Corporate Governance

Vedanta Resources - Corporate Governance
 

The Board of Vedanta Resources plc is committed to the highest standards of Corporate Governance for which the Board of directors are accountable to shareholders.

The Board also believes that, in the interests of shareholders, the application of corporate governance standards must reflect the nature and location of the Group's businesses, the ownership of the Company and its subsidiaries, and the Group's development needs whilst ensuring the talents within the Group are utilised to their fullest potential.

Detailed information about Vedanta's financial performance, strategy, structure, executive bodies, risk management and corporate governance are published in the Annual Report. -Download Latest Annual Report 

Leadership and the role of the Board

The Company’s Board of Directors is collectively responsible to its shareholders for the long-term success of the Company through the creation and delivery of sustainable shareholder value. This responsibility includes determining strategy, setting risk appetite, ensuring that adequate resources are available and monitoring Management’s performance in delivering against the strategy.

As part of its decision making processes the Board considers the long-term consequences of its decisions, the interests of various stakeholders including employees, the impact of the Group’s operations on the environment and the need to maintain high standards of corporate governance and conduct.

This is achieved through a prudent and robust risk management framework and internal controls and strong governance processes. The Board also engages with and reports to shareholders on business performance and to other stakeholders on their areas of concern.

 

Governance Framework

Board and Board Committees

The Board discharges its responsibility for Corporate Governance either directly or delegates certain responsibilities to Board Committees which operate within their defined terms of reference. The main Board Committees are the Audit, Nominations, Remuneration and Sustainability Committees (together, the Board Committees). It reports to shareholders on Corporate Governance in the Group in the Company’s Annual Report and the governance section of this website.

The relationship between the shareholders, the Board, Board Committees and Management Committees and the reporting structure as shown below forms the backbone of the Group’s Corporate Governance framework.

Duties of the Board

The duties of the Board are set out in its terms of reference including those matters specifically reserved for consideration by the Board. The Board’s terms of reference include:

  • Approval of the Group’s annual and half year reports and financial statements;
  • Declaration of the interim dividend and the recommendation of the final dividend;
  • Approval of any material restructuring or reorganisation of the Group;
  • Approval of major capital expenditure projects in excess of defined thresholds;
  • Approval of major acquisitions and disposals of assets in excess of defined thresholds;
  • Approval of a variety of major decisions that are determined by their nature to have a significant likely impact for the Group;
  • Approval of any appointments to or removals from the Board of Directors.

The Board’s terms of reference also set out those matters which must be reported to the Board such as details of fatalities within the Group and the adoption or material amendment to the Group policies relating to business conduct, environment and health and safety.

The Board has adopted a policy, consistent with the UK Corporate Governance Code, under which all Directors must seek re-election by shareholders annually, if they wish to remain on the Board. The Board believes that annual re-election promotes and supports accountability to shareholders. Annual re-election effectively means that Directors are subject to an annual appraisal. The Board, on the recommendation of the Nominations committee, makes an informed decision as to whether it will endorse a retiring director for re-election. Accordingly Directors are re-elected by ordinary resolution at the Company's AGM.

Controlling Shareholder Provisions

The Company is subject to the requirements of the Listing Rules in respect of premium listed companies with a controlling shareholder. This means that the independent non-executive Directors of the Company must be elected or re-elected by a majority of votes cast by all shareholders. Therefore, at the Company’s Annual General Meetings, the resolutions for the election or re-election of the independent non-executive Directors will be taken on a poll and passed only if a majority of votes cast by independent shareholders in addition to a majority of the votes cast by all shareholders being in favour.

Division of responsibilities

There is a clear division between the functioning of the Board in providing effective oversight and the executive responsibility for the operation of the Company’s business. The Board has an established policy which prescribes how it discharges its mandate. This policy sets out the roles and responsibilities of the Executive Chairman, Executive Vice Chairman, Chief Executive Officer, Senior Independent Director and Non-Executive Directors.

The role of the Executive Chairman

The Executive Chairman is responsible for:

  • Leading the Board and ensuring that it has the resources required to function effectively;
  • Developing succession plans for Board appointments for Board approval;
  • Helping to identify strategic priorities to enhance shareholder value;
  • Formulating strategic plans for the Board’s consideration and approval;
  • Identifying new business opportunities in line with the strategic plans approved by the Board;
  • Engaging with the Company’s shareholders and other stakeholders such as governments, communities and employees to ensure that an appropriate balance is maintained between the various interests;
  • Providing leadership to the senior management team;
  • Upholding the highest standards of integrity, probity and governance at Board level and throughout the Group;
  • Facilitating active engagement by all Directors and fostering an environment in which Non-Executive Directors can freely provide constructive challenge;
  • Evaluating the performance of the Board, Board committees and individual Directors and acting on the results of such evaluation;
  • Reviewing the training needs of the Directors for the fulfilment of their duties; and
  • Ensuring that new Directors participate in a full, formal and tailored induction programme.

