through a formal process Applied The board is authorised by the company’s Memorandum of Incorporation to appoint new directors based on the recommendations of the Nominations Committee. The Nominations Committee assists in identifying and assessing suitable candidates for appointment to the board. Newly appointed directors are required to retire at the next annual general meeting following their appointment and stand for election by shareholders. Eligibility for appointment as a director is guided by the Director’s Fit and Proper Standards Policy, requirements of the Companies Act, recommendations of King III and best practice.
Director appointment 2.20 The induction of and ongoing training and development of directors should be conducted through formal processes Applied Newly appointed directors undergo a comprehensive induction training guided by the Directors Induction Policy. Training includes one-on-one briefings on the company and its operations by the Chairman, Executive Committee members (including the CEO and CFO), the company secretary and the chairman of the Audit Committee. Newly appointed directors are also provided with written background information about the company and the duties of directors. Directors receive ad hoc training on relevant issues.
Company secretary 2.21 The board should be assisted by a competent, suitably qualified and experienced company secretary Applied The Company Secretary, Ms ME Sanz, a qualified lawyer, and an Executive Committee member, was appointed to the position in September 2012. As required by the JSE Listings Requirements, the board has formally assessed the competence, qualifications and experience of the company secretary.
Performance assessment 2.22 The evaluation of the board, its committees and the individual directors should be performed every year Applied A performance self-evaluation by the board and its committees is performed annually and the evaluation is facilitated by an independent evaluator on a three-yearly cycle. The following evaluations are conducted: performance of the board and committees; performance of individual non-executive directors; independence of the non-executive directors classified as “independent”; independence of the Chairman
Board committees 2.23 The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities Applied The board has established the committees noted above, The board charter and the terms of reference of all committees clearly state that the board does not abdicate its responsibilities through this delegation. The board appoints the members of all committees except the members of the Audit Committee who are appointed by the shareholders at the annual general meeting. The terms of reference of the committees are approved by the board annually after they have been reviewed by the committees.
Group boards 2.24 A governance framework should be agreed between the group and its subsidiary boards Applied The activities of the main subsidiary boards are reported to the board. The captive insurance company, which is regulated by the Financial Services Board (FSB), has its own audit committee.
Remuneration of directors and senior executives 2.25 Companies should remunerate directors and executives fairly and responsibly Applied The board recognises the need to remunerate directors and executives fairly and equitably and in this regard, on an annual basis, the board, through the Remuneration Committee, contracts the services of an independent consultant, to advise it on remuneration trends, both locally and globally. The board considers this advice in setting executive remuneration and in making recommendations to shareholders on non-executive directors’ fees.
2.26 Companies should disclose the remuneration of each individual director and each prescribed officer Applied The remuneration of executive and non-executive directors, as well as the remuneration of other prescribed officers is disclosed in the Annual Financial Statements.
2.27 Shareholders should approve the company’s remuneration policy Applied The company seeks annually, in accordance with market practice, a non-binding vote on its remuneration policy from shareholders at the annual general meeting.

Compliance with the Companies Act

Following its promulgation on 1 May 2011, management put in place a process to ensure full compliance with the Companies Act. As at 31 December 2012, the company had applied all key provisions, save for the adoption of a new Memorandum of Incorporation which would be completed post year-end on 27 March 2013.

The Board of Directors

The strategic leadership of AngloGold Ashanti is the responsibility of a unitary board, comprising two executive directors and ten independent non-executive directors, one of whom is a female, as at 31 December 2012. This includes the appointment of Rodney Ruston and Michael Kirkwood as independent nonexecutive directors during 2012.

The Memorandum of Incorporation does not set a mandatory retirement age for non-executive directors, however, in accordance with recommendations of King III and the requirements of the Sarbanes Oxley Act, directors are required to step down from the board after nine consecutive years of service. Nevertheless, the board has discretion to extend this period with the consent of the individual director and after a rigorous assessment of the director’s independence and performance.

The duties, responsibilities and powers of the board, delegation of authority and the matters reserved for the board are all set out in the Board’s Charter.

The board is led by an independent chairman whose roles and responsibilities are documented and approved by the board. The annual assessment of the performance of the chairman is guided by this document. The chairman is re-appointed annually in accordance with King III and results of the performance evaluation guide this process. In August 2012, the board re-appointed the chairman to serve until after the next annual general meeting.

