Board members from left to right: John Brown, John Fletcher, Dr Kerry Schott, Bob Pentecost, Dr Thomas G Parry, Brian Gilligan, Dr Greg Stewart, Ralph Kelly, Kate McKenzie.

In this section:
How the Board operates Directors’ duties and Code of Conduct Board Charter Board and committee meetings Audit and Risk Committee Environment Committee Finance Committee	Public Health and Research Committee Remuneration Committee Indemnity and insurance Attendance at board and committee meetings 2008–09 Board members

How the Board operates

Under Sydney Water’s enabling legislation, the Board of Directors (the Board) authorises all decisions relating to the operation of Sydney Water.

Under the Sydney Water Act 1994, the Board may have up to 10 members, including the Chairman. The Shareholder Ministers appoint the Chairman and Directors.

Under the Sydney Water Constitution, Directors are appointed for a fixed term. The term of appointment must not be longer than five years. At the end of a Director’s term of appointment, they are eligible for reappointment. The Managing Director is the only Executive Director on the Board. The Board is accountable to the NSW Government through a Portfolio Minister and two Shareholder Ministers.

The Chairman leads the Board and runs the Board meetings. The Managing Director manages Sydney Water’s day-to-day operations under the general policies and specific directions of the Board. The Managing Director has authority to delegate certain powers and functions to other positions within Sydney Water.

The Managing Director’s accountabilities to the Board are defined and regulated through three key instruments:

• an Instrument of Conferral of Powers and Authority
• an Employment Agreement
• a Performance Agreement.

The Board reviews the Managing Director’s performance at least once a year.

Directors’ duties and Code of Conduct

Under section 5A of the Sydney Water Act 1994, appointments are made so that the Board is composed of Directors with separate expertise in:

• business management
• protection of the environment
• public health.

The minimum standard for Directors’ duties is codified in Schedule 10 of the State Owned Corporations Act 1989. In addition, the Board has adopted its own Code of Conduct, which is republished yearly in a Director’s Handbook.

Board Charter

In 2009, the Board formulated and adopted a Board Charter. The Charter conforms to Guidelines for Boards of Government Businesses, issued by NSW Treasury. It also addresses improvements to the Board’s operations ascertained from an assessment conducted in 2008. Specifically, the Charter:

• outlines the roles, powers and responsibilities of the Board
• details key stakeholders such as customers, staff, Shareholder Ministers, the Portfolio Minister, regulators and the community, and the Board’s responsibilities towards each
• outlines Board operations such as the conduct of meetings, committees and assessment of Board performance, including appropriate procedures for resolving and recording concerns by individual Directors
• articulates the strategic character of the Board’s business, and clarifies the Board’s role in approving high-level policies and strategies.

Board Charter

Board and committee meetings

The Board meets at least monthly, except for January. A schedule of meeting dates is set out in advance for the year. Directors may call additional meetings as necessary. The Directors conduct these meetings following Sydney Water’s Constitution.

Under Sydney Water’s Constitution, Directors may delegate any of their powers to committees, which have at least one Director.

The Board has five regular committees:

• Audit and Risk
• Environment
• Finance
• Public Health and Research
• Remuneration.

Each regular committee has a charter approved by the Board. The purpose, objectives and functions of each committee are set out in their charters.

Special purpose committees can be convened on an ad hoc basis. For example, a special purpose committee may be convened in relation to a particular major project or other initiative. During the year ended 30 June 2009, the Board set up a special purpose committee – the Regulatory and Reform Committee.

Audit and Risk Committee

The committee has the following functions:

• monitors reports from the internal and external auditors and management’s responses to those reports
• evaluates the performance of the internal and external auditors
• appraises the programs and plans formulated by internal and external auditors and monitors their progress
• monitors the Corporate Risk Management strategies, framework and processes to identify and manage current and emerging risks
• monitors the Corporate Compliance Program
• monitors corporate ethical behaviour
• monitors Sydney Water’s financial reporting (and that of its subsidiaries) with a view to ensuring accuracy and integrity in such reporting
• monitors systems and processes designed to prevent fraud
• makes recommendations to the full Board
• undertakes any other function referred to the committee by the full Board.

Environment Committee

The committee has the following functions:

• oversees environmental planning and management
• reviews environmental performance
• monitors environmental regulatory compliance
• monitors emerging issues related to the environment
• makes recommendations to the full Board
• undertakes any other function referred to the committee by the full Board.

