For Macarthur Coal, the term corporate governance refers to the way a company is directed and managed.

Through good corporate governance, Macarthur Coal encourages shareholder value creation (through entrepreneurial approaches to innovation, development and exploration) and provides accountability and control systems appropriate to risk.

The Macarthur Coal board undertakes to provide accountability levels that meet or exceed the ASX Corporate Governance Council's Principles for Good Corporate Governance and Best Practice Recommendations.

 

Principle 1: The Board and Management are clear about their roles and responsibilities
How we comply with Principle 1		2009 Achievements
1.1	We have established clear delegations of authority between the Board and Management which includes functions reserved to the Board and those delegated to Management All Directors receive a letter of appointment which outlines important information including the Company’s expectations of them. Coupled with our induction program, all Directors obtain a detailed overview of the Company, its strategic direction and its business upon their appointment	A review of the delegations in place between the Board and CEO and the CEO and employees was undertaken during the year with significant enhancements made to ensure proper alignment with the business The letter of appointment for Directors was reviewed and updated during the year. A full copy of the letter of appointment is available on our website as part of the NRC Charter A review of the Company’s Short Term Incentive (STI) Policy during the year ensures better alignment of STI targets to overall Company performance going forward. Improvements have been adopted for the 2010 financial year to strengthen alignment between Executive remuneration and the creation of shareholder value
1.2	Senior Executives are provided with letters of appointment and a structured induction program. A review of Senior Executive remuneration took place in the reporting period
1.3	There has been no departures from the Guide to reporting on Principle 1:
	Performance Evaluations for the CEO and Senior Executives have taken place during the year. Refer to the Remuneration Report for full details
	Click here to access our Board Charter Click here to access our Directors Code of Conduct Click here to access our summary of the Delegation of Authority Policy in place between the Board and the CEO

Principle 2: The majority of the Board is independent and consists of Directors with skills and expertise sufficient to discharge their responsibilities and duties to the Company
How we comply with Principle 2		2009 Achievements
2.1	The majority of the Board is independent and our Board Charter contains a procedure for Directors to have access to independent professional advice at the Company’s expense. Directors are required to disclose situations which may impact their independence to every Board meeting	The appointment of 2 new independent Directors in October 2008 resulting in a majority of the Board being independent A review of the NRC Charter with updates to the letter of appointment for Directors and a procedure for selection and appointment of Directors
2.2	The Chairman is an Independent Non-Executive Director and the Chair’s role is set out in the Board Charter
2.3	The Chairman and the CEO are different individuals
2.4	The Company has a Nomination and Remuneration Committee (NRC) with a majority of independent Directors
2.5	A Board and Director evaluation has been undertaken focusing on skills, Board processes and decision making
2.6	All the information set out in the Guide to Reporting Principle 2 has been provided in this report:
	Skills, experience, and expertise of Directors and period of office
	Independence of Directors and relationships impacting independence
	Access to independent professional advice
	Names of members of NRC, attendance at meetings
	Performance evaluation for the Board, its Committees and Directors
	Click here to access the NRC Charter (including the procedure for selection and appointment of new Directors) Click here to access the Company’s constitution which sets out the rules for retirement and re-election of incumbent Directors

Principle 3: Macarthur Coal promotes ethical and responsible decision making by its Directors and staff and uses a number of tools to ensure this happens including: ·         constantly referring to the Four Pillars for guidance when making decisions, and when communicating and interacting between ourselves and with our stakeholders ·         ensuring Codes of Conduct for Directors and employees are in place and regularly referred to ·         being clear about the Company’s expectation when Directors, officers and employees trade in the Company’s shares
How we comply with Principle 3		2009 Achievements
3.1	We have in place both a Directors Code of Conduct and Code of Conduct for all staff and contractors Compliance with these Codes is underpinned by a Whistleblowers Policy	We have implemented a simple, clear Whistleblowers Policy to support staff in raising concerns about the conduct of individuals within the Company, free from recriminations and harassment. Training on this new policy will be undertaken in 2010 The Share Trading Policy was reviewed and updated during the year and regular broadcasts made to employees to remind them when trading windows opened and closed
3.2	We have a Share Trading Policy in place which is regularly communicated and referenced
3.3	There has been no departure from Principle 3:
	Click here to access our Code of Conduct Click here to access the Whistleblower Policy Click here to access our Share Trading Policy

Principle 4: We believe our systems and controls independently verify and safeguard the integrity of our financial reporting
How we comply with Principle 4		2009 Achievements
4.1	We have an Audit and Risk Management Committee (ARMC) that met 7 times during the year	The appointment of Terry O’Reilly, a qualified accountant, to the ARMC in November 2008 strengthened the independence of the ARMC and took its membership to 3, a requirement of Principle 4. The Company’s December 2008 Quarterly Report outlined the appointment of Terry O’Reilly to the Committee The ARMC Charter has been reviewed and enhanced to include a procedure for inducting new members to the ARMC and an annual planning calendar to assist in monitoring the internal and external control environment The appointment of Stuart Hatton, CFO in August 2008 was undertaken by the CEO and overseen by the ARMC
4.2	The ARMC: consists of only Non-Executive Directors    is made up of members that are Independent Directors. All members are financially literate with qualifications and experience relevant to the accountabilities of the Committee    is chaired by an Independent Non-Executive Director, Peter Forbes who is also a qualified accountant with experience in financial monitoring and reporting.  Mr Forbes is not the Chairman of the Board    has from November 2008, operated with at least 3 members. Between July and November 2008 the ARMC operated with only 2 independent Directors as members until Terry O’Reilly (appointed as a Director in October 2008) was appointed to the ARMC. The reasons for there being only 2 members of the ARMC until November 2008 is that there were no other independent Directors that could be appointed to the ARMC during this time.
4.3	The ARMC operates under a formal Board approved Charter which is reviewed annually
4.4	There has been no departure from Principle 4 All information required in the Guide to Reporting on Principle 4 has been included in this report:
	ARMC members and their qualifications
	Attendance at ARMC meetings and the number of meetings
	Click here to access our ARMC Charter which sets out the procedure for the selection and appointment of the external auditor and for the rotation of external audit engagement partners