IR The background and qualifications of each director are set out under board and executive management.

Appointment of directors

The board is authorised by the company’s Memorandum of Incorporation to appoint new directors based on recommendations by the Nominations Committee. The Nominations Committee assists in identifying and assessing suitable candidates for appointment as directors. Newly appointed directors are required to retire at the next annual general meeting following their appointment and to stand for election by shareholders. Eligibility for appointment as a director is guided by the Director’s Fit and Proper Standards Policy, requirements of the Companies Act, recommendations of King III and best practice.

Retirement by rotation

One-third of the non-executive directors retire by rotation annually in accordance with the company’s Memorandum of Incorporation, with the longest serving directors being eligible for re-election. Curriculum vitae of each director standing for election or re-election are made available in the Notice of Meeting of the annual general meeting to assist shareholders in their decision-making. Executive directors are not subjected to the rotation process given their responsibility for the day-today running of the company and are held accountable for the operational and management performance of the company by regularly reporting to the board. Their performance is assessed annually by the board against pre-determined criteria.

On 27 March 2013, shareholders will consider the company’s new Memorandum of Incorporation. One of the key changes in this document, compared to the old constitutional document, is the provision for all directors, not only non-executive directors, to be subjected to retirement by rotation. In anticipation of the adoption of this provision, Srinivasan Venkatakrishnan, Chief Financial Officer, will stand for re-election by shareholders at the annual general meeting to be held on 13 May 2013 and shareholders will equally vote on confirming Tony O’Neill’s appointment to the board. The other directors to retire by rotation are Frank Arisman, Bill Nairn and Ferdinand Ohene- Kena, all of whom will not stand for re-election.

Independence of directors

Determination of independence is guided by King III, the Companies Act, the requirements of the JSE and the New York Stock Exchange’s rules on independence as well as best practice. The board complies, at all times, with the requirement to consist of a majority of independent directors and this policy statement describes the criteria that guides the board in determining which of its members are independent, from a corporate governance point of view. Where the board, exercising its discretion and having considered all relevant facts, determines a director to be independent, despite not meeting all the criteria established in the independence policy, the board will publicly disclose its reasoning. The independence of each independent director is assessed annually and each director’s status is determined based on the outcome of such assessment. In February 2012, Frank Arisman and Bill Nairn, who had served the board for 13 and 12 years respectively, were subjected to a rigorous test of their independence and performance. The board concluded that despite their long tenure, their skills and knowledge were invaluable to the board and their independence of character and judgement were not in any way impaired by their long tenure on the board. The board therefore recommended their re-election by shareholders at the annual general meeting held on 10 May 2012 and the resolutions for their appointments were carried by the requisite majority.

Post year-end, Sipho Pityana’s status as an independent nonexecutive director was changed to non-executive director with effect from 19 February 2013. The company believed this to be appropriate after AngloGold Ashanti’s South African operations contracted with Izingwe Property Managers (Pty) Limited, after a competitive bidding process, to plan, design, develop and construct 200 residential accommodation units for its employees under a pilot employee homeownership programme. Izingwe Property Managers (Pty) Limited is an associate of Sipho Pityana. This commercial transaction has resulted in his being deemed non-independent in terms of the company’s policy on director independence. As a result of this change of status, he has stepped down as a member of the Remuneration Committee.

Compensation of directors

Non-executive directors receive fees for their services as directors including fees for their membership of committees and an allowance for travelling internationally to attend meetings. These fees and allowances are fixed by shareholders at the annual general meeting. Non-executive directors receive no further payments from the company and do not participate in the company’s share incentive scheme. Details of executive and non-executive directors’ remuneration and fees are included in the Remuneration Report.

All executive directors have contracts of employment with the company.

Board meetings during 2012

The board holds six scheduled meetings annually; four quarterly, one strategy session and a meeting that considers the company’s business plan and budget for the next financial year. During 2012, the board held four special meetings in addition to the six scheduled meetings. One of the special meetings considered and approved the company’s 2011 suite of corporate reports and another discussed the unprotected labour strikes that occurred at the company’s South African operations. The other two special meetings deliberated on special matters relating to the Chief Executive Officer.

