Page 132 - Annual Report 2020

2.9 Nomination and Governance Committee Report continued

Independence hold or held positions, and has concluded that the relationships
The Board is committed to ensuring a majority of Directors do not interfere with the Directors’ exercise of objective,
are independent. The Board considers that all of the current unfettered or independent judgement or their ability to act
Non-executive Directors, including the Chair, are independent. in the best interests of BHP.
Process to determine independence For example, Malcolm Broomhead and Ian Cockerill were
The Board has adopted a policy that it uses to determine the Directors of Orica Limited (a company BHP has commercial
dealings with) during FY2020. Orica provides commercial
independence of its Directors. This determination is carried out
upon appointment, annually and at any other time where the explosives, blasting systems and mineral processing chemicals
and services to the mining and resources industry, among
change in circumstances of a Director warrant reconsideration.
others. Mr Cockerill was appointed to the Orica Board in 2010
A copy of the policy on Independence of Directors (prior to his appointment to the BHP Board) and Mr Broomhead
is available at bhp.com/governance. was appointed to the Orica Board in 2016 (after his appointment
to the BHP Board). At the time of Mr Broomhead’s appointment
Tenure to the Board of Orica, and at the time of Mr Cockerill’s
At the end of FY2020, Malcolm Broomhead, who was appointed appointment to the Board of BHP, the BHP Board assessed
in March 2010, Shriti Vadera, appointed in January 2011 and the relationship between BHP and Orica and determined
Lindsay Maxsted, appointed in March 2011, had each served on (and remains satisfied) that Mr Broomhead and Mr Cockerill
the Board for more than nine years. The Board does not believe were, during FY2020, and Mr Broomhead remains, able to apply
their tenure interferes with their ability to act in the best interests objective, unfettered and independent judgement and
of BHP. The Board believes they have retained independence to act in the best interests of BHP. Mr Cockerill retired from
of character and judgement and have not formed associations the Board of Orica in August 2019.
with management (or others) that might compromise their Transactions during FY2020 that amounted to related party
ability to exercise independent judgement or act in the best transactions with Directors or Director-related entities under
interests of the Group. The Board was comfortable extending International Financial Reporting Standards (IFRS) are outlined
Mr Broomhead’s tenure for another year from the FY2020 AGMs in note 32 ‘Related party transactions’ in section 5.
in order to provide continued access to his corporate memory
and his extensive experience in the mining sector. Mr Maxsted Conflicts of interest
will retire on 4 September 2020, having completed the handover BHP Group Plc’s Articles of Association allow the Directors to
of the Risk and Audit Committee Chair position to Terry Bowen, authorise conflicts and potential conflicts where appropriate.
and seen through the Group’s FY2020 financial reporting A procedure operates to ensure the disclosure of conflicts and
schedule. As previously disclosed, Ms Vadera is not standing for for the consideration and, if appropriate, the authorisation of
re-election at the 2020 AGMs. those conflicts by non-conflicted Directors. The Nomination and
Relationships and associations Governance Committee supports the Board in this process by
reviewing requests from Directors for authorisation of situations
Lindsay Maxsted was the CEO of KPMG in Australia from 2001 of actual or potential conflict and making recommendations
until 2007. The Board believes this prior relationship with KPMG to the Board. It also regularly reviews any situations of actual
(BHP’s former external auditor) did not materially interfere with or potential conflict that have previously been authorised
Mr Maxsted’s exercise of objective, unfettered or independent by the Board and makes recommendations on whether the
judgement, or his ability to act in the best interests of BHP while authorisation remains appropriate. In addition, in accordance
KPMG was the Group’s auditor. The Board has determined, with Australian law, if a situation arises for consideration
consistent with its policy on the independence of Directors, where a Director has a material personal interest, the affected
that Mr Maxsted is independent. Director takes no part in decision-making unless authorised
Some of the Directors hold or have previously held positions by non-interested Directors. Provisions for Directors’ interests
in companies that BHP has commercial relationships with. are set out in the Constitution of BHP Group Limited.
Those positions and companies are listed in the Director The terms of reference for the Nomination and Governance
profiles in section 2.2.1. The Board has assessed the relationships Committee are available at bhp.com/governance.
between the Group and the companies in which our Directors

2.10 Risk and Audit Committee Report

Role and focus For more information on our approach to risk management,
The RAC assists the Board in monitoring the decisions and refer to section 1.5.4.
actions of the CEO and the Group and gaining assurance that
progress is being made towards achieving our purpose within The RAC met 11 times during FY2020. For information on
the limits imposed by the Board, as described in the Board Committee members’ qualifications, which include competence
Governance Document. relevant to the mining sector, refer to section 2.2.1.
The RAC oversees: The terms of reference for the RAC were updated in FY2020
• the integrity of BHP’s Financial Statements and Annual Report to align with revisions made to the UK Code, the ASX Fourth
• the appointment, performance and remuneration of the Edition, and the revised Remuneration Committee Terms of
External Auditor and integrity of the external audit process Reference that were approved by the Board in August 2019.
• the effectiveness of the systems of risk management,
including financial and non-financial risk, and internal control
• the plans, performance, objectivity and leadership of the
Internal Audit function and the integrity of the internal
audit process
• capital management (capital structure and funding,
and capital management planning and initiatives)
and other matters

130 BHP Annual Report 2020