Role of Board and Management

The role of the Board is generally to set objectives and goals for the operation of The Trust Company, to oversee The Trust Company’s management, to regularly review performance and to monitor The Trust Company’s affairs acting in the best interests of The Trust Company.  The Board is accountable to the shareholders and is responsible for approving The Trust Company’s corporate objective and overseeing the implementation of the strategic goals including achieving consistent growth in shareholder dividends.

The role of the Chairman is to facilitate the operation of the Board and represent the Board and The Trust Company to shareholders in relation to formal meetings and matters reserved to the Board.

The role of the CEO is to manage the business of The Trust Company. The Board delegates to the CEO all matters not reserved to the Board, including the day to day management of The Trust Company.

To assist the Board in carrying out its functions it has established the following Committees:

• Audit Risk and Compliance Committee
• People and Remuneration Committee
• Investment Committee
• Philanthropy and Community Committee.

and developed:

• An Ethical Framework to guide the Directors, the CEO, the Executive Team and the employees in the performance of their roles
• A revised Board Charter that describes the role of and responsibilities reserved for the Board, the Chairman and the CEO. The revised Board Charter is available here.

Evaluating the performance of the Executive Team

The Board evaluates the performance of the CEO against agreed plans and the key performance indicators that it sets at the beginning of each year. The CEO evaluates the performance of the other Executive Team members and makes his recommendations on their performance to the People and Remuneration Committee.

The performance of Executive Team members (and all The Trust Company employees) is evaluated on a six monthly basis against their key performance indicators that have been set at the start of the year. Key performance indicators cover both financial and non-financial aspects of each Executive Team member’s role. The key performance indicators are cascaded down from those set for the CEO. The performance management process plays a key role in developing high performance teams and aligning employee and organisational behaviour with The Trust Company’s cultural values as set out in the Ethical Framework.

The performance of Executive Team members (and all Trust employees) is evaluated on a six monthly basis against their key performance indicators that have been set at the start of the year.  Key performance indicators cover both financial and non-financial aspects of each Executive Team member’s role.  The key performance indicators are cascaded down from those set for the CEO.  The performance management process plays a key role in developing high performance teams and aligning employee and organisational behaviour with Trust’s cultural values as set out in the Ethical Framework and the interests of our stakeholders.

The performance evaluation of the Executive Team has taken place in accordance with the above process.

Remuneration of the Executive Team is reviewed by the People and Remuneration Committee (see Principle 8).

Independent Directors

At present The Trust Company Board consists of six independent Non-Executive Directors and one Executive Director. The names and details of the current Directors of The Trust Company, including attendance at Board and Committee meetings, are set out below:

It is the Board’s view that each of the six Non-Executive Directors is independent. The Board assesses Director independence pursuant to the relationships that affect independent status as set out in the Recommendations, along with other matters that the Board considers relevant. In making the assessment of Directors’ independence, materiality is assessed on a case by case basis having regard to the individual circumstances of each Director. The criteria for assessing independence are provided to Directors at each Board meeting for confirmation.

The Board meets regularly and considers that the diversity, composition and mix of skills of Directors is appropriate for the Directors to understand The Trust Company’s business and to discharge their duties. The Board also meets without management to ensure that it maintains independent judgement in Board decisions.

Chairman

The Chairman is selected by the Board and is an independent Non-Executive Director.

The current Chairman of The Trust Company is Bruce Corlett AM.

Selection and assessment of directors

The Nomination Committee functions are carried out by the full Board of The Trust Company given the small size of The Trust Company and the Board itself. The Board makes an assessment in relation to the appointment of new Directors and annually in relation to itself.

In accordance with The Trust Company’s Constitution and the ASX Listing Rules a third of the Non-Executive Directors of The Trust Company stand for re-election at each Annual General Meeting (AGM).

New Directors are fully briefed on the terms and conditions of their appointment by the Chairman of The Trust Company, which is formalised in a letter of offer, and undertake an induction program to familiarise themselves with The Trust Company and its business operations.