Outside of meetings, individual board members, especially the chairman of the board, the chairman of the Audit and Corporate Governance Committee and the chairpersons of other board committees, actively, and continuously engage with management and other stakeholders on important company matters, enabling a better understanding of the company’s affairs by board members, thereby improving the quality of their strategic leadership.

The following are some of the key actions and programmes undertaken and implemented by the board in 2012 in fulfilling its strategic oversight responsibilities and functions. These are in addition to the activities carried out by the various committees on behalf of the board:

  • evaluated and approved management’s five-year strategic proposals;
  • discussed and approved management’s budget proposals for the 2013 financial year;
  • examined ways of improving long-term value to shareholders;
  • successfully defended and maintained investment-grade credit rating, and completed a refinancing of the undrawn revolving credit facility; issued a new ten-year rated bond, and raised an aggregate of R1bn from the South African debt markets under the Domestic Medium Term Note Programme;
  • discussed and approved capital expenditure proposals submitted by management on a quarterly basis;
  • achieved substantial compliance with the provisions of the Companies Act;
  • visited various mines and exploration sites to observe and acquire a better understanding of the operations;
  • assessed the skills set of the board which resulted in the appointment of two new independent non-executive directors;
  • carried out an annual evaluation of the board, its committees, independence of directors, performance of the Chairman of the board and the competence and qualifications of the Company Secretary;
  • reviewed the independence of each independent non-executive director in accordance with policy and best practice guidelines;
  • set up the Social, Ethics and Transformation Committee in fulfilment of Section 72(4) and Regulation 43 of the Companies Act; and
  • considered and approved a number of regulatory compliance policies.

Board and committee performance evaluations

The performance of the board and its committees is assessed internally on an annual basis and on a three yearly cycle by an external independent evaluator. The 2012 evaluations commenced in November 2012 and were completed in February 2013. The following assessments were undertaken:

  • the performance of the board as a whole;
  • individual non-executive directors performance self-assessment;
  • independence of non-executive directors;
  • performance of the board chairman; and
  • performance of each committee.

The qualifications, competence and experience of the Company Secretary as well as the nature of the relationship between the board and the Company Secretary were also assessed.

Overall, the outcomes of the assessments were positive with no major issues raised. Suggestions made by directors for improvement in the board’s functioning would be implemented during 2013.

During 2012 the board implemented a number of remedial measures to address issues identified through an independent evaluation of the performance of the board, facilitated by the Institute of Directors of Southern Africa, in respect of the 2011 financial year.

Board committees

The board has established and delegated specific roles and responsibilities to 11 committees, including the Executive Committee, to assist it in discharging its duties and responsibilities. The terms of reference of each committee are approved by the board and reviewed annually or as necessary.

All committees, except the Executive Committee, are chaired by independent non-executive directors. The Audit and Corporate Governance, Remuneration, Nominations and Financial Analysis committees comprise only independent non-executive directors. All committees meet quarterly, in accordance with their terms of reference, except for the Executive Committee which meets monthly or as often as is required. However, the Party Political Donations and Financial Analysis committees meet on a need-to basis and did not meet during 2012. Members of the Executive Committee and other members of the management team attend meetings of board committees as and when required. During 2012, all committees held the minimum number of meetings as required and discharged their duties as prescribed by their respective terms of reference. The Social, Ethics and Transformation Committee held its first and only meeting for 2012 in November, following its establishment in April 2012.

Executive Committee

Day-to-day management of the group’s affairs is vested in the Executive Committee, which is chaired by the Chief Executive Officer and comprises 13 members, four of whom head the regional operations. The committee’s work is supported by country and regional management teams.

Given the importance of Colombia to AngloGold Ashanti, it was decided to restructure the work in Colombia under a dedicated EVP to manage the creation of a new social and sustainable mining model that delivers on the expectations of the people of Colombia and which creates frameworks for our Colombian business to be successful over the long term. Charles Carter has taken on the role of EVP - Colombia, reporting directly to the Chief Executive Officer, while retaining his accountability for AngloGold Ashanti’s investor relations and financial public relations portfolio. During the year under review, two new members, Mike MacFarlane and David Noko, were appointed to the committee as Executive Vice President: Business Strategy and Executive Vice President: Social and Sustainable Development, respectively.

The committee held 12 meetings and two workshops during 2012 to discuss operational matters and to review the programmes and activities being implemented to advance the achievement of strategic goals on safety, asset portfolio-, financial-, people- and environmental management as well as stakeholder engagement.

