Governance review

In exercising oversight of governance, the board of AngloGold Ashanti acknowledges that sound governance principles and practices underpin the creation of value and the sustainability of the business. These are critical to earning and maintaining the trust and confidence of the company’s stakeholders.

This in turn is crucial to the achievement of AngloGold Ashanti’s business objectives. AngloGold Ashanti is mindful too that corporate governance principles and standards are continually evolving and that the company must constantly strive for best practice.

Given that the company’s primary listing is on the JSE, AngloGold Ashanti subscribes to the principles of the King Code on Corporate Governance (King III). The company has applied all the principles of King III.

During 2013, the company continued to refine its governance processes and procedures as required by King III. A compliance register of which is available on the company’s website. This is a living document and is updated regularly. Some of the activities undertaken during 2013 to further strengthen our governance processes are included in the highlights of the board and committees below.

Post year-end, the independent non-executive Chairman retired and was replaced by a non-executive Chairman. To meet the requirement of King III, principle 2.16, a lead independent director was appointed.

The company has also implemented the last requirement of the South African Companies Act No. 71 of 2008, as amended, namely the adoption of a revised Memorandum of Incorporation (MOI) which was effected by shareholders on 27 March 2013. A copy of the MOI is available on the company’s website.

Given our commitment to comply with external standards, rigorous mechanisms for self-governance and transparency have been put in place. This is in line with the high standards of governance set in order that our stakeholders may be confident that we conduct our business responsibly and ethically.

BOARD

Role of the board

The overriding role of the board is to ensure the long-term sustainability and success of AngloGold Ashanti, for the mutual benefit of all its stakeholders. Its overall role is one of strategic leadership. This includes the setting, monitoring and review of strategic targets and objectives, the approval of capital expenditure, acquisitions and disposals, and oversight of governance, internal controls and risk management. The duties, responsibilities and powers of the board, the delegation of authority and matters reserved for the board’s authority are all set out in the Board’s Charter, which is available on the company’s website.

The composition of the board is such that a diversity of views contributes to discussions. No individual director or group of directors dominates board processes or decision-making. Following the retirement of three directors in 2013, the board reviewed the range of skills and expertise available and determined the additional skills required to augment its technical capabilities.

Role of the chairman

During 2013, the board was led by an independent non-executive Chairman. Post year-end, the independent Chairman, Tito Mboweni, stood down effective 17 February 2014 and a non-executive director, Sipho Pityana, was unanimously appointed non-executive Chairman.

The roles and responsibilities of the Chairman are documented and approved by the board and are separate from those of the Chief Executive Officer. The Chairman leads the board and is responsible for ensuring its effectiveness in discharging its duties. In accordance with King III, the Chairman is appointed annually. In May 2013, the board reappointed Mr Mboweni to serve until the first board meeting after the next annual general meeting in May 2014.

Role of the lead independent director

In February 2014, given the non-independence of the newly appointed Chairman and in line with the recommendations of King III, the board simultaneously appointed, Prof Nkuhlu, as lead independent director. The principal role of the lead independent director is to act when the board Chairman is not present or is unable to perform his duties for any other reason, and to serve as liaison between the non-executive directors and the board Chairman.

Role of the chief executive

The group’s Chief Executive Officer (CEO) is responsible for the execution of the company’s strategy and reports to the board. The CEO chairs the 10-member Executive Committee which oversees and manages the day-to-day running of the business.

Chief financial officer

Richard Duffy was appointed Chief Financial Officer on 1 June 2013 to replace Srinivasan Venkatakrishnan. As required by the JSE Listing Requirements, the Audit and Corporate Governance Committee, at its meeting held on 13 February 2014, considered and expressed its satisfaction at the level of expertise and experience of Messrs Duffy and Venkatakrishnan as Chief Financial Officers of AngloGold Ashanti during 2013.

The committee concluded that, they, together with 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 included in the Annual Integrated Report 2013.

Company secretary

The company secretary, Maria Sanz Perez, is responsible for developing, implementing and maintaining effective processes and procedures to support the board and its committees in the discharge of their duties and responsibilities. She advises the board and individual directors on their fiduciary duties and on corporate governance requirements and best practices.

In line with the JSE Listings Requirements, the board evaluated the qualifications, competence and experience of the company secretary in December 2013 and was satisfied that Maria is qualified to serve as company secretary. The board also confirmed her independence and her arms-length relations with the board, noting that she is not a director of the company and has no personal connections with any of the directors. Maria’s qualifications and experience can be viewed in the section under Board and Executive Management in the Annual Financial Statements 2013 and on the company website.