Evaluating the performance of the Board, Committees and Directors

Given the size of the Board, the Chairman of The Trust Company is responsible for monitoring and providing feedback to individual Directors. A confidential self assessment survey regarding the performance of the Board, Committees and Directors is undertaken annually and the Chairman discusses the results directly with each Director and the Board collectively.

The Board’s, each Committee’s and Director’s performance is reviewed during the year in accordance with the process summarised above.

Director access to information and advice

The Board is provided with regular detailed reports on The Trust Company’s financial position, financial performance and business to allow the Board to effectively fulfil its responsibilities. The Directors have access to the Executive Team, employees and The Trust Company’s advisers as necessary if they require additional information.

Further, The Trust Company has entered into a Deed of Access, Indemnity and Insurance with each Director entitling them to seek independent professional advice at The Trust Company’s expense with the prior approval of the Chairman. This advice is to be made available to all Directors.

The Trust Company has both an Ethical Framework and a Code of Conduct within which it carries on its business and deals with its stakeholders. These apply to all Directors and employees of The Trust Company and are available on this website.

Ethical Framework

The Ethical Framework supports all aspects of the way The Trust Company conducts its business and is embedded into the performance management process for the Executive Team and all employees.

The Ethical Framework guides and better aligns The Trust Company’s cultural values with the decision making conducted at all levels within The Trust Company’s business, and integrates this with The Trust Company’s purpose, vision and goals as an organisation and as a valued member of the wider community.

Diversity Policy

The Trust Company’s Workplace Diversity Policy covers the following areas: women in the workforce, age, cultural background, disability and flexible working arrangements. It is approved by the Board and overseen by the People and Remuneration Committee.

The Trust Company embraces workforce diversity as a source of strength. This is not only about increasing visible differences in the workforce, but more importantly it is about the strategic advantage that comes from incorporating a wide variety of capabilities, ideas and insights in our decision making, problem solving and policy development. This gives expression to one of The Trust Company’s strategic themes i.e. High Performance Teams.

The principles of Equal Employment Opportunity (EEO) are an important foundation for our Workplace Diversity Policy. The EEO principles aim to: ensure that staff are selected for positions on merit; provide equitable access to employment, professional development and workplace opportunities; and ensure that the workplace is free from all forms of unlawful discrimination and harassment. A copy of the Workplace Diversity Policy is included here.

The policy includes a requirement for the Board to:

• Establish measurable objectives for gender diversity
• Assess annually the objectives set for achieving gender diversity
• Assess annually the progress made towards achieving the objectives set

The measurable objectives set by the Board for FY12 are:

• Percentage of women in senior management positions to be a minimum of 35% by 2015; and
• At least one female Non-Executive Director at all times.

The following table discloses the gender diversity of the Company as at 29 February 2012:

Category	% Female	% Male
Board	16.67%	83.33%
Executive roles	33.33%	66.67%
Senior management roles	30.00%	70.00%
Group workforce*	57.35%	42.65%

* Group workforce percentages in the above table represent all permanent employees in the Group

The workforce of The Trust Company Group currently comprises a wide range of ages, cultural backgrounds and gender across all roles. As at 29 February 2012, women comprised 57.35% of the Group workforce. The Group is progressing towards achieving its objective of a minimum of 35% of women in senior management positions by 2015, with the percentage of women in senior management positions comprising 31.03% as at 29 February 2012. As we work towards our objective we will continue our focus on our Talent Management program including succession planning, our Leadership program and strengthening our internal capabilities. For definition purposes, ‘women in senior management positions’ is inclusive of: Executive and Senior management roles as shown in the above table.

With six Non-Executive Directors on the Board, the Group is currently meeting the objective of at least one female Non-Executive Director.

Share Trading Policy

The Trust Company has a Share Trading Policy in relation to trading in The Trust Company shares which only allows employees and Directors to trade between particular blackout periods. The blackout periods occur six weeks before financial results announcements, one month before an AGM and at any other time that the Directors decide. Directors and employees are reminded of upcoming blackout periods to ensure that they do not trade during a blackout period.

Directors are required to seek the Chairman’s prior approval of trading in The Trust Company’s shares and inform the Company Secretary of any share trades within five business days of the transaction to enable timely disclosure to the market.

The Trust Company’s Share Trading Policy is available here and has been lodged with ASX.