IR Progress in terms of these strategic targets is detailed in the Letter from our Chief Executive Officer.

Prescribed officers

In terms of Section 66(10), read together with regulation 38 of the Companies Act, AngloGold Ashanti has determined that all members of the Executive Committee are prescribed officers.

The resumés of the prescribed officers are disclosed under Board and executive management in the Annual Integrated Report 2012. The remuneration of prescribed officers (which includes the three highest paid employees, other than executive directors), is reported on an individual basis in the Remuneration report as required by King III.

Audit and Corporate Governance Committee

In accordance with best practice recommendations of King III and the Sarbanes-Oxley Act of the United States, membership of this committee comprises four independent non-executive directors. The Chairman of the board is not a member of the committee. In accordance with Section 94 of the Companies Act, members of the committee were nominated and recommended for appointment by shareholders at the annual general meeting, held on 10 May 2012, to serve until the next annual general meeting; the resolutions thereof were passed with the requisite majority.

The committee held seven meetings, recording full attendance by members, and also executed four written resolutions approving the company’s US GAAP financial statements and other financial matters.

Pursuant to the Companies Act, King III and best practice, the committee, amongst others:

  • reviewed and approved the external auditors’ fees and the integrated audit plan for the 2012 financial year;
  • reviewed the performance of the external auditors and recommended their reappointment by shareholders;
  • considered and pre-approved, on a quarterly basis, non-audit services provided by all external auditors to the group;
  • reviewed the independence of the external audit team and audit partner and concluded that they were independent for the 2012 audit year;
  • reviewed the 2011 annual reports and 2012 quarterly reports and recommended their approval by the board for publication;
  • received and reviewed, on a quarterly basis, the use of the company’s whistleblowing facility and advised on ways to enhance its use;
  • reviewed, on a quarterly basis, submissions by management on the state of the group’s financial affairs, internal control environment and auditing, and reported thereon to the board;
  • perform liquidity and solvency tests in relation to dividends (quarterly), and guarantees (as necessary);
  • monitored implementation of recommendations on audit findings;
  • monitored the activities of the group’s internal audit function and also ensured that it was sufficiently resourced to discharge its duties;
  • reviewed and monitored the implementation of the combined assurance framework and an integrated audit process;
  • monitored, on behalf of the board, application of the principles of King III and compliance with the requirements of the Companies Act;
  • monitored developments in IFRS and US GAAP accounting standards through regular updates from management with the main objective of ensuring that the company’s accounting practices complied with relevant standards;
  • received quarterly briefings and updates on the roll-out of the Code of Business Principles and Ethics and matters relating to compliance. This function was transferred to the Social, Ethics and Transformation Committee;
  • received and reviewed, on a quarterly basis, reports on major litigations and disputed cases so as to assess their likely outcome, their potential financial and additional impacts on the group; and
  • assisted and advised management in developing a legal and regulatory framework to monitor compliance with relevant laws and regulations.

Risk and Information Integrity Committee

The Risk and Information Integrity (R&II) Committee was established to comply with the recommendations of King III and to assist the board in discharging its responsibilities relating to (i) the governance of risk; (ii) the effective and efficient management of IT resources; and (iii) the integrity of information, in order to achieve corporate objectives. A detailed report on risk management is provided in the Integrated Report and the application of the King III principles on both risk management and information technology can be found in the King III application register on our website, www.anglogoldashanti.com.

Membership of the committee comprises six independent directors and two executive directors - the Chief Executive Officer and the Chief Financial Officer - and is chaired by an independent director. The committee held four meetings in 2012 which were attended by all members of the committee, except for two members who were unable to attend one meeting each. Meetings of the committee are attended by the executive responsible for risk and information technology management as well as senior management in these functional areas. Other senior management also attend the committee’s meetings as and when required.

During 2012, the committee reviewed, on a quarterly basis, the company’s risk environment with special focus on the top risks facing the company. This enabled the committee to guide management in focusing on the risks that were most critical to the company’s operations.

