Addressing Hot-button Issues and Priorities
The Nomination and Remuneration Committee (NRC) is the fore engine to ensure that boards are thoughtfully composed with the right mix of skills and expertise and diverse thinking to oversee forward-looking strategies.
Stakeholders’ expectations of NRC have increased. Regulators and investors are demanding for greater transparency on the board’s approaches to optimising their composition and to have a more rigorous process around the direction of selection, nomination, and appointment. Pressure asserted by the institutional investors for more women directors and reducing the number of long-serving independent directors on board by voting against the re-appointment of the NC Chair is becoming more prevalent. The after-effects of the COVID-19 pandemic, business recovery and growth, and ESG commitments continue to test the skills and experience of corporate directors.
As part of ICDM’s advocacy efforts to strengthen board committee roles, we strive to bring together all NRC chairmen and members to an informal, candid and thought-provoking ongoing discussion. The discussion will be moderated by Prof Mak Yuen Teen with panellists Tan Sri Wan Zulkiflee Wan Ariffin, ICDM, Datin Norazah Mohamed Razali, ICDM and Ms Teoh Su Yin, ICDM.
Some of the hot-button issues and priorities to start you thinking hard and to be discussed under the Chatham House Rule:
- Board composition & diversity: How do you fulfil regulatory requirements such as restriction of chairman’s involvement in audit, nomination and risk committee, the need to have 30% women on board as well as having a board member with ESG experience and ensuring there is sufficient diversity on board too? How do you identify the gaps in skills, background, and experiences to bring the organisation forward? Do you use a board skills matrix as part of your search and nomination process for directors? What is the optimum board size and composition? Are there enough board talent to fill the gaps?
- Board sourcing: Many boards have identified the need to have new non-traditional skills and experience on board, yet research has shown that most of them are still relying on personal networks (within traditional skillset) when looking for new board candidates. How are you sourcing for your new board members? Why are boards not using independent search firms to source for directors? Are you open to younger executives or candidate without previous board experience, but is digital or social media savvy?
- Board tenure & succession plan: How will you deal with those INEDs approaching the new 9- or 12-year term limit as well as non-performing directors? Do you plan to reappoint any long-tenured INED as an NINED? Has the board policy been updated to consider situations when a long-tenured INED will be re-appointed as an NINED? Do you have a formal succession plan in place for boards and senior management?
- Board fit and proper policy: Do you foresee any challenges in implementing a fit and proper policy for directors, especially in situations where there is a controlling shareholder who is pushing to appoint certain directors? How would you handle the situation where one of your existing directors no longer meets the fit and proper policy?
- Board Evaluation & development: How do you currently assess your board’s effectiveness? How could it be better? What is your take on the recommendation for doing an external board evaluation every 3 years? How do you use the current board evaluation in supporting continuous development of your board member? How is NRC playing this role? Do you have proper planning for board training or is it mostly based on adhoc requests by individual directors?
- Impact of ESG on NRC’s responsibilities: How is the focus on environmental, social and governance (ESG) issues impacting the work of the NRC in areas such as board composition, director development/training, succession planning for directors and key management, board evaluations; and remuneration of key management?
- Linking ESG to executive remuneration: ESG and remuneration: Do you currently link or plan to link ESG factors, such as energy transition (“E”); employee welfare, health and safety (“S”); and anti-bribery initiatives (“G”); to the remuneration of the CEO and other key management? Do you think ESG should be factored into remuneration of key management and if so, how? Should it be linked to the annual bonus, long-term incentives, or both?
To ensure continuous support is available for the NRC community, we will also set up an NRC Circle at the end of the session. More information on the NRC Circle will be shared then.
Panellists
TAN SRI WAN ZULKIFLEE WAN ARIFFIN, ICDM
Malaysia Aviation Group Berhad, Chairman
Tan Sri Wan Zulkiflee was appointed the Chairman of Malaysia Aviation Group Berhad and Malaysia Airlines Berhad in July 2020. In September 2020, he was appointed the Chairman of DRB- HICOM Berhad, a diversified business conglomerate involved in automotive, services, and property businesses. In July 2021, he joined the Board of Gas Malaysia Berhad as Chairman of the company whose primary activity is the reticulation business of natural gas to industrial, commercial, and residential customers.
Wan Zulkiflee had served Petronas, the national Oil and Gas Company of Malaysia, for 37 years. He was appointed President and Group CEO in April 2015 and retired from the position in June 2020 after a highly successful 5 years. He was on the Board of Petronas for more than 12 years, from August 2007 to June 2020. He was active with the World Economic Forum activities in Davos serving as one of the Oil and Gas Governors and was on the Stewardship Board for Shaping the Future of Energy initiative. He was also the Council member for ASCOPEfor 5 years.
