Corporate governance is a term broadly referring to the manner in which PCQ is controlled and governed in order to achieve its strategic goals and operational activities. It encompasses many activities including authority, accountability, stewardship, leadership and direction. Good corporate governance assists PCQ to achieve its outcomes and obligations through sound planning and risk management. It provides a framework for establishing responsibilities PCQ has to its various stakeholders, assists in decision making and improves accountability. At PCQ, the Board assumes overall responsibility for corporate governance. It monitors the performance of the Corporation, its management and staff both directly and through the established Board Committees.
CODE OF CONDUCT
PCQ’s business is dependent on good relations and fair treatment of customers, employees and the public, with due consideration of the operating requirements of the business. The principles defining the work performance and ethical conduct expected of all Directors and employees are:
respect for the law and the system of government
respect for persons internal and external to the organisation
integrity
diligence
economy and efficiency.
OPERATING ENVIRONMENT
In conducting its business, PCQ is subject to relevant legislation and government policy. Government ownership is represented through two Shareholding Ministers, the Treasurer and the Minister for Transport, Trade, Employment and Industrial Relations.
The Minister for Transport, Trade, Employment and Industrial Relations has specific powers under the Transport Infrastructure Act to:
approve Land Use Plans
approve the disposal of any freehold land or the exercise of tenure greater than 25 years over any Corporation strategic port land.
The Shareholding Ministers select the Board of Directors and approve the Statement of Corporate Intent, which sets the business objectives each financial year. They may act jointly to issue directions to the Board.
BOARD ACCOUNTABILITY
PCQ's Board of Directors is formally accountable to the organisation's Shareholding Ministers under the Government Owned Corporations (GOC) Act 1993. Directors' duties are similar to those of directors for private sector companies. Under the GOC Act, PCQ is a statutory body under the Statutory Bodies Financial Arrangements Act 1982 and the Financial Administration and Audit Act 1977.
The criteria for membership of the Board is in accordance with the GOC Act: namely, that in appointing a person as a Director, the Governor in Council must have regard to that person’s ability to make a contribution to PCQ’s commercial performance and implementation of its Statement of Corporate Intent.
FUNDING
Income is raised principally from port charges relating to shipping and trade volume and through licensing and leasing agreements with port users. Profits are reinvested and an annual dividend returned to the State Government.
PCQ is subject to the National Tax Equivalents Regime, which requires tax-equivalent payments to the State Government.
PERFORMANCE EVALUATION
PCQ has a very good corporate governance history, including a focus on proactively improving the functioning of the board, committees and contribution of participant directors and officers. Although not documented in one place key processes include:
Board and committee charters list what knowledge and skills collectively are to be possessed by the members.
Committee charters require each committee to provide a summary of the role and achievements of the Committee for board consideration and inclusion in the annual report.
For each Board meeting, a director is allocated to provide an end of meeting critic of the Board meeting effectiveness and director contribution.
Annually the board considers the effectiveness of committees, appropriateness of their charters and composition.
On an annual basis, the Chairman discusses with Directors, their competencies as well as Board performance. Part of this process involves a 360 degree evaluation being undertaken in relation to Board and each of the Directors, to review Board and individual performance. The results of the evaluation are discussed by the Chairman with the Board.
The Corporate Governance and Planning Committee review the results of that evaluation in relation to improvement of Board processes and make recommendations to the Board.
The Human Resources and Industrial Relations Committee also review development needs and opportunities in relation to Directors on a regular basis throughout the year.
Each Committee (in accordance with their Charters) addresses competency and performance issues at least annually, as well as information needs.
PCQ has developed a comprehensive induction process for new directors.
PCQ maintains a record of director training.
REMUNERATION ARRANGEMENTS FOR MANAGEMENT AND EMPLOYEES
The Chairman reviews the performance of the Chief Executive Officer and reports to the Board through the Human Resources and Industrial Relations Committee.
