MISC Annual Report 2019

During the year under review, the FY2018 Board Effectiveness Evaluation (BEE) facilitated by independent consultants, which included an assessment of individual Directors, was completed. The following conclusions were arrived at by the independent consultants: • Overall, the results of the BEE indicate that the Board is cohesive, focused, highly disciplined and competent. • Connectivity amongst the Board members is good. • The Board has drawn on a mix of talents and expertise to set the strategy, identify risks and mitigate these in a structured and professional manner whilst continuing to identify new business opportunities. • The NINEDs bring new young talent and fresh perspectives to enhance board effectiveness. • There is a consistent commitment to improvements in best practices in corporate governance and a strong principle of accountability. • The INEDs speak openly and demonstrate independence exemplified by impartiality, objectivity and consideration of all stakeholders’ interest. • Although the Board has reasonable knowledge and understanding of MISC Group’s business environment and strategy, upskilling, especially on market trends of shipping related industry, should be enriched through various learning platforms. iii. Senior Management - Appointment and Succession Planning The NRC is tasked with making appropriate recommendations to the Board for the appointment or renewal of contracts of employment of the President/Group CEO and Management Committee (MC) members of the Company, taking into account diversity in addressing the MC composition. During the year under review, having conducted all relevant reviews and assessments, the NRC deliberated and recommended the appointment of the following MC members: • Ausmal Kardin (appointed as Vice President, Legal, Corporate Secretarial and Compliance and MC member effective 1 January 2020); and • Wan Mashitah Wan Abdullah Sani (re-appointed as MD & CEO of Malaysia Marine & Heavy Engineering Holdings Berhad and MC member effective 9 January 2020). The NRC also has the responsibility for ensuring appropriate succession planning for MC members. Below is a brief illustration of the succession planning approach and process adopted by MISC Group: iv. Directors’ and Senior Management Remuneration The Company’s policy for remunerating its Directors is based on the PETRONAS Public Listed Companies Non-Executive Directors’ Guidelines and Remuneration Package. The fee structure for NEDs of MISC is as follows: Monthly Fees Meeting allowance per attendance Board Board Audit & Risk Committee Nomination & Remuneration Committee Chairman RM20,000 RM3,500 RM3,500 RM3,500 Member RM10,000 Independent Non-Executive Directors are entitled to fuel allowance of RM6,000 per annum The fees and allowances for NEDs are determined by the Board and are subject to the approval of the shareholders of MISC. The breakdown of the detailed Directors’ fees paid during the year under review is disclosed in the Corporate Governance Overview Statement on pages 190 to 203 of this Annual Report. The Directors’ fees and meeting allowances for NINEDs who are employees of PETRONAS are paid directly to PETRONAS. The presence and participation of the NINEDs who are employees of PETRONAS give the Board a deeper insight into PETRONAS’ operations. The remuneration package for the Executive Director of MISC is balanced between fixed and performance-linked elements. A portion of the Executive Director’s remuneration package is variable in nature and is KPI based, which includes the Group’s performance. As an Executive Director, he is not entitled to receive Directors’ fees or meeting allowance. The MC members’ remuneration is based on salary bands reflective of industry standards and categorised into two categories, i.e. MC 1 (for business heads) and MC 2 (for service division heads). v. Company and President/Group CEO Performance Appraisal The Company’s performance against the FY2019 Balanced Scorecard was deliberated by the NRC. The performance appraisal covered the following Scorecard dimensions, whereby specific ratings were given to each dimension based on “Minimum”, “Base” or “Stretch” achievements: • Financials • Strategic Initiatives • Operations • Health, Safety and Environment (HSE) • People Development Based on the Company’s performance against the FY2019 Balanced Scorecard, the NRC also deliberated on the individual performance of the President/CEO of the Company for FY2019 and made the appropriate recommendations to the Board for further deliberation. Nomination and Remuneration Committee Report 1 Identification of Critical Positions within the Group based on three criteria • Impact on business results • Sustaining the business • Uniqueness of positions 2 Identification of potential successors from pool of staff at General Manager and Senior Manager levels, nominated and assessed by the Leadership Team based on four criteria • Achievement: Sustainability of performance • Ability: Competence to deliver successfully • Agility: Traits and values which help adaptability • Aspiration: Passion, tenacity and commitment for self and the organisation 3 Deliberation and identification of successors by the MC based on three criteria, followed by mapping of shortlisted individuals to a maximum of three Critical Positions and rating of readiness levels: R1-Ready now R2-Ready within 12 months R3-Ready between 12 & 24 months R4-Ready above 24 months • Capabilities: Leadership and Functional Competencies • Contribution: Results orientation based on performance ratings and key highlights during the year • Cultural Fit: Demonstration of Cultural Beliefs and own career and personal aspirations 4 Formulation of an Individual Development Plan for each individual 209 208 OUR GOVERNANCE MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019