Governance

De Beers Group
The Company is managed and controlled from its head office in Luxembourg, where the Board meets to attend to the business of the Group.  Its commercial activities are carried out by a number of associated subsidiaries and investments it finances in different parts of the world.  Together these subsidiaries and investments constitute the Family of Companies. 

Taxes and royalties to governments are paid by each of the different subsidiaries and investments in a manner consistent with the requirements of the jurisdiction in which they operate. 

Appointment of Board Directors
The appointment of De Beers directors is governed by three legally binding documents:  the Shareholder’s Agreement; the Management Contract; and the Company’s Articles of Incorporation.

The Shareholder’s Agreement defines the objectives and relationship between the shareholders.  It also sets out provisions relating to the appointment of Board members. 

Central Management Services Limited (CMSL) has been appointed to assist in the appointment of directors, senior executives and management.  It also assists in the strategic development of the De Beers Family of Companies. 

The Articles of Incorporation relate to the legal establishment and registration of De Beers as a joint stock corporation in Luxembourg.  As a legal constitutional instrument it allows for a minimum of three and a maximum of 20 Board Directors. 

Composition and independence
At 31 December 2007, the De Beers Board consisted of 17 directors, five of which serve in an executive capacity and are members of the Executive Committee. 

Each shareholder group is entitled to nominate two persons for appointment to the Board:  six directors, five non-executives and one executive (the Chairman, Nicky Oppenheimer) are currently appointed.  The role of the Chairman is distinct from that of the Managing Director. 

Expertise of Board directors
The appointment of directors is based primarily on the extent to which they represent the interests of the shareholders and are able to provide strategic guidance on the direction, values and performance of the Company. 

This includes with respect to the Principles, ECoHS policies and related sustainability and risk management. 

The term of office for each director is limited by law and the constitutional documents of the Company to six years.  Directors are however eligible for re-election by the shareholders. 

Shareholders also have the ability to terminate appointments if necessary, prior to the completion of the appointed term of office.

Board continuity is fundamental to the success of the De Beers Group.  This requires an ongoing resource and skills identification to be performed by the Board in consultation with shareholders. 

Ethics and the Board
The Board supports the principles of openness, integrity, responsibility and accountability.  It endeavours to ensure the Company’s governance processes and policies meet best practise standards. 

De Beers complies with Luxembourg company law as well as applicable principles set out in the King Report on Corporate Governance for South Africa.  The King Report also includes specific sections on risk management and integrated sustainability reporting and is aligned with the UN Global Compact and the Global Reporting Initiative sustainability reporting guidelines. 

Structures under the Board
The Board is responsible for the group’s system of governance and is ultimately accountable for the strategic direction of the business and all activities across the Family of Companies.
 
The Board also reviews sustainability performance and risks on at least an annual basis in line with the formal risks review process.
 
The De Beers Board is supported in its decision-making by five committees:  the Executive Committee, the Audit Committee, the ECoHS Committee, the Investment Committee and the Remuneration Committee. 

Although not an official committee under the Board, the Principles Committee provides further review and scrutiny on the extent to which the Family of Companies contributes to sustainable development and operates in conformance with its Principles. 

The Executive Committee
Briefly, the Executive Committee is chaired by Gareth Penny as the Managing Director.  It is responsible to the Board for implementing the Principles, policies and strategies of De Beers.  The Executive Committee deals with all executive business not specifically reserved for the Board or shareholders.

The Audit Committee
The Audit Committee consists of directors who do not hold executive office in De Beers, its subsidiaries or investments.  It monitors the adequacy of internal controls, accounting policies and financial reporting.  It monitors and supervises the effective functioning of the internal Audit department and the ethical conduct of the Company.

ECoHS Committee
The Environment, Community, Health and Safety (ECoHS) Committee monitors and reviews associated policies, guidelines, operational practices and performance of the Family of Companies.  It provides strategic oversight of the ECoHS disciplines and their respective peer groups. 

Investment Committee
The Investment Committee manages the process of investment capital approval and allocation within the Group.  Its key aim is to ensure that investments, divestments and financing proposals increase shareholder value and meet De Beers financial and business strategy criteria.
 
Remuneration Committee
The Remuneration Committee comprises a majority of directors who do not hold executive office in De Beers, its subsidiaries or investments.  It approves remuneration for Executive Directors on the Board and other senior managers including those on the Executive Committee. 

Principles Committee
The Executive Committee, Audit Committee and ECoHS Committee are further supported in developing their input to the Board by the Principles Committee.  Whilst not a formal Board committee it was established in 2007 with the remit to review compliance, risk and opportunities related to the development and implementation of the Principles and Assurance Programme for the Principles. 

Risk management
The shareholders and Board recognise that engaging risk is at the core of the business.  De Beers is governed by a risk framework through which risks are proactively identified, engaged and managed.  This includes taking advantage of opportunities and protecting capital, income and assets by mitigating the adverse impacts of risk. 

*Please note that further detail on Governance can be found in our Operating and Financial Review 2007.