The CEO is appointed by contract which expires on 31 July 2010 with severance payments agreed to be a maximum value of two weeks superannuable salary for each year of continuous service until contract termination date, up to a maximum 52 weeks salary. Executives, excluding the CEO, are appointed as permanent employees and have as a minimum entitlement redundancy payments equivalent to those available to employees under industrial legislation or agreements, most particularly the Ports Corporation of Queensland Collective Agreement 2007-2009.
Remuneration recommendations for executives are reviewed annually by the Human Resources and Industrial Relations Committee, before consideration and approval by the Board. Remuneration for executives in 2007/08 was determined in accordance with the requirements of the Deputy Premier, Treasurer and Minister for Infrastructure. Future remuneration will be determined in accordance with the GOC Governance Arrangements for Chief and Senior Executives (May 2008) as required by shareholding Ministers.
Details of the remuneration paid to PCQ’s senior executives are contained in the Notes to the Financial Statements of PCQ.
The Board keeps Shareholding Ministers informed of the remuneration arrangements of senior executives on a regular basis. This advice is provided in writing and details the nature and amount of the remuneration and the way in which the remuneration has been determined.
The Board is required to submit any significant amendments or variations to PCQ’s remuneration policies to Shareholding Ministers.
REVIEW OF PERFORMANCE FOR MANAGEMENT AND EMPLOYEES
The CEO participates in a performance pay scheme with agreed targets of profit, operational and environmental performance set by the Board. The proposed performance payments for the 2007/08 year have not been approved or paid at reporting date. The CEO was not entitled to a performance payment for the 2006/07 year under his contract at that time.
PCQ operates a performance pay scheme for executives. The performance pay comprises two components:
70% based on group performance and
30% based on individual performance
The following pre-agreed (at the start of the financial year) performance criteria are used to determine the level of the group component of the payment. The performance indicators and weighting for management bonus are made up of the following:
Commercial Agreements 10%
Capital Development 15%
Asset Maintenance and Contract Admin 10%
Environment 5%
Workplace Health and Safety 5%
Security 5%
Financial Targets 15%
Customer/Stakeholder Service 10%
Corporate Efficiency 10%
Risk 5%
Planning 10%
Total 100%
The recommended payments are determined by the Board after the end of the financial year and paid and reported to shareholding Ministers in accordance with current guidelines. The proposed performance payments for the 2007/08 year have not been approved or paid at reporting date. The 2006/07 year performance payments were approved on 6 December 2007 and paid on 19 December 2007. The CEO was not entitled to a performance payment for the 2006/07 year under his contract at that time.
The performance pay scheme applicable to other employees is based on preset individual targets that are linked to the individual’s position description and their required contributions to the current goals and objectives of their section. The scheme is not mandatory and involves a performance payment pool for the 2007/08 financial year of 6% of the salaries of participants. Individual payments of up to a maximum 8% of a participant’s salary. Not all the 6% pool was distributed relating to the 2007/08 year. This scheme is recognised within the approved collective agreement.
Relevant remuneration policies are disclosed on PCQ’s website.
SHAREHOLDER COMMUNICATION PROTOCOL
The key disclosure requirements under the GOC Act require PCQ to reasonably inform shareholding Ministers about its operations and financial matters as well as material risk factors.
There are four primary means by which PCQ keeps Shareholding Ministers and Government advisers informed of issues. These include:
Face to Face Briefings
Ministerial Briefing Notes
PCQ Issues Report
Letters to Sharholding Ministers.
Regular communications are initiated with key stakeholders, including shareholding Ministers and government representatives. Quarterly reports are provided to shareholding Ministers and their representatives, as well as individual Ministerial briefings on specific issues.
The Chair and the Chief Executive Officer met with shareholding Ministers and their representatives on a regular basis. PCQ management also meets with representatives of OGOC and Queensland Transport each month after the Board meeting to update them on relevant issues.
A high level communication protocol has been agreed with shareholding Ministers and was approved by the Board in 2005 and updated in 2007.
PCQ’s policies do not prescribe the type and level of disclosure to shareholding Ministers. The Board and PCQ management exercise their judgement on a case by case basis as to what matters should be disclosed in order to comply with the GOC Act disclosure requirements.
Ports Corporation of Queensland Limited ACN 126 302 994
