Vodacom

Ethical leadership

The Board accepts collective responsibility for defining how ethics and ethical behaviour should be implemented in Vodacom. This includes setting out the conduct of individual Board members, to ensure that they act with integrity, competence, responsibility, accountability, fairness and transparency. These characteristics set the tone from the top to support an ethical culture within Vodacom.

Board leadership and committees

Board

Vodacom has a unitary Board of 12 directors, of whom five (including the Chairman) are independent non-executive directors, five are non-executive (but not independent as they represent Vodafone) and two are executive directors. King IV recommends that the governing body (Board) should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively. The Board is satisfied that the balance of knowledge, skills, experience, and diversity on the Board is sufficient and does not require additional independent voices. The Board acknowledges the requirement for gender diversity policy with targets for race and gender representation in its membership. Vodacom has adopted a formalised policy on the promotion of gender diversity at Board level. The Board is also in the process of establishing a succession plan for its membership which would include the identification, mentorship and development of future candidates. The Board has evaluated the performance of the Chief Executive Officer through the Nomination Committee and is satisfied with the outcome of the evaluation. The Board has delegated to the Chief Executive Officer to oversee that the key management functions are headed by individuals with necessary competence and authority and adequate resources.

Accountability

The Board takes overall responsibility for Vodacom’s success. Its role is to exercise leadership and sound judgement in directing Vodacom to achieve sustainable growth and act in the best interests of shareholders.

In line with best practice, the roles of Chairman and Chief Executive Officer are separate. The Chairman is responsible for leading the Board, while the Chief Executive Officer is responsible for the operational management of the Group.

The Board charter details the responsibilities of the Board, which include:

• Oversight of the Group’s strategic direction;
• Approving major capital projects, acquisitions or divestments;
• Exercising objective judgement on the Group’s business affairs, independent from management;
• Ensuring that appropriate governance structures, policies and procedures are in place;
• Ensuring the effectiveness of the Group’s internal controls;
• Reviewing and evaluating the Group’s risks;
• Approving the annual budget and operating plan;
• Approving the annual and interim financial results and shareholder communications;
• Approving the senior management structure, responsibilities and succession plans; and
• Information and technology governance.

In March 2017, the Board charter was updated to include elements of King IV.

Directors

Vodacom’s memorandum of incorporation specifies that non-executive directors have no fixed-term of appointment. Executive directors are subject to standard employment terms and conditions and a six-month notice period. Directors are subject to retirement by rotation and re-election by shareholders at least once every three years. Any director appointed to fill a temporary vacancy must retire at the first annual general meeting following their appointment.

Chairman

The memorandum of incorporation requires the Board to re-elect the Chairman annually. The Board is comfortable that the Chairman is able to perform the duties of this office effectively. While Peter Moyo was re-elected on the anniversary of his appointment in May 2017. His tenure as director and Chairman of the Company would terminate at the conclusion of the annual general meeting convened for Tuesday 18 July 2017. This follows his recent appointment as CEO of Old Mutual Emerging Markets on 1 June 2017, which was fully disclosed to shareholders in a SENS announcement published on 3 April 2017.

Independent advice

The Board recognises that there may be occasions where directors consider it necessary to take independent professional advice. This is done at the Company’s expense according to agreed procedure.

Board meetings

The Board holds a minimum of four meetings, three teleconferences and a strategy session every year. Special Board meetings are convened when necessary. One special Board meeting was convened during the year.

The table below records the attendance of directors at Board meetings for the year.

	6 May 2016		13 May 2016 Telecon		20 July 2016		24 Oct 2016 Special		11 Nov 2016 Telecon		8 Dec 2016		31 Jan 2017 Telecon		30 Mar 2017
MP Moyo	✔		✔		✔		✔		✔		✔		✔		✔
MS Aziz Joosub	✔		✔		✔		X•		✔		✔		✔		✔
V Badrinath1	–		–		–		–		–		✔		✔		✔
DH Brown	✔		✔		✔		✔		✔		✔		✔		X†
M Joseph	✔		✔		✔		✔		✔		✔		✔		✔
BP Mabelane	✔		✔		✔		✔		✔		✔		✔		✔
TM Mokgosi-Mwantembe	✔		✔		✔		✔		✔		✔		✔		✔
PJ Moleketi	✔		✔		✔		✔		✔		✔		X		✔
JWL Otty	✔		✔		✔		✔		✔		✔		✔		✔
M Pieters	✔		✔		✔		✔		✔		✔		✔		✔
RAW Schellekens	✔		✔		✔		✔		✔		✔		✔		✔
T Streichert	✔		✔		✔		✔		✔		✔		✔		✔
S Timuray2	✔		✔		✔		✔		✔		✔		–		–
Notes:
1. V Badrinath appointed 8 December 2016. 2. S Timuray resigned 8 December 2016. • Mr Aziz Joosub was intentionally recused from this meeting. † Mr Brown was absent due to illness.