Independence of directors

King III provides that assessment of the independence and performance of directors who have been serving on the board for more than nine consecutive years should be more rigorous than for those who have been appointed more recently. As at 31 December 2013, none of the company’s independent directors had served for that length of time. Mr Pityana is not considered independent following the conclusion of a commercial transaction during 2013, between AngloGold Ashanti and Izingwe Property Managers (Pty) Limited, a related party of Mr Pityana.

Evaluation of board effectiveness

Evaluations of the independence of the performance of the board, the committees, individual directors, the board Chairman and non-executive directors are conducted annually, and are facilitated either internally or externally. Self-evaluation exercises are also undertaken.

Corporate governance principles are continually evolving as is the implementation of best practice.

During 2013, the board implemented several remedial measures to address certain issues identified in the previous year’s evaluations. Improvements resulting from the implementation of these measures included:

  • Enhanced quality of the contents of board and committee meeting documents leading to more productive meetings.
  • More timely submission of meeting papers resulting in better preparation for meetings and more productive discussions and decision-making.
  • Introduction of electronic systems for the delivery of materials for board and committee meetings to assist in the timely distribution of meeting documents.
  • Improved flow of communication between management and non-executive directors between quarterly meetings.

Questionnaires for the 2013 evaluations were completed in December. The results were discussed in February 2014 and action plans developed to address the following areas:

  • Composition of the board and committees to enhance their efficiency and effectiveness.
  • Strategy setting and risk management – increase involvement of non-executive directors in strategy development and in determining the group’s risk appetite.
  • Greater levels of engagement between management and non-executive directors.

PRESCRIBED OFFICERS

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

BOARD COMMITTEES AND THEIR FUNCTIONS

Seven committees assist the board in discharging its responsibilities. The functioning of the committees is guided by their terms of reference which are approved by the board and reviewed annually or as required. During 2013, all board committees, with the exception of the Safety, Health and Environmental Committee, were chaired by independent non-executive directors.

KEY ACTIVITIES OF THE BOARD AND ITS COMMITTEES DURING 2013

The activities of the board and its committees during 2013 aimed at promoting the economic sustainability of the business. This entailed ensuring that its operations were conducted with due regard to the expectations and or needs of stakeholders, the safety and health of employees and communities, the development of systems to ensure proper access to and dissemination of credible information. The board and its committees continuously strive to achieve best practice in corporate governance.

Board committees and their objectives

Board committees and their objectives
Below is summary of the major activities of the board and its committees during 2013:
Committee:Highlights of activities:
Board of directors
  • Following the resignation of the former Chief Executive Officer with effect from 1 April 2013, ensured stability of executive management by putting in place interim leadership with the appointment of Messrs AM O’Neill and S Venkatakrishnan as joint group chief executives.
  • Appointment of a new Chief Executive Officer in May 2013.
  • Appointment of a new Chief Financial Officer in June 2013.
  • Reviewed board committee structures and mandates to improve their effectiveness and efficiency.
  • Established a technical advisory group, which will become operational in 2014, to advise the board and management on technical operational matters.
  • Reviewed the skills set of the board resulting in a decision to recruit an additional director with the requisite technical skills in 2014.
  • Monitored implementation of strategy by the Executive Committee and assessed progress against set objectives.
  • Evaluated and approved strategy and ensured business plans were aligned with needs of the business and stakeholders’ expectations.
  • Discussed and approved management’s budget proposals.
  • Evaluated performance of the board, individual non-executive directors and committees.
  • Adopted a new constitutional document (Memorandum of Incorporation) and recommended it to shareholders for approval as required by the Companies Act.
  • Kept abreast with material legal and regulatory developments in operational jurisdictions.
  • Reviewed and approved a revised group’s Delegation of Authority Policy to improve and facilitate decision-making.
  • Post year-end, appointed new board Chairman after the former Chairman stood down.
Audit and Corporate Governance Committee (Audcom)
  • Reviewed and assessed integrity of published financial statements to ensure their preparation was in accordance with relevant accounting standards and other requirements.
  • Considered and confirmed the independence of the external audit firm and recommended its re-appointment by shareholders.
  • Considered and approved the audit fees.
  • Considered and approved internal and external audit plans and monitored performance against these plans.
  • Ensured that the internal audit department had the required resources to deliver on its mandate.
  • Considered internal audit reports and monitored implementation of remedial action to address any adverse findings.
  • Reviewed and pre-approved non-audit services and related fees in accordance with policy on the approval of non-audit services.
  • Evaluated and confirmed the competence and professionalism of the Chief Financial Officer in accordance with JSE Listing Requirements.
  • Evaluated the accounting issues that impacted the group and company’s financial statements.
  • Reviewed major legal cases and disputes that impacted or could impact the company financially.
  • Reviewed and recommended the Annual Integrated Report 2012 and Annual Financial Statements 2012 to the board for approval.
  • Held closed sessions with external and internal auditors, Group General Counsel and financial management to discuss any issues they may be facing in executing their responsibilities and advised accordingly.

