Download Annual Report 2008 - Sembcorp

CorporateGovernanceBOARD MEMBERS FOR 2008Date of first Date of last re-election /Position held appointment re-appointmentDirector on the board to the board as director Nature of appointmentPeter Seah Lim Huat Chairman Jul 29, 1998 Apr 23, 2007 * Non-executive / Non-independentTang Kin Fei Director May 1, 2005 Apr 25, 2008 Executive / Non-independentGoh Geok Ling Director May 3, 2000 Apr 25, 2008 Non-executive / IndependentRichard Hale, OBE Director Sep 1, 2000 Apr 25, 2008 * Non-executive / IndependentYong Ying-I Director May 26, 2003 Apr 23, 2007 Non-executive / IndependentEvert Henkes Director Apr 30, 2004 Apr 23, 2007 Non-executive / IndependentLee Suet Fern Director Jul 1, 2005 Apr 27, 2006 * Non-executive / IndependentBobby Chin Yoke Choong Director Dec 1, 2008 N.A * Non-executive / IndependentK Shanmugam(Resigned on April 25, 2008) Director Jul 29, 1998 Apr 27, 2006 Non-executive / Independent*Up for re-election / re-appointment at AGMperspective to enable balanced and well-considereddecisions to be made. Profiles of the directors may befound on page 46 to 49.The NC considers Lee Suet Fern an independentnon-executive director notwithstanding her relationshipwith the company in respect of Guidance Note 2.1(d)of the Code. While Mrs Lee is the Senior Directorof Stamford Law Corporation, which has renderedprofessional services to the Group, the NC is of theview that she is nonetheless able to exercise strongindependent judgement in her deliberation in theinterest of the Company.Chairman and Chief Executive Officer (Principle 3)To ensure an appropriate balance of powersuch that no one individual represents a considerableconcentration of authority, the roles of chairmanand the Group President & CEO are separate.The Chairman and the Group President & CEO are notrelated to each other.The Chairman, who is non-executive, leads andensures effective and comprehensive board discussionon matters brought to the board including strategicissues as well as business planning and monitors thetranslation of the board’s decisions into executiveaction. Meanwhile, the Group President & CEOexecutes the board’s decisions and is responsible forimplementing the Group’s strategies and policies andthe conduct of the Group’s business.Formal appointment and re-election of directors (Principle 4)Sembcorp Industries’ board is periodically renewedto ensure strong, independent and sound leadership forthe continued success of the company and its businesses.The board also recognises the contribution of directorswho, over time, have developed deep insights into theGroup’s businesses. As such, the board would exerciseits discretion to retain the services of such directors.The company subscribes to the principle that alldirectors including the Group President & CEO shouldretire and submit themselves for re-election at regularintervals, subject to their continued satisfactoryperformance. The company’s Articles of Associationrequire a third of its directors to retire and subjectthemselves to re-election by shareholders at everyAGM (one-third rotation rule).Prior to seeking shareholders’ approval at theAGM, the NC reviews and considers the retirementand re-election of directors. In addition, a newlyappointeddirector submits himself for retirementand election at the AGM immediately following hisappointment. Thereafter, he is subject to the one-thirdrotation rule. Directors who are above the age of 70are also statutorily required to seek re-appointmentat each AGM.Every year, the NC reviews the independence ofdirectors. To this end, each director is required to completea Director’s Independence Checklist on an annual basisto confirm his independence. The checklist is drawnup based on the guidelines provided in the Codeand further requires each director to assess whetherhe considers himself independent despite not beinginvolved in any of the relationships identified in theCode. The NC will then review the checklist completedby each director to determine whether the directoris independent.The NC supports and advises the company bynominating suitable board candidates to maintain theboard’s balance of skills, knowledge and experience.Appointments to the board are made on merit andagainst objective criteria. Candidates must be ableto discharge their responsibilities as directors whileupholding the highest standards of governancepracticed by the Group. The NC takes care to ensurethat appointees have enough time available to devoteto their directorship roles.The NC is chaired by Mr Seah and its members in2008 were Mr Goh and K Shanmugam, who resignedon April 25, 2008 following his appointment as aminister of the Singapore government. The NC mettwice in 2008 and achieved an average of over 80%attendance. The NC Chairman is regarded as nonindependentwith reference to the definition of“independence” under the Code, given his seat onthe Advisory Panel of Temasek Holdings, a substantialshareholder of the company. Notwithstanding this,the board believes that the NC Chairman’s abilityto exercise strong independent judgement in hisdeliberations and act in the best interest of the companyis not compromised, as his appointment to the AdvisoryPanel of Temasek Holdings is non-executive in natureand does not entail involvement in the day-to-dayconduct of Temasek Holdings’ business.Pursuant to the one-third rotation rule, Mr Seahand Mrs Lee will each submit themselves forretirement and re-election by shareholders at theforthcoming AGM.Bobby Chin Yoke Choong, who was newlyappointed to the board on December 1, 2008, will alsosubmit himself for retirement and re-election at theforthcoming AGM. In addition, Richard Hale, OBE, whois above the age of 70, will also submit his retirementand offer himself for re-appointment pursuant to theCompanies Act.BOARD PERFORMANCE AND CONDUCT OF ITS AFFAIRSActive participation and valuable contributions are keyto overall effectiveness of the board (Principle 5)Each year, the board undertakes an informalassessment of its performance. To provide feedbackto aid in this assessment, each director is requiredto complete a questionnaire on the effectiveness ofthe board as a whole. This questionnaire considersfactors such as the size and composition of the board,directors’ access to information, board processes andaccountability as well as board performance in relationto communication with senior management. Feedbackfrom the questionnaire is subsequently discussed ata board meeting and used to highlight areas ofstrength and weakness for the future developmentof the board and its committees to further improvetheir performance.The NC feels that the financial indicators set out inthe Code as guides for the evaluation of the board aremore a measure of the management’s performanceand therefore are less applicable to directors. The NCbelieves that board performance is ultimately reflectedin the long-term performance of the Group.FULL ACCESS TO INFORMATION AND RESOURCESDirectors have complete, adequate and timelyinformation and resources (Principle 6)To assist the board in discharging its duties,Sembcorp’s management furnishes adequatemanagement and operation reports as well as financialstatements to it on a regular basis. As a general rule,board and board committee papers are sent to directorsat least three working days before each meeting sothat they may better understand the matters prior tothe meeting and discussions may be focused on questionsthat the directors have on these matters. Members ofsenior management who may provide insight into thematters at hand are also called on to be present atdiscussions relevant to them.Financial highlights of the Sembcorp Group’sperformance and key developments are presented on aquarterly basis at board meetings. The Group President& CEO, Group Chief Financial Officer and members ofsenior management are present at these presentationsto address any queries which the board may have.56 Delivering Essential Solutions Sembcorp Industries Annual Report 2008 57