Corporate Governance - Singapore Technologies Engineering

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Office, comprising the President and CEO, two DeputyCEOs, and the Chief Financial Officer, will strengthenthe execution of the globalisation strategy and providebetter focus on customers and growth areas. The twoDeputy CEOs were promoted from within the Group,an endorsement of the confidence of the Board in themanagement team and the strength of talent in theGroup.The Committee also reviewed and approved the grantof share options and conditional performance shareawards under ST Engineering’s approved share plans.The Group has set out a groupwide cross section ofexecutives’ remuneration by number of employeesfrom $100,000 upwards in bands of $50,000 upto $250,000 on page 188. This is a comprehensiveanalysis detailing remuneration for up to 1,000 ofits key employees instead of only for a small groupof selected individuals. It therefore gives a betterperspective of the remuneration pattern in the Group.The Senior Human Resource Committee, chaired by MrPeter Seah, comprises Mr Tan Pheng Hock, Lieutenant-General Ng Yat Chung and Dr Tan Kim Siew. Duringthe year, it met twice to review the development ofsenior staff as well as those staff with the potential tohold senior positions in the Group. During the year,the Committee enhanced its system of identifying andscreening talent to be groomed for senior positionsthrough a framework of eight leadership competencies.The Committee also reviewed succession plans for keypositions in the Group.Accountability (Principle 10)The Board places importance on its relationship withshareholders as it is accountable to them for theGroup’s performance.Shareholders are required to approve directors’fees and also the appointment and re-appointmentof auditors.The ST Engineering Boardprovides leadership andguidance on corporatestrategy, business directions,acquisitions and divestments,risk policy and implementationof corporate objectives.Directors and key senior executives of the Group areprohibited from dealing in ST Engineering shares twoweeks before the announcement of ST Engineering’sfirst quarter, half year, third quarter and full yearresults up to the date of the announcement of theresults. Additionally, all directors of the Group and itsemployees are required to observe the insider tradinglaws at all times.The directors’ interests in shares of ST Engineeringand its related companies during the year are foundon pages 97 to 106.Audit Committee (Principle 11)The Audit Committee comprises Mr Koh Beng Seng,Dr Philip Pillai and Mr Venkatachalam Krishnakumar.All the members of the Audit Committee areindependent directors. The Audit Committee held fourmeetings during the year including a session with theexternal and internal auditors, without management,to review FY2003 results.The Audit Committee reviewed and recommended tothe Board the release of the full year and half yearfinancial statements, and considered and approved the2004 Audit Plan and the 2004 Internal Audit (IA) Plan.It also reviewed internal control procedures, InterestedPerson transactions, corporate guarantee status andnoted updates on the risk review undertaken by theRisk Review Committee. With delegated authority by27TheEnterpriseInstinct
Corporate Governancethe Board, the Audit Committee also met and approvedthe release of the financial results for the first quarterand third quarter of 2004.In the first meeting in 2005, the Audit Committeereviewed the audit observations with the externalauditors for the financial statements for FY2004 audit.The Audit Committee also met with the external andinternal auditors, without management, to review 2004results. There were no major issues highlighted andthe auditors confirmed that they would provide anunqualified report.The Audit Committee reviewed the nature and extentof non audit services provided by the externalauditors during the year which included tax services.It was satisfied that the quantum of services was notsignificant enough to call into question the externalauditors’ independence.The Audit Committee also reviewed the performanceof the external auditors. It recommended to the Boardthe re-appointment of Ernst & Young as auditors forFY2005, after having been satisfied with its standardsof audit, independence and objectivity.The Audit Committee was supported in its work bythe audit committees of the four main subsidiaries.The respective Chairmen of the audit committees ofthe four subsidiaries were invited to attend the AuditCommittee meetings of ST Engineering so as to havea clear understanding of policies made at the holdinglevel and to give feedback from the subsidiaries’ auditcommittees.The Audit Committee has full authority to commissionand review findings of internal investigations intomatters where it is alerted of any suspected fraudor irregularity or failure of internal controls orinfringement of any law likely to have a materialimpact on the listed Group’s operating results. It caninvestigate any matter within its terms of reference andwith the full cooperation of management.The mix of independentand non executive directorscontributes to useful andobjective board deliberations.An independent mindeddirector can constructivelychallenge and guidemanagement without beingadversarial in approach.Internal Controls (Principle 12)Internal Audit (Principle 13)The Audit Committee oversees and appraises thequality of the audit effort of the Company’s IA function.The IA function in 2004 was carried out by the GroupInternal Audit (GIA), which resided in STPL. Duringthe year, GIA planned its IA work in consultation with,but independent of, management. GIA attended everyAudit Committee meeting of ST Engineering andits subsidiaries and reported on its IA work at suchmeetings. In addition, the Audit Committee met GIAat least once during the year without the presence ofmanagement.The 2004 IA Plan, which was approved by the AuditCommittee, identified the broad business risks for focusin the Business Continuity Plan to be drawn up underthe purview of the Risk Review Committee. When therisk processes are finalised and approved by the Board,IA will monitor and audit the risk processes.SingaporeTechnologiesEngineering LtdAR 2004 28
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Corporate Governance - Singapore Technologies Engineering

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