FRONTLINE COVER FA 070606 CR2.indd

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30 frontline technologies corporation ltd annual report 2006 > corporate governance report (cont’d) 2. Principle II: Board Composition and Balance The Board comprises three (3) executive directors and five (5) non-executive directors. Four (4) of the non-executive directors are regarded as independent. The objective judgment of the independent and non-executive directors on corporate affairs and their collective experience and contributions are invaluable to the Company. The NC reviews the independence of each director, Board structure, size and composition annually. The NC considers the current Board size and composition to be adequate and appropriate in view of the nature and scope of the Group’s operations, and as capable of effective decision-making. The strong and independent element of the Board ensures that it is able to exercise objective and independent judgment on corporate affairs and that the Board’s decision making process is not dominated by any individual or small group of individuals. NC also takes the view that the diverse experience and expertise of the directors of the Board provides the necessary core competencies for meeting Frontline’s performance targets. 3. Principle III: Chairman and Chief Executive Officer Mr Steve Ting Tuan Toon and Mr Lim Chin Hu are the Chairman and Chief Executive Officer (“CEO”) of the Group respectively. The role of the Chairman and the CEO are separate to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making. The Chairman and CEO are not related to each other. The Chairman is the founder of the Group and continues to play a pivotal and significant role in developing the Group’s businesses. The Chairman sets the meeting agenda of the Board in consultation with the CEO and exercises control over the quality and timeliness of the flow of information between management and the Board. The CEO has executive responsibility for the Group’s business, and oversees the daily operations of the Group’s operations and is responsible to execute strategies and policies adopted by the Board. 4. Principles IV and V: Board Membership and Board Performance The NC comprises of three (3) independent directors. During FY06, four (4) NC meetings were convened. The NC performs the following functions for the Company: a) Identifies, reviews and recommends candidates for appointment as directors and appointment to the Audit and Compensation Committees. b) Re-nominates directors and determine annually the independence of directors. c) Assesses the effectiveness of the Board as a whole. d) Recommends directors who are retiring by rotation to be put forward for re-election. All directors are required to submit themselves for re-election at regular intervals in accordance with Frontline’s articles of association. Nominees for directorship and directors seeking re-election are required to submit themselves to review by NC who will thereafter consider their suitability in line with the requirements of the Company. The NC also evaluates the performance of the Board as a whole as well as each director’s contribution to the effectiveness of the Board. This assessment process takes into consideration, inter alia, frequency of meetings, directors’ independence, quality of decision making and quality and timeliness of board papers. The NC also considers other performance criteria as set out in the Code, including the performance of the share price of the Company. Individual directors were evaluated based on their attendance record at meetings, functional expertise and contributions.
frontline technologies corporation ltd annual report 2006 31 > corporate governance report (cont’d) 5. Principle VI: Access to Information Frontline management provides directors with regular management reports so that the Board is able to fulfill its responsibilities. Relevant information on material events are circulated to the directors as and when they arise. The agenda for each Board meeting is prepared in consultation with the Chairman and is circulated in advance to directors. The Board has separate and independent access to the company secretary and to Frontline management at all times in performing their duties. Should any of the directors, whether as a group or individually, require independent professional advice, the Company will bear the expenses incurred if such advice is required to enable the directors to discharge their duties professionally. 6. Principle VII: Procedure for Developing Remuneration Policies Principle VIII: Level and mix of Remuneration Principle IX: Disclosure of Remuneration The CC comprised two (2) independent directors and one (1) executive director. 4 During FY06 the CC met three (3) times. The CC reviews and recommends to the Board for approval the remuneration packages of directors. The CC’s review encompasses all aspects of remuneration including but not limited to directors’ fees, salaries, allowances, bonus, share options and benefits-in-kind. The remuneration package of each executive director is based on both the performance of the Group and the individual. Frontline has a formal and transparent process for fixing the directors’ fees for individual directors, which are subject to shareholders’ approval at Frontline’s Annual General Meeting (“AGM”). No director is involved in deciding his own remuneration. It is the Group’s policy to set a level of remuneration that is appropriate to attract, retain and motivate the directors. The remuneration of executive directors includes a fixed as well as a variable component. Remuneration of key executives (other than directors) are determined by the CEO based on individual performance and the value added to the Group. The Group’s remuneration policies have always been to maintain a reasonable fixed salary and an emphasis on performance bonus.
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