Principle 5: Timely and balanced communication with our staff and our stakeholders is integral to our business and has been a key focus in 2009
How we comply with Principle 5		2009 Achievements
5.1	The Continuous Disclosure Policy and Media Policy detail clear procedures to be followed, including accountability for compliance with disclosure obligations under the ASX Listing Rules The Annual Report contains a report from the CFO which provides commentary on the Company’s financial results. Refer to page 10 of the Annual Report Shareholders are provided with quarterly, half-yearly and annual reports and our website is also used as a communication medium	During the year, a number of material disclosures were made. The Company strives for the highest possible disclosure to the market and has systems in place to ensure disclosures are made in a timely fashion. Additional presentations to shareholders were made during the year as part of the Company’s capital raising including a special presentation to retail shareholders prior to the close of the Share Purchase Plan (SPP) A key focus in 2009 has been enhancing internal communication to staff and contractors through a variety of communication forums. Further information on these initiatives is set out on pages 41 to 42 of the Annual Report
5.2	There have been no departures from Principle 5
	Click here to access our Continuous Disclosure Policy and Media Policy

Principle 6: We strive to ensure communication with our shareholders is timely and presented in a clear manner
How we comply with Principle 6		2009 Achievements
6.1	Our Shareholder Communication Policy forms the minimum standards acceptable for communication with our shareholders. Shareholders are provided with regular communication through quarterly, half-yearly and annual reports and updates to our website Approximately 20% of shareholders have opted to receive communications from the Company electronically. This is promoted by the Company making a donation to eTree1 if they opt to receive shareholder communications electronically	Our primary communication tool is our website which is updated regularly with Company announcements and news. The website will undergo an upgrade review in the 2010 financial year to ensure ease of access by shareholders to balanced and readable information about the Company During the 2009 financial year there were two hosted analyst/institutional visits to the Mines At the 2009 AGM, the Company will be providing a shareholder the opportunity to win a visit to one of our operating Mines to meet management and experience firsthand, an operating coal mine. Terms and conditions for participation in the competition will be posted on the Company’s website www.macarthurcoal.com.au
6.2	There are no departures from Principle 6
	Click here to access our Shareholder Communication Policy

Principle 7: Recognise and Manage Risk
How we comply with Principle 7		2009 Achievements
7.1	A written, Board-approved, Risk Management Policy and Framework requires that Macarthur Coal's activities be undertaken within Board-approved risk tolerance levels to protect profitability and assets including management, oversight and reporting of Material Business Risks (MBRs)	Monthly review by the EMT of risk mitigation plans for each MBR ensures focus on achieving targets Bi-annual review by the SMT of business unit risk registers helps embed risk management practices into our daily operations A review of the Company’s Risk Management Framework including its regulatory and compliance framework will be undertaken in 2010
7.2	The Board has received a report from Management on the MBRs facing the business, the process undertaken to identify and assess those risks, each risk’s mitigation plan and the monitoring regime in place
7.4	The Board has also received assurances in writing from the CEO and CFO that the financial reporting risks and associated internal controls are operating effectively in all material respects
7.5	There have been no departures from Principle 7:
	The Board has received a report from Management under Recommendation 7.2 on the management of MBRs
	The Board has received assurances in writing form the CEO and CFO
	Click here to accessCompany’s  Risk Management Policy and Framework

Principle 8: Our remuneration structure is designed to attract and retain high calibre people and comprises a performance-based component linked to stretch targets
How we comply with Principle 8		2009 Achievements
8.1	The Board has in place a NRC with a Board-approved Charter.  The Committee consists of a majority of independent Directors, is chaired by the Chairman of the Board and has three members. Details of the membership of the Committee and attendance at meetings have been provided	A review of the Company’s Short Term Incentive Plan was undertaken. The outcome resulted in the implementation of corporate Key Performance Indicators (KPIs) across the business. The corporate KPIs are in the areas of safety, profit and people
8.2	The Company’s Remuneration Policy clearly distinguishes the structure of Non-Executive Directors’ remuneration from that of the Executive Director and Senior Executives. There is no scheme for retirement benefits, other than superannuation, for Non-Executive Directors The Remuneration Report (which forms part of the Directors’ Report) explains how Macarthur Coal’s remuneration structure complies with the elements of principle 8 of the ASX Principles
8.3	There has been no departure from Principle 8:
	The Company’s Share Trading Policy prohibits Directors and employees from hedging the economic risk of a holding in unvested shares in the Company Click here to access our Share Trading Policy and NRC Charter

 The company's corporate governance documents are:

Macarthur Coal Corporate Code of Conduct (200 KB)
Macarthur Coal Directors' Code of Conduct (185 KB)
Macarthur Coal Board Charter (219 KB)
Audit and Risk Management Committee Charter (200 KB)
Nomination and Remuneration Committee Charter (217 KB)
Continuous Disclosure Policy (111KB)
Share Trading Policy (60 KB)
Shareholder Communication Policy (126 KB)
Sustainability Statement of Intent (105 KB)

Last updated 3 September 2009