More detail of the activities of this committee are available in the committee’s report to shareholders in the Annual Financial Statements 2013.

Remuneration and Human
Resources Committee (Rem&HR)
  • Considered and recommended implementation of a retention scheme for executive management following the resignation of the then chief executive.
  • Assisted the board in determining the remuneration of the new Chief Executive Officer appointed in May 2013.
  • Reviewed and approved corporate goals and objectives relevant to the compensation of the executive management.
  • Approved both short- and long-term executive compensation after evaluating executives’ performance against set targets and consideration of local and international executive remuneration trends.
  • Pro-actively explained the company’s remuneration policy to major shareholders. At the annual general meeting, 82% of shareholders voted to endorse the policy.
  • Reviewed market trends on non-executive directors and made recommendations to the board regarding the board fee proposal to be presented to shareholders for approval.
  • Appointed an external remuneration advisor to assist the committee in better understanding trends in executive and non-executive remuneration, both locally and internationally, enabling the committee to make informed decisions on the subject.
  • Devised adjusted metrics for the 2014 bonus share and long-term incentive plans to reflect the company’s revised priorities and to improve alignment with shareholder interests.
Risk and Information
Integrity Committee (R&II)
  • Guided management in determining the company’s top risks, both short- and long-term, and reviewed implementation of remedial measures.
  • Adopted a new risk management policy which categorises risks in terms of imminent and longer-term risks. One key risk facing the company was discussed in detail at each quarterly meeting. Remedial measures to address such risks were also deliberated.
  • Provided oversight of the roll-out of the enterprise resource planning (ERP) programme to operations in the South Africa, Australia and Americas regions. Implementation of the ERP has improved the company’s information management systems which are now largely standardised and centralised.
  • Reviewed the 2013/2014 insurance policies to ensure adequate insurance cover for the company’s assets and employees at competitive rates.
Safety, Health and Environment Committee (SHE)
  • Given that “safety is our first value”, the focus was on providing direction and support to management in implementing programmes to improve work place safety. Positive results were achieved and improvements in key safety indicators are detailed in the Annual Sustainability Report 2013.
  • Reviewed and provided direction and support to management on the implementation of programmes to improve the health and well-being of employees and their families.
  • Considered mining activities that had the potential to negatively impact the environment.
  • Reviewed the Sustainability Report 2012 jointly with the Social, Ethics and Transformation Committee.
Social, Ethics and Transformation Committee (SE&T)
  • Monitored programmes on safety, health and the environment through regular reports from the SHE committee.
  • Monitored the group’s progress in complying with transformation targets set by the Mining Charter and the Department of Mineral Resources (DMR) in South Africa.
  • Monitored transformation activities at the group’s other operations, especially in relation to developing local talent and skills.
  • Monitored the group’s activities relating to stakeholder management.
  • Monitored the group’s community improvement programmes and expenditure in that regard, as well as ensuring that such spend is guided by criteria that seek to promote achievement of the company’s business objectives.
  • Monitored the systems and programmes in place to enable the group to comply with relevant laws and regulations.
  • Monitored the group’s labour relations environment and advised on developing strategies to improve the landscape of labour relations.
  • Reviewed and approved, jointly with the SHE committee, the Sustainability Report 2012.
  • In order to strengthen the company’s compliance with anti-corruption and anti-bribery legislation, a revised risk-based compliance framework was presented to the committee and implemented.
  • The committee’s mandate was revised to include that of the Party Political Donations Committee.
  • Further details of its activities are available in the committee’s report to shareholders in the Annual Financial Statements 2013.