Finance Committee

The committee has the following functions:

• reviews the capital structure
• reviews the yearly budget and longer-term plans, and monitors performance against these at both an operational and a corporate level
• reviews operating expenditure and capital expenditure performance against budget, debt management, cash position and dividend policy
• reviews the internal treasury function
• makes recommendations to the full Board
• reviews Sydney Water’s quarterly reports to its shareholders
• undertakes any other function referred to the committee by the full Board.

Public Health and Research Committee

The committee has the following functions:

• reviews, analyses and monitors public health matters related to drinking water, wastewater, wastewater reuse and waste product management
• oversees incident management of public health issues related to Sydney Water’s operations
• oversees the research and development strategy
• monitors emerging issues related to public health and research and development
• makes recommendations to the full Board
• undertakes any other function referred to the committee by the full Board.

Remuneration Committee

The committee has the following functions:

• reviews the appointment of positions reporting directly to the Managing Director
• reviews the performance, remuneration and terms of employment of positions reporting directly to the Managing Director
• reviews the performance, remuneration and terms of employment of senior managers
• oversees initiatives to improve performance and behaviours across Sydney Water
• makes recommendations to the full Board
• makes recommendations to management
• undertakes any other function referred to the committee by the full Board.

Indemnity and insurance

Under the State Owned Corporations Act 1989 and Sydney Water’s Constitution, Sydney Water may indemnify its Directors only with the approval of its Shareholder Ministers.

All Directors have been given a Deed of Indemnity. However, indemnity does not extend to circumstances where the liability arises out of conduct involving lack of good faith.

Sydney Water has a policy of insurance for Directors’ and officers’ liability. The policy underpins and augments the Deed of Indemnity. Insurance does not extend to deliberate acts of fraud or dishonesty.

Attendance at Board and committee meetings 2008–09
Director	Board of Directors Attended (Number held)	Audit and Risk Committee Attended (Number held)	Environ- ment Committee Attended (Number held)	Finance Committee Attended (Number held)	Public Health and Research Committee Attended (Number held)	Regulatory and Reform Committee Attended (Number held)	Remuneration Committee Attended (Number held)
T. Parry	(C) 11 (11)	–	–	3(4)	3 (3)	2 (2)	(C) 1 (1)
K. Schott	11 (11)	5 (5)	3 (3)	4 (4)	3 (3)	2 (2)	1 (1)
J. Brown	11 (11)	(C) 5 (5)	–	–	–	2 (2)	–
J. Fletcher*	11 (11)	5 (5)	–	(C)* 4 (4)	–	–	–
B. Gilligan	11 (11)	–	(C) 3 (3)	–	–	2 (2)	–
R. Kelly	11 (11)	5 (5)	2 (3)	4 (4)	–	–	1 (1)
K. McKenzie**	5 (5)	–	–	–	–	–	–
B. Pentecost	11 (11)	–	3 (3)	–	3 (3)	–	–
J. Priest***	5 (5)	3 (3)	–	(C)*** 4 (4)	–	–	–
G. Stewart	10 (11)	–	–	–	(C) 2 (3)	–	–

 

Notes:
(C) Chairman of the Board and/or Committee.
* Mr Fletcher assumed the role of Chairman of Finance Committee from December 2009.
** Ms McKenzie was appointed as a Director to the Board from 1 February 2009.
*** Mr Priest’s term expired on 30 November 2008.

Board members

Dr Thomas G Parry AM (Chairman) – BEc (Hons), MEc, PhD Term of appointment: 18 October 2006 to 31 May 2010. Appointed as Chairman on 1 June 2007. Chair of the Regulatory and Reform, and Remuneration Committees. Member of the Finance, and Public Health and Research Committees. Tom was a consultant to Macquarie Capital Funds Group until August 2009. He was Foundation Executive Chairman of the Independent Pricing and Regulatory Tribunal of NSW (IPART) and its predecessor, the Government Pricing Tribunal of NSW from 1992 to 2004. Tom was an ex officio Commissioner of the Australian Competition and Consumer Commission, a member of the NSW Council on the Cost and Quality of Government, and the Foundation NSW Natural Resources Commissioner. He was also a member of the Board of NSW Health’s Clinical Excellence Commission and South East Area Health. Tom is currently Chairman of Australian Energy Market Operator, and First State Super and a director of the Australian Securities Exchange's Market Supervision Company.

