Back to: Corporate governance

Non-executive Directors are encouraged to build up their shareholding in Westpac, equal in value to 100% of their annual base fees within a reasonable period of their appointment to the Board, to better align their interests with the long term interests of shareholders.

Westpac is guided by the Australian Shareholders Association policy regarding other directorships of publicly listed companies. In addition the Board Audit Committee charter restricts to two the number of audit committees the committee members can be a member of.

The performance evaluation of the Board, committees and individual directors is fully set out in the Corporate Governance Statement.

Under the Corporations Act, director election proceeds via an ordinary resolution at the AGM and a simple majority of the shares represented in person or by proxy is indeed required. Directors who do not receive a simple majority are not re-elected - ie they are automatically off the board.

Westpac's Constitution states that at each annual general meeting one-third of its directors, (excluding the CEO) and any director who has held office for three or more years since their last election must retire. The maximum time that each director can serve in any single term is three years. The Constitution also states that any director who has been appointed during the year must stand for election at the next annual general meeting.

Eligible directors who retire as required may offer themselves for re-election by shareholders at the next annual general meeting. The Nominations Committee evaluates the contribution of retiring directors through a peer review process. The Board has a policy to limit the number of terms of office that any director may serve. Directors (other than the Chairman) should not hold office as a director for more than three consecutive terms. The Board's policy is that the maximum tenure of the Chairman is to be no more than four terms or twelve years (inclusive of any term as a director prior to being elected as Chairman), from the date of first election by shareholders.

In addition, under the Corporations Act, shareholders may remove all directors at any time via a special meeting and shareholder vote.

Westpac does not operate a staggered or classified Board because the terms of office of each non-executive director, including the Chairman are identical.

At Westpac, 'one-share, one-vote' prevails and no poison pills or undisclosed pre-emptive rights arrangements are in place. The Corporations Act states that any change to a company's Constitution or to approve a merger requires a special resolution of members. A special resolution must be passed by at least 75% of the votes cast by members entitled to vote.

The Financial Sector (Shareholdings) Act 1998 imposes restrictions on shareholdings in Australian financial sector companies (which includes us). Under that legislation a person (including a corporation) may not hold more than a 15% 'stake' in a financial sector company without prior approval from the Treasurer of Australia. A person's stake in a financial sector company is equal to the aggregate of the person's voting power in the company and the voting power of the person's associates. The concept of voting power is very broadly defined. The Treasurer may approve a higher percentage shareholding limit if the Treasurer is satisfied that it is in the national interest to do so.

In addition, even if a person does not exceed the 15% shareholding limit in a financial sector company, the Treasurer has the power to declare that a person has 'practical control' of a financial sector company and require the person to relinquish that control or reduce their stake in that company.