The role of the Executive Vice Chairman

The Executive Vice Chairman supports the Executive Chairman in his leadership of the Board and is responsible for:

  • Supporting the Executive Chairman in ensuring that the Board functions effectively;
  • Supporting the Executive Chairman in identifying new business opportunities;
  • Supporting the development of the Group’s oil & gas strategy;
  • Supporting the development of the Group corporate structure to greater align strategic priorities and enhance shareholder value;
  • Guiding the execution of the Group’s HR strategy and talent management;
  • Providing oversight of the development of top talent throughout the Group; and
  • Strengthening the Group’s procurement capability and focusing management attention on critical areas.

 

The role of the Chief Executive Officer

The Chief Executive Officer is responsible for:

  • Ensuring effective implementation of Board decisions;
  • Developing operational business plans for Board approval;
  • Providing leadership to the senior management team for the delivery of the Group’s operational business plans following Board approval;
  • Providing oversight and management of all of the Group’s operations, business activities and performance including environmental, social, governance, health and safety, sustainability, investor relations and external communications;
  • Managing the Group’s risk profile in line with the risk appetite set by the Board;
  • Ensuring that prudent and robust risk management and internal control systems are in place throughout the Group;
  • Recommending annual budgets to the Board for approval;
  • Making recommendations to the Remuneration Committee on remuneration policy and executive remuneration; and
  • Supporting the Executive Chairman in maintaining effective communications with various stakeholders.
  • Maintaining a close working relationship with the Chairman
  • Leading the Executive Team

The role of the Senior Independent Director

The Senior Independent Director plays a key role in achieving a balance between the Company’s Executive and Non-Executive Directors. He is responsible for:

  • Providing  a channel of communication between the Executive Chairman and the Non-Executive Directors;
  • Acting as an intermediary for shareholders who wish to raise concerns that they have been unable to resolve through the normal channels of communication;
  • Acting as a sounding board for the Executive Chairman and serving as an intermediary for the Non-Executive Directors where necessary; and
  • Meeting with the Non-Executive Directors at least once a year to appraise the Executive Chairman’s performance and on such other occasions as are deemed appropriate.
  • Availability to meet with a range of shareholders when requested , to develop a better understanding of their issues and concerns and reporting the outcomes of such meetings at subsequent Board meetings.

 

The role of the Non-Executive Directors

The Non-Executive Directors are responsible for helping to develop the Company’s strategy and providing rigorous, objective and constructive challenge to create accountability and drive performance. Collectively, the current Non-Executive Directors have the appropriate balance of skills, experience knowledge and independent judgement gained through experience in a variety of business factors.  The responsibilities of the Non-Executive Directors include:

  • Helping management to develop the Company’s strategic objectives by drawing on their own business and commercial experience and challenging assumptions;
  • Scrutinising management’s performance in delivering against the strategy;
  • Satisfying themselves on the integrity of financial information and ensuring that risk and control systems are robust; and
  • Determining appropriate levels of remuneration, succession planning and participating in the appointment of Executive Directors and other Non-Executive Directors.

 

The Board considers that each of the Non-Executive Directors has the following attributes:

 

  • Time to undertake the responsibilities of the role;
  • Unquestionable honesty and integrity;
  • An ability to provide strategic thought to the relevant matters;
  • An ability to manage and consider materiality and risk tolerance as key considerations in decision-making ;
  • Experience of managing in the context of uncertainty, and an understanding of the risk environment of the Group, including the potential for risk to impact on health and safety, environment, community, reputation, regulatory market and financial performance.

 

The Executive Directors bring additional perspectives to the Board through a deeper understanding of the Group's business and day- to- day operations.

Management Committees

The Executive Committee

The Executive Committee acts as a conduit between management and the Board comprises of the Chief Executive Officer and members of senior management whose biographies are given in the Annual Report. The Executive Committee meets monthly and is responsible for implementing strategic plans formulated by the Board, allocating resources in line with delegated authorities and monitoring the operational and financial performance of the Group. The Executive Committee therefore has a key role in putting the Board’s plans and policies into action. The Chief Executive Officer, Mr Albanese, keeps the Board informed of the Executive Committee’s activities through his standing reports to the Board.