Board committees

The non-executive directors contribute their extensive experience and knowledge to the Board’s committees. All committees operate under Board-approved terms of reference, which are updated from time to time to stay abreast of developments in corporate law and governance best practice.

Executive Committee

During the year, the Executive Committee included the Chief Executive Officer (Chairman), Chief Financial Officer, Chief Human Resources Officer, Chief Officer: Corporate Affairs, Chief Operating Officer: International Business, Chief Technology Officer, Chief Officer: Legal and Regulatory, Chief Officer: Strategy and New Business, Chief Officer: Consumer Business Unit, Chief Officer: Consumer Sales and Distribution, Chief Officer: Commercial Operations and Chief Officer: Enterprise Business Unit.

The committee is responsible for managing the Group’s operations, developing strategy and policy proposals for the Board’s consideration, and implementing the Board’s directives. It has a properly constituted mandate and terms of reference.

The committee’s other responsibilities include:

• Leading executives, management and employees;
• Developing the strategy of the Group;
• Developing the annual budget and business plans for the Board’s approval; and
• Developing, implementing and monitoring policies and procedures, internal controls, governance, risk management, ethics and authority levels.

Audit, Risk and Compliance Committee

Current members: DH Brown (Chairman), BP Mabelane, PJ Moleketi.

Further details of the activities of the Audit, Risk and Compliance Committee can be found in its standalone report in the consolidated annual financial statements. www.vodacom.com

Remuneration Committee

Current members: TM Mokgosi-Mwantembe (Chairman), V Badrinath, DH Brown, RAW Schellekens.

The Remuneration Committee, in consultation with executive management, ensures that the Group’s directors and senior executives are fairly rewarded for their individual contributions to overall performance and in line with Vodacom’s remuneration policy.

The membership of the Remuneration Committee does not comply fully with King IV or the JSE Listings Requirements, which advocate a majority of independent non-executive directors. Of the non-executive directors on the committee, only half are independent. Thoko Mokgosi-Mwantembe, the Chairman of the committee, and David Brown are independent non-executive directors. The Board is satisfied that Vodafone’s representation on this committee is appropriate given the valuable contribution of the Vodafone directors. Vivek Badrinath, who is the Vodafone Regional CEO for Africa, Middle East and Asia Pacific, has oversight over Vodacom, and Ronald Schellekens is the Vodafone Human Resources Director. Both provide useful insights to the performance of the Chief Executive Officer and the senior management. This assists with the evaluation of performance for reward purposes. To address non-compliance with the JSE Listings Requirements, it was agreed with the JSE that the Chairman of the committee would have a casting vote in the event of any deadlock or dispute that could arise. The mandate of the committee was revised accordingly. The Chief Executive Officer and Chief Human Resources Officer attend the meeting by invitation. The committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period.

In the year, the Remuneration Committee met four times with attendance as follows:

Name of director	6 May 2016	20 Jul 2016	4 Nov 2016	30 Mar 2017
TM Mokgosi-Mwantembe	✔	✔	✔	✔
V Badrinath1	–	–	–	✔
DH Brown	✔	✔	✔	X†
RAW Schellekens	✔	✔	✔	✔
S Timuray2	✔	✔	✔	–
Notes: 1. V Badrinath appointed 8 December 2016. 2. S Timuray resigned 8 December 2016. † Mr Brown was absent due to illness.

More detail on the activities of the Remuneration Committee can be found in the remuneration report.

Nomination Committee

Current members: MP Moyo (Chairman), V Badrinath, TM Mokgosi-Mwantembe, RAW Schellekens.

The Nomination Committee’s duties include identifying and evaluating suitable potential candidates for appointment to the Board, as well as candidates for the position of Chief Executive Officer and Chief Financial Officer. The authority to appoint directors remains a function of the Board. The committee also makes recommendations on the composition of the Board in terms of the mix of skills, size and the number of committees required, and it reviews and approves executive succession.