Preparation for the implementation of the enterprise resource planning (ERP) programme through SAP was the major activity undertaken by information technology in 2012. Roll-out of this programme began when SAP went live on 4 February 2013 at the company’s South Africa operations. The main objective of the project is to remove any unacceptable high-level risk from obsolete information systems, improve the group’s decision-making capability through a uniform information system throughout the organisation and support on-going organisational improvement initiatives. Its purpose is to create a new information system environment which is world class and able to support the vision of AngloGold Ashanti as a leading mining company.

Business insurance is a critical component of risk management in AngloGold Ashanti. The R&II committee assumed overall responsibility for insurance matters during 2011. It reviewed the group’s insurance policies for the 2012/13 insurance year to ensure adequate cover for the company’s assets and employees and, to the extent this cover was available and commercially feasible, is in place.

Safety, Health and Sustainable Development Committee

The Safety, Health and Sustainable Development Committee is responsible for ensuring that the company undertakes and conducts, in compliance with company policies, its operations in an economically and socially responsible manner, pursuing sustainable business practices by conducting its business with due regard to the safety and health of its employees and other stakeholders, sustainable development, including, but not limited to the impact of its operations on the natural environment. Safety remains AngloGold Ashanti’s first value and continues to be a key component of management’s operational deliverables.

Membership of this committee comprises seven independent directors and the Chief Executive Officer.

The committee held five meetings during 2012 which were attended by all members except for two members who were unable to attend one meeting each. In addition to providing leadership and strategic direction in improving the management of safety, health, the environment and community relations, the committee considered and approved group and regional sustainability frameworks and strategies.

The committee furthermore reviewed strategies to improve the health and well-being of employees and their families especially in relation to HIV/AIDs and malaria. Illegal mining continued to raise concerns across the company’s operations, especially in West Africa and these matters were extensively discussed with a focus on finding alternative and sustainable solutions to improve the socio-economic standards of the affected communities.

As of January 2013, this committee has been focused on safety, health and environmental issues. Community and other sustainable development matters will be dealt with by the Social, Ethics and Transformation Committee.

Transformation and Human Resources Development Committee

AngloGold Ashanti subscribes to the South African government’s initiatives on social transformation and the labour localisation policies of other operational jurisdictions.

The Transformation and Human Resources Development Committee has been mandated by the board to oversee compliance with these policies and to guide their development and implementation in order to develop the skills and talents of employees group-wide, and to support the achievement of social transformation and localisation targets.

The committee’s six members include five independent non-executive directors and the Chief Executive Officer. Only one member was unable to attend one of the four meetings held by the committee in 2012.

The work of this committee in relation to transformation matters has been absorbed by the Social, Ethics and Transformation Committee with effect from 1 January 2013, and the human resource matters have been incorporated into the Remuneration Committee. This committee, therefore, ceased to exist with effect from that date.

Remuneration Committee

The purpose of the committee is to discharge the responsibilities of the board relating to all compensation, including equity compensation of the company’s executives. The committee establishes and administers the company’s executive remuneration with the broad objective of aligning executive remuneration with company performance and shareholder interests, setting remuneration standards aimed at attracting, retaining and motivating the executive team, linking individual pay with operational and company performance in relation to strategic objectives; and evaluating compensation of executives including approval of salary, equity and incentive-based awards. The committee also considers and makes recommendations to shareholders on non-executive directors’ fees.

Membership of the committee consists of only independent nonexecutive directors, including the Chairman of the board. Michael Kirkwood was appointed as a member of the Remuneration Committee with effect from 1 October 2012.

The performance of the executive team, including the executive directors, is considered relative to the prevailing business climate and market conditions, as well as to annual evaluations of the achievement of key performance objectives. Bonuses paid to the executives are a reflection of performance of each of the executives and the company as a whole.

Details of the company’s remuneration policy and other relevant matters are disclosed in the Remuneration Report in this report.

During the year under review, the committee held four scheduled meetings and two special meetings. The Chief Executive Officer, Chief Financial Officer, Executive Vice President: People and Organisational Development are invited to the committee’s meetings. External remuneration advisors support the committee in its decision-making regarding remuneration issues by providing members with trends on executive remuneration, both locally and internationally. The committee has also retained GRS/Mercer to conduct, an executive and non-executive bespoke salary survey, advising on salary benchmarking annually.