The Finance Standing Committee

The Finance Standing Committee is an ad-hoc sub-committee to which authority is delegated by the Board for approval of certain matters such as routine bank and financing issues. It comprises five members; Executive Chairman, Executive Vice Chairman, Chief Executive Officer, Chief Financial Officer, Director of Finance and Director, Investor Relations. The Company Secretary provides an update on the Finance Standing Committee meetings to the Board at the subsequent Board meeting and the minutes of all Finance Standing Committee meetings are reviewed by the Board.

Chairman’s Committee

The Chairman’s Committee meets monthly and comprises of Messrs Anil Agarwal, who chairs the Chairman’s Committee, Navin Agarwal, Tom Albanese, Tarun Jain and Arun Kumar. The Committee is a management committee which was established to support the review of businesses in more detail in order to minimise cost of the functioning of the Board and to ensure that the business of the Board and its Committees is properly planned and aligned with Management. The Chairman’s Committee provides a forum for the Chief Executive Officer to report to the Executive Chairman on the Company’s operational performance and key issues impacting performance and for the members to deliberate on how best to align performance with the strategic objectives set by the Board.

Board Procedure

The Board holds a number of regular meetings each year, supplemented by ad hoc meetings from time to time for specific purposes, for example in connection with specific acquisitions. Each of the Board Committees have powers formally delegated to them by the Board in their respective Terms of Reference. The terms of reference for each of the Board Committees are available on the Board Committees page or by request to the Company Secretary. .Each committee’s terms of reference is reviewed regularly to ensure that it complies with current legal and regulatory requirements, reflects best corporate practice and improvements in the way the Committees are managed. Each committee’s Chairman reports formally to the Board after each committee meeting. Additionally, from time to time, the committees submit reports and recommendations to the Board on any matter which it considers significant to the Group.

The Board members are authorised to obtain legal or other professional advice as necessary at the expense of the Company, to secure the attendance of external advisers at their meetings and to seek information from any employee of the Company in order to perform their duties. Under the terms of reference of each of the Board Committees only the members of each committee have the right to attend committee meetings. However, other Directors, management and advisers may attend meetings at the invitation of the Committee chair. The Group Company Secretary acts as the secretary to the Board, Audit, Nomination and Remuneration Committees while the President-Group Communications, Sustainability and Corporate Social Responsibility acts as the secretary to the Sustainability Committee.

 

Directors’ and Officers’ Liability Insurance

The Group maintains appropriate Directors’ and Officers’ Liability insurance on behalf of, and provides individual indemnities to, the directors, and Company Secretary, which complies with the provisions of Section 234 of the Companies Act 2006.

Board evaluation

Each year, the Board reviews its performance, the performance of its committees and individual Directors. This is done annually, with the support either of an independent facilitator or the Company Secretary in alternate years. The process involves individual confidential interviews with each Board member and other senior employees. The results of these interviews are reported to the Chairman and made available to the Board for discussion.

 

Information and training for Directors

The Company arranges for each new Non-Executive Director to receive detailed business briefings as regards the Group's operations and to make induction visits to the Group's principal sites. Non-Executive Directors may at any time make visits to Group businesses or operational sites, which are coordinated by the Group Company Secretary's office. The whole Board also visits at least one operational site each year. In addition, presentations on the Group's businesses and specialist functions are made regularly to the Board. The Group CEO provides a monthly update to the Non-Executive Directors on the Group’s operations. The Group Company Secretary also briefs the Directors on significant changes in the law affecting their duties as directors.

Conflicts of interest

Vedanta has adopted a formal procedure for the disclosure, review, authorisation and management of Directors' actual and potential conflicts of interest in accordance with the Companies Act 2006. The procedure requires Directors formally to notify the Board (via the Company Secretary) as soon as they become aware of any new actual or potential conflict of interest or when there is a material change in any of the conflicts of interest they have already disclosed. Any potential conflicts of interest notified by a Director are reviewed by the Board as soon as possible. The Board considers whether a conflict or potential conflict does, in fact, exist. If a conflict does, or could, exist, the Board will decide whether it is in the interest of the Company to authorise it and, if so, on what terms. In making their judgment on this, the other Directors have regard to their general duties to the Company. Authorisations may be revoked, or the terms on which they were given varied, at any time if deemed appropriate. Possible conflicts of interest authorised by the Board are reviewed annually. In the event of any actual conflict arising in respect of a particular matter, mitigating action would be taken (for example, non-attendance of the Director concerned at all or part of Board meetings and non-circulation to him of relevant papers).

Corporate Governance

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