The membership of the Nomination Committee does not comply fully with King IV or the JSE Listings Requirements, which advocate a majority of independent non-executive directors. Of the non-executive directors on the committee, only half are independent. Peter Moyo, the Chairman of the committee, and Thoko Mokgosi-Mwantembe are independent non-executive directors. The Board is satisfied that Vodafone’s representation on this committee is appropriate given the valuable contribution of the Vodafone directors. Vivek Badrinath, who is the Vodafone Regional CEO for Africa, Middle East and Asia Pacific, has oversight over Vodacom, and Ronald Schellekens is the Vodafone Human Resources Director. As mentioned earlier, both provide useful insights to the performance of the Chief Executive Officer and other senior management. This assists with the review of the succession plans for management. To address non-compliance with the JSE Listings Requirements, it was agreed with the JSE that the Chairman of the committee would have a casting vote in the event of any deadlock or dispute that could arise. The mandate of the committee was revised accordingly. The committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period.

In the year, the Nomination Committee met four times with attendance as follows:

Name of director	6 May 2016	20 Jul 2016	26 Oct 2016	30 Mar 2017
MP Moyo	✔	✔	✔	✔
V Badrinath1	–	–	–	✔
TM Mokgosi-Mwantembe	✔	✔	✔	✔
RAW Schellekens	✔	✔	✔	✔
S Timuray2	✔	✔	✔	–
Notes: 1. V Badrinath appointed 8 December 2016. 2. S Timuray resigned 8 December 2016.

The committee’s key focus areas during the year included:

• Succession planning in respect of the senior leadership team;
• Reviewing the composition and mix of skills of the Board;
• Evaluating candidates for the positions of Chief Officer: Corporate Affairs, Chief Officer: Strategy and New Business and Chief Officer: Consumer Sales and Distribution;
• Board evaluation more fully reported below;
• Evaluating a list of candidates for the roles of independent directors for Vodacom Tanzania;
• Discussion around the appointment of a lead independent director (per King IV); and
• Updating the committee charter to accommodate King IV.

Social and Ethics Committee

Current members: PJ Moleketi (Chairman), MP Moyo, RAW Schellekens, MS Aziz Joosub.

There were no changes to the composition of the Social and Ethics Committee during the year. Key executives attend meetings by invitation but have no vote, including the Chief Risk Officer, Group Company Secretary (Ethics Officer), Chief Human Resources Officer, Chief Officer: Corporate Affairs, Chief Officer: Legal and Regulatory, Chief Officer: Strategy and New Business and Chief Officer: Commercial Operations.

As required by the South African Companies Act, No 71 of 2008 (as amended) and King IV, this committee oversees and monitors Vodacom’s activities in relation to:

• Social and economic development including the principles of the United Nations Global Compact, Broad-based Black Economic Empowerment (BBBEE), Employment Equity and the Organisation for Economic Co-operation and Development’s (OECD) recommendations on corruption;
• Good corporate citizenship which includes promotion of equality, prevention of unfair discrimination, corporate social responsibility, ethical behaviour and managing environmental impacts;
• Customer relations;
• Labour and employment including skills development; and
• Safety, health and environmental issues.

The Social and Ethics Committee met four times during the year with attendance as follows:

Name of director	4 May 2016	12 Jul 2016	9 Nov 2016	27 Mar 2017
PJ Moleketi	✔	✔	✔	✔
MP Moyo	✔	✔	✔	✔
RAW Schellekens	✔	✔	✔	✔
MS Aziz Joosub	✔	✔	✔	✔

The committee’s key focus areas during the year included:

• Noting the impact of the South African Government’s National Integrated ICT Policy White Paper;
• Driving BBBEE in Vodacom South Africa;
• Maintaining good relations with customers;
• Maintaining good relations with employees and achieving employment equity;
• Promoting and protecting the environment, health and safety; preventing and combating bribery and corruption;
• Promoting the Code of Conduct and driving ethical behaviours;
• Being a good corporate citizen, particularly our efforts at protecting and advancing human rights, promoting equality and preventing unfair discrimination; and
• Extending the reach and impact of our values and ethics through our business partners and supply chain.

More detail on the activities of the Social and Ethics Committee can be found in the Sustainability report.

