MISC Annual Report 2017

139 Corporate Governance NOMINATION AND REMUNERATION COMMITTEE REPORT Treasury and Chief Financial Officer for PETRONAS’ Upstream Business and currently, the Head of Group Financial Controller Department of PETRONAS, and Mohd Yusri’s background as an engineer and having held several portfolios within PETRONAS, including as General Manager of Ethylene Malaysia Sdn. Bhd., CEO of PC Derivatives Sdn. Bhd. and Head Manufacturing of PETRONAS Chemicals Group Berhad and currently the Vice President of Refining and Trading, Downstream Business of PETRONAS. With the appointment of Liza Mustapha, the ratio for gender diversity on the Board has also improved. In accordance with Article 95 of the Company’s Constitution, all Directors who are newly appointed to the Board shall hold office until the next AGM subsequent to their appointment and shall then be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by rotation at that AGM. Article 97 of the Company’s Articles also provides that at least one-third (1/3) of the Directors shall retire from office by rotation at least once in every 3 years but shall be eligible for re-election. The NRC deliberated on, and agreed to recommend to the Board, that at the forthcoming 49 th AGM of the Company, Dato’ Ab. HalimMohyiddin, Liza Mustapha and Mohd Yusri Mohamed Yusof are retiring pursuant to Article 95 while Datuk Manharlal Ratilal and Lim Beng Choon are retiring pursuant to Article 97 of the Constitution. These Directors being eligible, have offered themselves for re-election. In making recommendations for new appointments to the Board, the NRC assesses the suitability of candidates, taking into account the required mix of skills, knowledge, expertise and experience, professionalism, integrity, competencies and other necessary qualities, including diversity in gender, before recommending potential new Directors to the Board for appointment. ii. Board and Individual Directors’ Assessment The NRC conducted a review of the Board Performance for FY2016, which is done on an annual basis. This included a review of the effective performance of Management responsibilities in supporting the Board to perform its oversight role on risk management and certain aspects of internal control. The Board performance for FY2016 was reviewed against the KPIs agreed by the Board and the NRC identified ways and means to improve certain aspects of Board Structure, Board Operations and Board Roles and Responsibilities. The performance of the Board and the Board Committees is tracked annually against the Board KPIs, using a Performance Evaluation Sheet (PES) as a tool. The Board KPIs focus on achievements of measurable ‘hard targets’ based on 3 criteria, i.e., Board Structure (covering for example, Board composition and Directors’ Succession Planning), Board Operations (covering for example Timeliness, Adequacy of Information and Access to Management) and Board Roles and Responsibilities (covering for example Strategic Vision and Risk Management oversight). Under each criteria the KPI components are stated consistent with best practice requirements. Each Director is required to give Rating ‘1’ for Best Practice, Rating ‘2’ for Meets Requirement and Rating ‘3’ for Areas of Improvement. The final ratings are then reviewed by the NRC, the Board and the Management, and consequently Action Plans are implemented by Management for the areas for improvement highlighted. The NRC also deliberated on, and agreed to, a new set of Board KPIs that reflect the best practices and recommendations of the MCCG 2017 that will track Board performance for FY2018. Hence for the FY2018 Board performance the evaluation will be conducted using new and enhanced KPIs, tracked against the MCCG 2017 best practices. The main changes to the FY2018 Board KPIs include :- • That the Board consists of a majority of Independent Directors; • That the tenure for appointment of Independent Directors shall not be more than 9 years; • That 30% of the Board membership shall comprise female directors; • Effective conduct of Board Evaluation, including evaluation of individual Directors’ performance; • Inclusion of a new item on promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness; and • Inclusion of new item relating to Corporate reporting and meaningful relationship with Stakeholders.