Investment Committee (Invcom):
  • Reviewed progress reports on the execution of capital projects to assess progress against board approved plans and project specifications.
  • Received information on the company’s financial position at the start of each meeting to assist the committee in its investment decisions.
  • Deliberated on the group’s asset portfolio with a view to guiding management on its rationalisation in accordance with future growth plans.
Nominations Committee (Nomcom)
  • Reviewed, on behalf of the board, results of the 2013 performance evaluation of the board, the independence of independent directors, the qualifications and competence of the company secretary and the independence and performance of the board Chairman.
  • Monitored implementation of an action plan to address concerns and suggestions arising from the evaluations.
  • Discussed results of the evaluation of the independence and performance of the board Chairman and coordinated his reappointment for 2013.
  • Co-ordinated processes and procedures culminating in the appointment of a new chief executive following the resignation of the former Chief Executive Officer in March 2013.
  • Interviewed several candidates for appointment to the board in 2014.
  • Post year-end, following the retirement of the independent non-executive Chairman, oversaw appointment of new non-executive Chairman and lead independent director.

During 2013, of the two ad hoc committees, the Financial Analysis Committee did not meet and the Party Political Donations Committee was dissolved and its mandate transferred and included with that of the Social, Ethics and Transformation Committee.

Board and committee meeting attendance – 2013

The current composition of the board and committees, and attendance at meetings during 2013 are disclosed in the table below:

Name of Director Board Audcom Rem&HR R&II SHE SE&T Invcom Nomcom
TT Mboweni 12/12 5/5 4/4 5/5
SM Pityana 11/12 4/5 4/4 4/5 4/5 4/4 5/5
FB Arisman (1) 3/4 4/5 2/3 1/2 2/3 1/2 2/3
M Cutifani (2) 3/3 1/1 1/2 1/2 1/1
RN Duffy (3) 7/7
R Gasant (4) 12/12 9/10 4/4 1/1 5/5
NP January-Bardill 11/12 9/10 5/5 5/5 5/5
MJ Kirkwood (5) 11/12 7/7 5/5 5/5 4/4 5/5
AM O’Neill (6) 4/5
WA Nairn (7) 3/4 3/3 2/2 3/3 3/3 2/2 2/3
Prof LW Nkuhlu (8) 12/12 10/10 5/5 4/4 5/5 5/5 1/1 4/5
F Ohene-Kena (9) 3/4 1/3 1/3
RJ Ruston (10) 11/12 2/2 4/4 5/5 5/5 4/4 5/5
S Venkatakrishnan 12/12 4/4 4/4

(1) Mr Arisman retired from the board on 13 May 2013.
(2) Mr Cutifani resigned as CEO and executive director on 31 March 2013.
(3) Mr Duffy was appointed as CFO and executive director on 1 June 2013.
(4) Mr Gasant was appointed a member and chairman of the Invcom with effect from 1 September 2013.
(5) Mr Kirkwood was appointed to Audcom on 1 April 2013.
(6) Mr O’Neill was appointed as executive director with effect from 20 February 2013 and resigned on 19 July 2013.
(7) Mr Nairn retired from the board on 13 May 2013.
(8) Prof LW Nkuhlu resigned from the Invcom with effect from 1 April 2013.
(9) Mr Ohene-Kena retired from the board on 13 May 2013.
(10) Mr Ruston was appointed a member of the Rem&HR with effect from 1 July 2013.

EXECUTIVE COMMITTEE

The day-to-day management of the group’s affairs is vested in the Executive Committee, chaired by the Chief Executive Officer and comprising 10 members. The committee’s work is supported by country and regional management teams as well as group corporate functions. On 21 May 2013, the Executive Committee was restructured to better align the team with the strategy and current imperatives of the company.

VALUES AND ETHICS

The Code of Business Principles and Ethics (Our Code) is the defining document on 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. The principles of King III facilitate the monitoring of the company’s performance from the perspective of ethics.

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 2013. Our Code has been translated into four languages and is available on the corporate website, the intranet, and DVD.

In 2013, the online training platform was re-launched on the OneERP learning management platform, providing access to four courses. An additional course is to be rolled out in 2014. Training is available in four languages and has enabled accelerated training in Our Code and on anti-bribery and anti-corruption.

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. Failure to live up to Our Code may result in disciplinary action being taken, up to and including dismissal.

Employees, directors and officers who are aware of a situation in which they believe Our Code is being transgressed are urged to communicate their concerns to their line managers, the legal department, human resources or group compliance. No employee, director or officer will be disciplined or otherwise victimised for raising a concern in good faith.

The company has promoted its whistle-blowing communication channels that include hotlines, text messaging, email and web facilities, which are administered by a third party. Use of these facilities is promoted by means of posters at all locations. Employees, directors, officers and external parties may use the hotlines, anonymously if they wish, to report concerns. All concerns are carefully investigated and, wherever possible, feedback is provided to the person raising the concern upon request.