Board evaluation

A comprehensive Board evaluation was conducted during the year, facilitated by an external service provider. Overall consensus was that the Board is working well, has a good mix of directors and that there is a high commitment to work in the best interest of Vodacom. Other conclusions included that the Board:

• Has implemented mechanisms to identify areas of potential problematic performance before a crisis occurs;
• Can handle and navigate the most difficult discussions effectively and take decisions on difficult issues;
• Has improved its ability to formulate strategy;
• All committees appear to be working well and are effective; and
• Should be more proactive regarding succession planning of the Chairman of the Board, independent directors and the chairman of the Audit, Risk and Compliance Committee. This is currently being addressed by the Nomination Committee.

Company Secretary

All directors have access to the advice and services of the Group Company Secretary, Sandi Linford, who is responsible to the Board for ensuring compliance with procedures and applicable statutes and regulations. For the Board to function effectively, all directors have full and timely access to information that helps them do their duties properly. This includes corporate announcements, investor communications and information about developments that may affect Vodacom and its operations. Directors have full access to management as required.

The Group Company Secretary is responsible for director training. The Group Company Secretary and Chief Executive Officer induct new directors, which includes briefings on their fiduciary and statutory responsibilities as well as on the Group’s operations as required.

Share dealings

Vodacom has a share dealing policy requiring all directors, senior executives and the Group Company Secretary to obtain prior written consent from either the Chairman or Chief Executive Officer to deal in Vodacom Group shares. The Chairman has to obtain prior written clearance from the chairman of the Audit, Risk and Compliance Committee. Closed periods are implemented as per JSE Listings Requirements, during which the Group’s directors, executives and employees are not allowed to deal in Vodacom Group shares. Additional closed periods are enforced should Vodacom be subject to any corporate activity requiring a cautionary announcement.

Stakeholder relationships

Stakeholder engagement

The Board has delegated to management the responsibility to deal with stakeholder relationships in a proactive and constructive manner. There is an approved stakeholder policy in place. The initiatives and activities for the year are more fully reported in the Social and Ethics Committee report.

More detail on the activities of the Social and Ethics Committee can be found in the Sustainability report.

Shareholder relations

Vodacom proactively communicates its strategy and activities to shareholders through a planned investor relations programme which includes:

• Formal presentations of annual and interim results;
• Briefing meetings with major institutional shareholders after the release of results; and
• Hosting investor and analyst sessions.

Risk management

Management continuously develops and enhances its risk and control procedures to improve risk identification, assessment and monitoring. The Board considers business risks when setting strategies, approving budgets and monitoring progress against budgets.

A division reporting to the Chief Risk Officer assists in identifying, assessing and recording the risks facing the Group and, where appropriate, monitors mitigating actions.

The key risks that are currently being managed by the Group are detailed in the Risk management report. www.vodacom.com

Internal control

Management implements internal controls, which comprise policies, procedures and processes, to provide reasonable assurance on safeguarding assets, preventing and detecting errors, the accuracy and completeness of accounting records, and the reliability of financial statements. Internal audit provides independent, objective assurance of the system of internal controls within the Group.

Technology and information governance

In line with King IV, technology and information governance forms part of our governance structures, policies and procedures. It forms part of the Group’s strategic and business processes and is managed by the Chief Technology Officer.

The Vodacom Technology Governance Framework and Charter, which are mapped to the IT governance principles of King IV, have continued to be reinforced in the organisation. Each framework element is substantiated through demonstrable processes to align technology strategy and business needs, deliver value and manage performance, and to strengthen information security management, information management, risk management, business continuity management and compliance.

Our attention in the past year has focused on putting mechanisms in place to ensure independent assurance of services provided by outsourced providers, and moving towards compliance of the Protection of Personal Information (PoPI) Act. King IV acknowledges the rapid advances in technology and its potential to result in significant disruption, opportunity and risks. King IV recommends practices to assist the governing body with technology and information governance. The Board will consider the need to receive periodic independent assurance on the effectiveness of the organisations technology and information arrangements including outsourced services.

The key areas of focus during the period included:

• Independent assurance of outsourced services;
• Protection of Personal Information Act; and
• Technology security, more specifically cyber security.

The key areas of focus during the period included:

• Maturity journey to King IV alignment and application;
• Continued focus on independent assurance of wider outsourced services; and
• Cyber security.