In addition to routine activities of the committee relating to the review of and approval of executive management remuneration, consideration of non-executive directors’ fees and making recommendations to shareholders. The committee also undertook the following activities during 2012:

  • a review of executive terms and conditions with a focus on retention;
  • a review of global governance requirements including the King lll (SA), Dodd-Frank (USA), Australian and UK legislative changes in relation to remuneration committee requirements and voting;
  • through its chairman and members of the executive team, the committee actively engaged a number of shareholders on the company’s remuneration practices leading to amendments, with a focus on executive retention; and
  • reviewed and made recommendations to shareholders for approval to amend certain aspects of the company’s incentive scheme with a view to improving the competitiveness of executive remuneration.

Following the resignation in January 2013 of Mark Cutifani as Chief Executive Officer of the company, the committee actively engaged and extensively deliberated and put in place remuneration packages for Tony O’Neill and Srinivasan Venkatakrishnan, who were appointed as interim joint Chief Executive Officers while a search is conducted for a new Chief Executive Officer.

Social, Ethics and Transformation Committee

The board established the Social, Ethics and Transformation Committee, in accordance with Section 74(4) and Regulation 43 of the South African Companies Act 71 of 2008, effective 30 April 2012.

The purpose of the committee is to assist the board in discharging its responsibilities relating to:

  1. the functions of a Social and Ethics Committee as contemplated by the Companies Act;
  2. sustainable development matters; and
  3. transformation and localisation matters.

The committee held its first meeting on 5 November 2012 which was attended by all members. Members deliberated mainly on administrative and other issues pertinent to the smooth running of the committee.

Members of the committee comprise six non-executive directors and the Chief Executive Officer. The Executive Vice President - Social and Sustainable Development, Executive Vice President - People and Organisational Development, the Group General Counsel and Company Secretary, and other members of senior management are permanent invitees to the committee’s meeting.

Nominations Committee

The main mandate of the committee is to assist the board, in consultation with the Chairman of the board and Chief Executive Officer, in identifying suitable candidates for appointment to the board. Membership of the committee comprises all ten non-executive independent directors on the board.

During the year under review the Nominations Committee met three times and assisted the board in executing processes leading to the appointment of two new independent directors. The committee also reviewed the outcome of the 2011 performance evaluation of the board and provided insight for the implementation of an action plan that was put in place to address concerns resulting from the evaluations.

Investment Committee

The objective of the committee is to assess individual capital projects, ensuring that investments, divestments and financing proposals are aligned with AngloGold Ashanti’s objectives.

Membership of the committee comprises seven independent directors and the two executive directors. The committee held four meetings in 2012.

The committee deliberated on matters pertaining to the company’s strategic plans as these relate to the management of its asset portfolio. It debated several investment proposals, made recommendations to the board and monitored the execution of approved projects to ensure these complied with project specifications.

During 2012, the committee also reviewed and recommended for approval by the board the execution of capital projects, including the company’s participation in the Kibali project in the DRC and the Mine Life Extension project at the Cripple Creek & Victor mine in the United States. In addition several other projects were reviewed on behalf of the board.

Financial Analysis Committee

Membership of this committee as at year end comprised five independent non-executive directors. It is an ad hoc committee that assists the board in the analysis of certain defined financial matters and issues. The objectives of the committee are to undertake the analysis of possible financial strategies and the development of financial management recommendations.

The committee did not meet during 2012.

Party Political Donations Committee

During 2012, membership of this committee comprised six independent non-executive directors and the Chief Executive Officer, and was chaired by the Chairman of the board. The committee is ad hoc in nature and discharges the responsibilities delegated to it by the board in terms of the Party Political Donations policy which sets the guiding principles for the company’s political contributions in the jurisdictions in which it operates.

The committee did not meet during 2012.

Board and committee meeting attendance - 2012

The current composition of the board, each committee, the number of meetings held and attendance thereof are disclosed in the table below:

Director Board Audcom Remcom R&II Nomcom SE&T SHSD THRC Invcom
TT Mboweni 10/10 5/6 3/3 4/4 4/4
FB Arisman 10/10 7/7 6/6 3/4 3/3 3/5 4/4
M Cutifani (3)7/10 3/4 1/1 4/5 4/4 4/4
R Gasant 10/10 7/7 4/4 3/3
NP January-Bardill 10/10 7/7 3/3 1/1 5/5 4/4
MJ Kirkwood (1) 5/6 2/2 1/1 1/1 1/1
WA Nairn 10/10 6/6 4/4 3/3 1/1 5/5 4/4 4/4
Prof LW Nkuhlu 8/10 7/7 6/6 4/4 3/3 1/1 5/5 4/4
F Ohene-Kena 5/10 2/3 4/5 3/4
SM Pityana 10/10 5/6 4/4 3/3 1/1 5/5 4/4 4/4
RJ Ruston (2) 10/10 2/2 3/3 1/1 3/3 2/2
S Venkatakrishnan 10/10 4/4 4/4
  1. (1) Appointed to the board and Nomcom on 1 June 2012 and Remcom and Invcom on 1 October 2012.
  2. (2) Appointed to the board and Nomcom on 1 January 2012 and R&II, SHSD and Invcom on 1 June 2012.
  3. (3) M Cutifani was recused from attending two board meetings convened to discuss special matters relating to the chief executive officer and one other meeting, which he was unable to attend owing to an important industry meeting.

Key

Audcom:
Audit and Corporate Governance Committee
Remcom:
Remuneration Committee
R&II:
Risk and Information Integrity Committee
Nomcom:
Nominations Committee
SHSD:
Safety, Health and Sustainable Development Committee
SE&T:
Social, Ethics and Transformation Committee
THRC:
Transformation and Human Resources Development Committee
Invcom:
Investment Committee

Directorate and committee changes post year-end

Name of director Type of change Effective date of change
Mark Cutifani Announcement of resignation as Chief Executive Officer 31 March 2013
Tony O’Neill Appointed executive director 20 February 2013
Srinivasan Venkatakrishnan Appointed Joint Acting Chief Executive Officer 1 April 2013
Tony O’Neill Appointed Joint Acting Chief Executive Officer 1 April 2013
Michael Kirkwood Appointed chairman of the Remuneration Committee 1 April 2013
Michael Kirkwood Appointed a member of the Audit and Corporate Governance Committee 1 April 2013
Prof Wiseman Nkuhlu Resignation from the Investment Committee 1 April 2013

Chief financial officer

Srinivasan Venkatakrishnan, an executive director, is the Chief Financial Officer. At its meeting held on 14 February 2012, the Audit and Corporate Governance Committee, as required by the JSE Listings Requirements, considered and expressed its satisfaction at the level of expertise and experience of Srinivasan Venkatakrishnan as Chief Financial Officer of AngloGold Ashanti.

The committee concluded that, he, together with other members of the financial management team, had effectively and efficiently managed the group’s financial affairs during the period under review as detailed in the Chief Financial Officer’s report.

Company secretary

The company secretary, Maria Sanz Perez, was appointed with effect from 1 September 2012 to replace Lynda Eatwell who retired from the company with effect from 31 August 2012. The company secretary is responsible for developing, implementing and maintaining effective processes and procedures to support the board and its committees in the effective discharge of their duties and responsibilities. The board and individual members have access to the services and advice of the company secretary. She advises the board and individual directors on their fiduciary duties and on corporate governance requirements.

Being the group’s General Counsel responsible for legal and regulatory compliance functions, Maria is also a resource on general legal matters and regulatory compliance and advises the board on related matters. She is also a member of the Executive Committee.

In line with the JSE Listings Requirements, the board carried out an evaluation of the qualifications, competence and experience of the company secretary in February 2013. Having reviewed relevant documentation and taken into account individual directors’ assessment of the company secretary, the board was of the view that Maria Sanz Perez possessed the necessary qualifications to occupy the position.

The board was also satisfied that she had discharged her duties with diligence and competence and that she had provided the necessary support to the board as a whole and to individual directors and ensured that the necessary structures and processes are in place for the board to fulfil its mandate.

In order to assess her qualifications and competence, the board reviewed her curriculum vitae and career achievements, and established that Maria Sanz Perez is a qualified lawyer with several years of legal and company secretarial experience. The board therefore declared her duly qualified to serve as company secretary. Maria’s qualifications and experience can be viewed in the section Board and Executive Management and directors in the Annual Integrated Report.

The board also confirmed that the company secretary is not a director of the company and maintains an arm’s length relationship with the board.

Legal, ethical and regulatory compliance

The group’s geographical spread makes its legal and regulatory environment diverse and complex. Given the critical importance of compliance in building a sustainable business, Group Compliance plays an essential role in coordinating compliance with laws and regulations, standards and contractual obligations and in assisting and advising the board and management on designing and implementing appropriate compliance policies and procedures.