Dr Kerry Schott (Managing Director) – BA (Hons), MA, D Phil Term of appointment: 2 August 2006 – for a term equivalent to her appointment as Managing Director. Ex-officio member of all committees. Kerry is a member of the Infrastructure Australia Board and Chairman of the Water Services Association of Australia. She was previously Deputy Secretary, NSW Treasury, Office of Infrastructure Management. Kerry was a non-executive director of the Sydney Water Board from 1997 to 2001. She spent 15 years as an investment banker, including as Managing Director of Deutsche Bank and Executive Vice President of Bankers Trust Australia. She has worked as an economic policy adviser with the Reserve Bank of Australia, the Commonwealth Government and as an academic at University College London and at Oxford University. Kerry was Chairman of the NSW Environment Protection Authority and the NSW Film and Television Office, a director of the Film Finance Corporation Limited and director of Australian Airlines Limited. She has been a member of the Corporations and Securities Panel and a Trade Practices Commissioner.

John Brown (Non-executive Director) – BCom, FCA, MAICD Term of appointment: 7 September 2004 to 6 September 2010. Chair of the Board's Audit and Risk Committee and a member of the Regulatory and Reform Committee. John was formerly a KPMG Partner and head of KPMG's NSW Government Practice. John is the independent Chairman of the Audit Committees of the NSW Government Departments of Education and Commerce, a member of the Audit Committees of the Department of Defence and the Australian Broadcasting Corporation, and a director of Integrated Research Ltd and Gift of Life Foundation Limited.

John Fletcher (Non-executive Director) – BSc, MBA, FAICD Term of appointment: 7 April 2008 to 6 April 2011. Member of the Audit and Risk, and Finance Committees. John is a director of APA Group and Babcock & Brown Power Group. He was previously a director with Integral Energy Australia and Foodlands Australia Limited. John has held a number of executive roles at the Australian Gas Light Company including Chief Financial Officer and Group Manager Investments.

Brian Gilligan (Non-executive Director) – BA, DipEd, MA, FAICD Term of appointment: 12 May 2004 to 6 September 2010. Chair of the Environment Committee and member of the Regulatory and Reform Committee. Brian is a director of the Hunter Valley Research Foundation and an independent member of the Audit Committee for Parks Australia. His former appointments include Director-General, NSW National Parks and Wildlife Service (1998–2003), Executive Director Operations, NSW Environment Protection Authority (1996–98), and director, Hunter Water Corporation (1989–92).

Ralph Kelly (Non-executive Director) – BCom, MBA, SF Fin, FAICD Term of appointment: 21 September 2001 to 6 September 2010. Member of the Audit and Risk, Environment, Finance, and Remuneration Committees. Ralph has been in investment banking for over 30 years, with particular experience in corporate finance advice, infrastructure and listed capital raisings. He is principal of Pennant Advisory Services Pty Ltd, Chairman of Australis Managed Investments Limited, a director of IOR Group Limited and its subsidiary Salford Living Pty Ltd, a director of Ausflag Limited, and a member of the Audit Committee of the Office of State Revenue.

Kate McKenzie (Non-executive Director) – BA, LLB Term of appointment: 1 February 2009 to 31 January 2011. Member of the Audit and Risk Committee. Kate has been the Group Managing Director of Strategic Marketing in Telstra since March 2009. Before that, Kate was the Group Managing Director of the Telstra Wholesale business unit, a position she held for over three years. Kate joined Telstra in August 2004 as head of Telstra's regulatory group. Within a year she was promoted to the role of Deputy Group Managing Director for Public Policy and Communication. Before joining Telstra, Kate was Director-General of the Department of Commerce and previously held a range of senior executive roles in government departments and offices.

Bob Pentecost AM (Non-executive Director) – BE (Civil), GDA, MAICD Term of appointment: 8 October 2007 to 7 October 2010. Member of the Environment, and Public Health and Research Committees. Bob has worked in the private sector as a director on several boards, and also in government, giving advice at ministerial and cabinet level. Recently, Bob was the Chief Executive Officer of Rail Infrastructure Corporation. He has filled similar roles at Network Design & Construction (telecoms), Merlin International Properties and the Darling Harbour Authority. He was also a director of Hamilton Island Pty Ltd. Bob was awarded membership to the Order of Australia for services to the building and construction industry in 1991. He is a member of the Industry Advisory Network, University of Technology Sydney.

Dr Greg Stewart (Non-executive Director) – MBBS, MPH, FRACMA, FAFPHM Term of appointment: 1 December 2005 to 30 November 2011. Chair of the Public Health and Research Committee. Greg is the Director of Population Health, Planning and Performance for the Sydney South West Area Health Service. He was previously Chief Health Officer of NSW, Chief Executive Officer of Wentworth Area Health Service, and Director of the Public Health Unit of South Western Sydney Area Health Service. Greg is a member of the NSW Medical Board, the Board of the Australian Institute of Health and Welfare and the Council of the Australasian Faculty of Public Health Medicine.

Our Chairman and Managing Director’s review can be viewed here.