MISC Annual Report 2019

Functions of the NRC and related activities in FY2019 i. Board Membership - Appointment/Re-election of Directors and Succession Planning The NRC has the responsibility for ensuring appropriate succession planning of Directors and for reviewing the Board’s required mix of skills and experience, which includes review of the tenure of Independent Directors on the Board and proposals for re-appointment or re-election. The nomination of new Board members follows the following Board appointment process: In sourcing for suitable candidates, the Company has used a variety of approaches and sources, including from Directors’ registries available under the NAM Institute for the Empowerment of Women, the Minority Shareholders Watch Group (MSWG), LEAD Women and recommendations from existing Board members. The NRC has also explored the possible use of independent search firms. The nomination of Non-Independent Non-Executive Directors (NINEDs) to the Board is made by PETRONAS, being the majority shareholder of the Company. The potential candidates to assume the role of Independent Non-Executive Directors (INEDs) are first tabled to the NRC for consideration and evaluated based on merit, suitability with the Company’s objectives and required mix of skills, knowledge, expertise, experience, professionalism, integrity, personal attributes and time commitment required to effectively fulfil his or her role as a Director. Diversity in terms of age, gender and ethnicity is also considered during the selection process. During the year under review, the NRC took a multi-year view of three years when conducting its annual review of the Board succession plan to identify the circumstances giving rise to a Board vacancy, including casual vacancy, tenure and gaps in Board diversity. Arising therefrom, the NRC obtained the Board’s endorsement to commence the search for candidates, through independent search firms, to increase the Board composition by appointing up to two new INEDs. The NRC is also responsible for recommending to the Board, Directors who are standing for re-appointment or re-election at the Annual General Meeting (AGM) pursuant to Rules 21.7 and 21.8 of MISC’s Constitution. At the forthcoming 51 st AGM of the Company, the following Directors will be retiring by rotation pursuant to Rule 21.8, and being eligible, have offered themselves for re-election: • Dato’ Sekhar Krishnan • Puan Liza Mustapha • Encik Mohd Yusri Mohamed Yusof In line with the MCCG 2017, the Board Charter includes a policy which limits the tenure of INEDs to nine years as well as the Board Diversity Policy. ii. Board Performance Evaluation - Board and Board Committees’ Assessment The performance of the Board and the Board Committees is tracked annually against the Board Key Performance Indicators (KPIs), using a Performance Evaluation Sheet as a tool. The Board KPIs focus on achievements of measurable ‘hard targets’ based on three criteria, i.e. Board Structure, Board Operations and Board Roles and Responsibilities. Each Director is required to give Rating ‘1’ for Best Practice, Rating ‘2’ for Meets Requirement or Rating ‘3’ for Areas of Improvement. The final ratings are then reviewed by Management, the NRC and the Board, and consequently action plans are implemented by Management for the areas for improvement highlighted. For FY2019, the following areas will be assessed: Process Flow for Appointment of Directors Mandatory Accreditation Programme (if applicable), Continuous Training & Annual Performance Assessment On-boarding Session for new Director Table proposed appointment of Director to MISC Board for approval Deliberation by the NRC on suitability of the candidate The NRC interviews shortlisted candidates Assess (including conduct of background checks) and shortlist potential candidates in consultation with the NRC Management initiates search for candidates Company Secretary to seek PETRONAS’ nomination of the new Board representative NRC develops the selection criteria, i.e. competencies and attributes required Refer to HRM Succession Plan for Management Committee Positions Board Vacancy: Independent Director Circumstances giving rise to a Board Vacancy Board Vacancy: Non-Independent Non-Executive Director Board Vacancy: Executive Director Board and Management Structure • Composition • Board Audit and Risk Committee evaluation • Orientation, Training & Development • Nomination and Remuneration Committee evaluation Board Operations • Timeliness • Adequacy of Information • Access to Management Board Roles and Responsibilities • Strategic Vision • Risk Management & Internal Controls • Succession Planning • Investor Relations • Effectiveness • Discharge of functions, duties and responsibilities in accordance with the TOR Board Performance Evaluation Board Committees Performance Evaluation Nomination and Remuneration Committee Report 207 206 OUR GOVERNANCE MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019