During 2012, Group Compliance undertook activities that contributed to the enhancement of the company’s governance. Key among these activities were:

  • the continued roll-out of awareness training on the Code of Business Principles and Ethics (Our Code);
  • the company adopted a compliance management framework which was approved by the board and provided guidance to the operations on the implementation of the framework;
  • the roll-out of anti-bribery and anti-corruption training;
  • the issue of a global communication on International Anti-Corruption Day in December emphasising the group’s zero tolerance of bribery and corruption and re-affirming its commitment to the tenth principle of the UN Global Compact in working against all forms of corruption, including extortion and bribery;
  • revised and issued new policies and procedures, including a new anti-bribery and anti-corruption policy and a new facilitation and extortion payments policy;
  • further automation of the group’s gifts, hospitality and sponsorships registers;
  • automation of the group’s conflicts of interests registers;
  • further efforts to track compliance with laws, regulations, standards and contractual obligations (at the country and group levels); and
  • further assessment of compliance risk in the group.

South African Employment Equity Act of 1998

In compliance with Section 21 of the Employment Equity Act 55 of 1998, the company is obliged to file with the Department of Labour, the employment equity statistics for its South African workforce. A report was filed with the Department of Labour on 19 December 2012, covering the period 1 August 2011 to 31 July 2012. A copy of the report is available on the AngloGold Ashanti website, www.anglogoldashanti.com/sustainability, in the section entitled “Other public reports”.

Values and ethics

King III enjoins the board to provide ethical leadership to the company. Our Code is the defining document which explains AngloGold Ashanti’s values and ethics. The board and management recognise the enduring importance of ethical behaviour by all employees, directors and related parties at all times as the company strives to generate competitive shareholder returns and create value for the benefit of all stakeholders.

Our Code provides a framework and sets requirements for the implementation of key corporate policies and guidelines. Among other areas it addresses fraud, bribery and corruption, conflict of interests, gifts, hospitality and sponsorships, use of company assets, privacy and confidentiality, disclosures and insider trading.

Roll-out of Our Code, which began soon after its launch in November 2010, continued during 2012. A top-down approach to training was adopted – beginning with management and progressing to other levels in the organisation. The board and executive management, from time to time, support activities targeted at embedding ethical employee behaviour, including hosting roundtable panel discussions on aspects of Our Code. Our Code, and translations are available on www.anglogoldashanti.com, the intranet and in hard copy.

An online training platform was launched in September 2012 for all employees with access to computers (approximately 12,000 people). Training is available in four languages and has allowed an accelerated programme for training on Our Code and also on anti-bribery and anti-corruption. A further suite of online training courses will be rolled out during 2013.

A DVD was released at the end of December 2012 and distributed in eight languages to all regions for roll out during 2013, to employees that do not have access to computers.

AngloGold Ashanti holds all employees, directors and officers accountable for complying with Our Code and policies in addition to applicable laws, regulations, standards and contractual obligations in the countries in which AngloGold Ashanti does business. If employees, directors and officers do not understand any aspect of Our Code it is their responsibility to ask for clarification. They can do this by speaking to their line manager, the legal department, human resources or Group Compliance. Failure to live up to Our Code may result in disciplinary action being taken, up to and including dismissal. More serious transgressions may also result in fines, jail sentences and other sanctions including suspension of the right to operate.

Employees, directors and officers who become aware of a situation in which they believe Our Code is being violated are urged to communicate the concern to their line manager, the legal department, human resources or Group Compliance. No employee, director or officer will be retaliated against for raising a concern in good faith.

The company has promoted its whistleblowing hotline, which is administered by a third party, with the use of posters at all locations. Employees, directors, officers and external parties may use the hotline, anonymously if they wish, to report concerns. All concerns are carefully investigated and, wherever possible, the results of the investigation is provided to the person raising the concern.

Stakeholder engagement

AngloGold Ashanti’s vision to become the leading mining company cannot be realised without the contribution of all stakeholders. The company has therefore adopted an inclusive approach to stakeholder engagement. Its key stakeholders include shareholders, employees, communities and governments. Numerous stakeholder engagement activities took place during 2012 and are detailed under Delivering sustainable community benefits in the Sustainability Report.