Voting rights in capacity as a Trustee

The Trust Company and a number of its subsidiaries act as trustee and are responsible for the administration of funds, trusts and estates that hold shares in The Trust Company. The Trust Company receives independent advice on how these voting rights should be exercised and a summary of these voting rights is included here

Philanthropy and Community Committee

The Trust Company has a Philanthropy and Community Committee which assists with better promotion and co-ordination of The Trust Company’s philanthropic and community activities. Josephine Sukkar is Chairman of the Committee and Board members include Bruce Corlett and John Atkin.

In accordance with the Committee Charter the term of service of the members of the Committee is reviewed by the Chairman annually, with a view to rotating members periodically, without, however, losing the continuity of experience and knowledge gained by the members of the Committee. The Committee will usually meet four times a year and have such additional meetings as the Committee Chairman may decide in order to fulfil its role.

The Trust Company has an Audit, Risk and Compliance Committee (ARCC). The Committee is comprised of four members with a majority of independent Non-Executive Directors. The Committee Members are Roger Davis (Chairman), Bruce Corlett and John Macarthur-Stanham and an independent Non-Executive Committee Member, John Richardson.

In accordance with the Committee Charter the term of service of the members of the Committee is reviewed by the Chairman annually, with a view to rotating members periodically, without, however, losing the continuity of experience and knowledge gained by the members of the Committee. The Committee will meet quarterly and at least once in relation to each of the Annual and Half Year Financial Reports. The Committee may have such additional meetings as the Committee Chairman may decide in order to fulfil its role.

John Richardson, BEc, FCA, FCIS, is an independent accounting member of ARCC. Formerly a senior audit partner of KPMG Chartered Accountants, he retired in 2001 after thirty years as a partner of that firm and now acts as an independent corporate adviser to a range of companies, both public and private, and provides expert advice on accounting and auditing issues.

One of the primary objectives of the Committee is to fulfil the Board’s responsibilities relating to the review of Annual and Half Year Financial Reports and the review of accounting and financial reporting practices of The Trust Company and its subsidiaries.

The Committee also meets with the external auditor without management present to discuss any issues in relation to the Annual and Half Year Financial Statements.

The Committee has a charter, which sets out its role and responsibilities and a copy of this charter is available here.

External auditor

The senior audit partner is rotated by agreement with the CEO and CFO at least once every five years and approved by the Board. For the 2009 financial report a new audit partner was appointed to the audit of The Trust Company Group in accordance with this agreement.

The current auditor for The Trust Company is Deloitte Touche Tohmatsu.

The Trust Company has a continuous disclosure policy to ensure compliance with ASX and the Corporations Act continuous disclosure requirements. The policy requires timely disclosure of information to be reported to the Executive Team and CEO to ensure, information that a reasonable person would expect to have a material effect on The Trust Company’s share price or would influence an investment decision, is disclosed to the market.

The CEO is the nominated continuous disclosure officer for The Trust Company and reports directly to the Board on disclosure matters and the Company Secretary is responsible for making disclosures to the ASX after appropriate Board consultation.

The Trust Company is committed to providing both shareholders and the market with timely information so that the market is sufficiently informed of The Trust Company’s business and operations.

In addition to The Trust Company’s continuous disclosure obligations, The Trust Company:

• Provides shareholders with full copies of all ASX announcements and other press releases on its website immediately after being announced to the market
• Rotates the venue of the Annual General Meeting between Sydney, and Melbourne, where the majority of shareholders reside, to enable their attendance at meetings

The Trust Company has an active program for effective communication with all of its shareholders, clients and other stakeholders. Copies of all communications material are made available on this website.

The Trust Company values the importance of robust risk management systems and has established ARCC to assist the Board to discharge its risk management and compliance responsibilities.

Role and members of ARCC

As noted above in addition to reporting to the Board on audit and financial matters, ARCC is responsible for the oversight of risk management, internal control systems and compliance matters for The Trust Company Group. It also reviews internal and external audit processes and reports. ARCC meets regularly with the Executive Team, senior management and external advisers, and reports directly to the Board.