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 co-ordinating 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 2013, Group Compliance activities aimed at enhancing the company’s governance. Key among these activities were:

  • the hiring of a permanent full-time head of compliance (Vice-President: Group Compliance) based in Johannesburg;
  • the continued global roll-out of awareness training on Our Code by means of both online training and “in-person” DVD training for those without computer access;
  • continued development of a compliance programme aligned with “best practice” principles identified by, among others, bodies responsible for the prosecution of violations of key extra-territorial legislation like the Foreign Corrupt Practices Act, and adaptable at an operational level to enhance the effectiveness of the compliance framework;
  • development of a global supplier code of conduct and a revised risk-based third party due diligence process;
  • development of a methodology for continuous improvement in auditing and a review of compliance policies, including the development of compliance metrics for use in internal audits;
  • the continued roll-out of online anti-bribery and anti-corruption training;
  • revised and issued new policies and procedures, including the development of an investigation reporting standard for the company;
  • assessment of the automated group gifts, hospitality and sponsorships registers;
  • automation of the group’s conflicts of interests register; and
  • additional efforts to provide automated access to track and monitor compliance with laws and regulations, including a self-certification process and legal register by country.

External standards and voluntary codes

In addition to legislative and regulatory compliance, AngloGold Ashanti also complies with several external standards and has undertaken to comply with certain voluntary standards. As a member of and a signatory to the International Council on Mining and Metals (ICMM), the principles of the United Nations Global Compact (UNGC), Extractive Industries Transparency Initiative (EITI) and the Voluntary Principles on Security and Human Rights (VPSHR), the World Gold Council’s Conflict-Free Gold Standard (WGC CFGS), AngloGold Ashanti endeavours to comply with the principles advocated by those bodies and reports on this compliance.

Compliance with externally-verified voluntary standards enables AngloGold Ashanti to demonstrate that it operates responsibly and to create rigorous mechanisms for self-governance and transparency. As the company maintains this high standard of governance, stakeholders may be confident that it performs responsibly.

Increasingly, customers and consumers want assurance that the gold they are purchasing has not contributed to conflict or human rights abuse. This has resulted in a number of measures being introduced by industry-related organisations to prevent gold and other commodities being used to fund conflict and other violations of human rights.

AngloGold Ashanti has taken a public stand and played a leading role in developing the WGC’s CFGS; not only because it is committed to responsible business practices and to making positive contributions to the societies in which it operates, but also to deliver on obligations to stakeholders to ensure that the gold in its supply chain does not fuel conflict, contribute to human rights abuse or breach any international humanitarian laws. In addition, AngloGold Ashanti is actively involved in initiatives to reduce illicit trafficking of precious metals at national and international levels.

In 2013, AngloGold Ashanti played an active role in three voluntary standards – the WGC CFGS; the Responsible Jewellery Council’s Code of Practices and the LBMA’s Responsible Gold Guidance – that enable the company to demonstrate that it operates responsibly. More detail on these standards is available in the Annual Sustainability Report 2013.

AngloGold Ashanti’s shares are registered with the SEC in the United States and therefore the company is subject to the various laws regarding securities that are applicable in that country. This reporting extends to Sections 1502, 1503 and 1504 of the Wall Street Reform and Consumer Protection Act (Dodd Frank) to the extent that the SEC has published relevant rules.

Our compliance with externally-verified voluntary standards enables us to demonstrate that we operate responsibly and to create rigorous mechanisms for self-governance and transparency.

A more detailed report on AngloGold Ashanti’s corporate governance is presented in the Annual Financial Statements 2013.

Governance – supply chain management and procurement policies

Supply chain management is about more than just procuring the right product, at the right time and in the right quantities. Effective supply chain management, undertaken with integrity and in line with the company’s values and governance principles, can add value to the company’s business by improving efficiency, relationships and reputation and, ultimately, affect the long-term sustainability of AngloGold Ashanti. As a global company operating on most of the world’s continents, responsible management of the supply chain is an increasingly important ethical and human rights consideration for the company’s business. External ratings agencies and customers are ever more aware of the implications and importance of ethical conduct in the supply chain.

Many of AngloGold Ashanti’s operations are located in developing countries, and responsible supply chain management has the potential to add value to these communities. The way in which the company operates must be value-adding for communities, local governments and society as a whole.

The company has adopted a cross-functional approach to supply chain management to ensure best practice while complying with international human rights and labour standards and ensuring the economic participation of local stakeholders. In 2013, AngloGold Ashanti approved a human rights policy framework in line with international human rights protocols.