Wan Zulkiflee was Chairman of Malaysia’s National Trust Fund and was a Council Member of the East Coast Economic Region Development Council (ECERDC) and the Northern Corridor Implementation Authority (NCIA).
In education, Wan Zulkiflee is passionate about talent and leadership development as well as shaping the right culture for organisations. He was the Pro-Chancellor at the University Teknologi Petronas. He currently sits on the Board of Trustees at the Razak School of Government and the Board of Governors at the International Islamic University of Malaysia where he is the Adjunct Professor at the Kulliyah of Economics and Management Science.
DATIN NORAZAH MOHAMED RAZALI, ICDM
Sime Darby Property Bhd, Independent Non-Executive Director
Datin Norazah Mohamed Razali is an Independent Non-Executive Director. She graduated with a Bachelor of Laws (LLB Hons) degree from the International Islamic University Malaysia in 1993. She was admitted as an Advocate and Solicitor of the High Court of Malaya and became a member of the Malaysian Bar in 1994. She has also received a Master of Business Administration (MBA) in Management from The Imperial College Business School, University of London, United Kingdom and a Diploma of the Imperial College in Management from Imperial College, the United Kingdom in 1998.
Datin Norazah Mohamed Razali began her career with Sidek, Teoh, Wong & Dennis as a solicitor in 1994 before leaving to further her studies in the United Kingdom in 1997. After obtaining her MBA in 1998, she returned to Southeast Asia and joined the management consulting firm of Booz, Allen & Hamilton in Singapore where she served the firm for a year. She then joined the Boston Consulting Group (BCG) in 2000 as a consultant based in Kuala Lumpur. At BCG, Datin Norazah Mohamed Razali was promoted to Principal in 2007. Just prior to that, she was in the role of Project Leader as well as alternating as the Asia Pacific Recruiting Head.
She was elected as Partner and Managing Director of BCG in 2010 as well as a member of its Executive Leadership team for Southeast Asia. As a Partner, she undertook a range of leadership roles within the firm including, leading BCG Malaysia from 2011 to 2014, the Public Sector Practice in Malaysia from 2012 to 2017 as well as the Women’s Initiative Programme in Southeast Asia to encourage women participation in senior leadership roles. She was also a core member of BCG’s Global Economic Development team.
While no longer a Partner and Managing Director at BCG, Datin Norazah remains as a Senior Advisor (Public Sector Practice, BCG Malaysia), a role she took on from August 2017. She has more than 20 years of experience advising private and public sector clients on transformation and growth, restructuring as well as talent development.
Datin Norazah is also an Independent Non-Executive Director of Permodalan Nasional Berhad (PNB) and MISC Berhad, where she is also the Chairman of its Board Governance and Risk Committee.
TEOH SU YIN, ICDM
CIMB Investment Bank, Chairperson
Teoh Su Yin is a Senior Independent Director of CIMB Group Holdings and Chairperson of CIMB Investment Bank. Within the Group she chairs the Group Nomination & Remuneration Committee and Group Sustainability & Governance Committee as well as is a member of the Audit Committees.
Su Yin is also on the Board of Trustees of WWF-Malaysia and in Singapore, Albizia ASEAN Opportunities Fund. Her background is in Equity Research where she spent 20 years at JP Morgan and Deutsche Bank covering Malaysia and the ASEAN markets.
Representing CIMB, she is on the Steering Committee of the CEO Action Network (CAN) to advocate sustainability in business & development.
Moderator
PROF. MAK YUEN TEEN
NUS Business School, Accounting Professor
Professor Mak Yuen Teen, PhD, FCPA (Aus) is Professor (Practice) of Accounting at the NUS Business School. He served on the Corporate Governance Committee which developed the first Code of Corporate Governance in Singapore in 2001, the Council on Corporate Disclosure and Governance which revised the Code in 2005, and the Corporate Governance Council which revised the Code in 2018. He was recently appointed to a second three-year term on the Corporate Governance Advisory Committee under the Monetary Authority of Singapore. Professor Mak has been involved in the development of several corporate governance indices and scorecards in Singapore and the region, and has served as a member or chair of various corporate governance award committees. He regularly conducts training for directors, regulators and other professionals, including for nominating and remuneration committee members. He has written many case studies, reports and articles in corporate governance and has a personal website called Governance for Stakeholders, where he shares his views on current issues in corporate governance.