The Trust Company and a number of its subsidiaries hold Australian Financial Services Licences in relation to which ARCC acts as the Compliance Committee pursuant to Part 5C of the Corporations Act.

Management’s responsibilities for risk management

The Executive Team and the risk and compliance function regularly report any material business risks to the Board (via the CEO) and to ARCC through its quarterly risk and compliance reporting process. Significant matters arising during a quarter are addressed by management and escalated as appropriate.

Risk management and internal control systems

The Trust Company has a formal risk management program in place and maintains a current risk register. It was developed with external consultants and is based on Standards Australia AS/NZS ISO 31000:2009 – Risk Management Standard. The program includes policies and procedures to identify and address material financial and non-financial risks. This program has been endorsed by the Board and ARCC. The risks identified together with their management have been reported to the Board as part of regular reviews of the risk register.

The Board and ARCC are responsible for overseeing compliance with the risk management program and its continuous evolution.

The Trust Company also maintains an independent ‘internal’ audit function which reports directly to ARCC and the Board if necessary. This service is provided by KPMG in Australia and Singapore and Ernst & Young in New Zealand.

CEO and CFO declarations

The CEO and CFO provide formal statements to the Board to confirm that the financial statements are founded on a sound system of risk management, internal compliance and controls which implement the policies adopted by the Board. In addition they confirm The Trust Company’s risk management and control system is operating efficiently and effectively in all material respects.

The Trust Company has remuneration policies in place to maintain and attract talented and motivated Directors and employees. The policies are designed to improve the performance of The Trust Company, while also aligning the financial interests of employees and Directors with the interests of shareholders. They provide for regular benchmarking of compensation levels across The Trust Company Group and depending on level, provide for base, incentive and share based rewards to employees.

People and Remuneration Committee

The Trust Company has a People and Remuneration Committee. The Committee is comprised of three independent Non-Executive Directors, with a Chairman who is different to the Chairman of the Board. The Committee Members are John Macarthur-Stanham (Chairman), James King and Josephine Sukkar. The Committee has reviewed and approved its charter which sets out its role and responsibilities and a copy of this charter is available here.

In accordance with the Committee Charter the term of service of the members of the Committee is reviewed by the Chairman annually, with a view to rotating members periodically, without, however, losing the continuity of experience and knowledge gained by the members of the Committee. The Committee will usually meet four times a year and have such additional meetings as the Committee Chairman may decide in order to fulfil its role.

In relation to remuneration matters, the Committee’s purpose is to review and assess the performance of the CEO and his direct reports and ensure appropriate remuneration policies and arrangements are applied consistently and equitably throughout the organisation. The Committee also reviews succession planning for employees, particularly at more senior levels of management together with The Trust Company’s policies and practices for the development of its people.

Director’s Remuneration

The Board is responsible for reviewing each Director’s remuneration. During 2011 shareholders approved a cap of A$750,000 on the total value of Non-Executive Directors’ remuneration, which is inclusive of superannuation. Existing Non-Executive Directors have not received a Director fee increase during the past financial year ended 29 February 2012.

Non-Executive Directors are remunerated by way of Directors’ fees and superannuation contributions. Non-Executive Directors do not participate in equity or option based incentive schemes, nor do they receive bonus payments.

Details of the Directors’ remuneration, together with the details of the remuneration of key management personnel, are set out in the Remuneration Report.

Executive Team remuneration

The Board, with advice from the People and Remuneration Committee, is responsible for approving the Executive Team’s incentive remuneration arrangements, which includes both fixed and performance related arrangements. The object of The Trust Company’s Executive Team remuneration policy is to reflect both short-term and long-term performance objectives of The Trust Company and to align the Executive Team’s rewards with The Trust Company’s strategic objectives and business plans, including the consistent growth in shareholder dividends.

Incentive plans

The Trust Company currently has a Performance Rights incentive plan designed for the Executive Team and all permanent employees. Details of the Performance Rights Plan are contained in the Remuneration Report and a copy of the terms of the Performance Rights Plan is available on this website.

During 2009 The Trust Company introduced a policy of prohibiting the hedging of unvested equity entitlements by members of the Executive Team with non-vested incentive remuneration arrangements.