112 Innovating for the Future Annual Report 2016 Sime Darby Berhad Sime Darby Berhad Annual Report 2016 Corporate Governance 113 STATEMENT ON CORPORATE GOVERNANCE “Our governance processes, culture of integrity and openness, and a diversity of perspective continue to support the Board in delivering a sustainable and successful Sime Darby Group.” TAN SRI DATO’ ABDUL GHANI OTHMAN Chairman CHAIRMAN’S OVERVIEW Board Effectiveness The Board attaches the highest priority to I continue to keep the membership of our Board corporate governance and as a Board, we provide under review, looking for exceptional candidates to strong leadership in setting standards and values join us and ensuring that we have the right mix of for our company. As Chairman, I passionately skills, experience and background. believe in creating and delivering long term sustainable value to our stakeholders. Our Our overriding priority in any new appointment is to governance processes, culture of integrity and select the best candidate with a view to achieving a openness, and a diversity of perspective continue high-performing Board, in line with the evolving to support the Board in delivering a sustainable circumstances and needs of the Group. The and successful Sime Darby Group. Directors of the Board are selected on the criteria of proven skill and ability in their particular field of Our Board Committees continue to play a vital role endeavour, and a diversity of outlook and in supporting the Board. Our governance structure experience which directly benefits the operation of is shown on page 122. Each Board Committee chair the Board as the custodian of the business. has provided a report on the Committee’s key focus areas and action plans during the year. You I am personally committed to ensuring that our can read about this in the ensuing pages of this Board is strong, committed, effective and able to statement. respond to the opportunities and challenges we face in a changing world, and under the prevailing I am pleased to report that we are fully compliant ‘business unusual’ circumstances. with the Malaysian Code on Corporate Governance 2012. As Chairman, it is my responsibility to encourage an environment of open, robust and effective debate Strategy during discussions at the Board. The Board certainly did not shy away from difficult conversations and The Board remains focused on the key priorities of decisions during the financial year, always with a the Company in light of the challenging operating focus on what was needed to drive forward the environment. As a Board, we are cognisant of our execution of the strategy to generate sustainable critical role in governing and setting the strategic value for Sime Darby and its stakeholders. This is direction of the Company, while excercising the Board culture we foster at Sime Darby and we oversight on the targets set by management. shall continue to live this culture and promote it within our businesses. Together with Management, we explored and debated the strategic priorities of the Company, We have carried out the annual board evaluation leveraging on our Board members’ different through an external facilitator. The feedback from experiences, skills and expertise to provide the evaluation provided insightful areas and insights and refinements to the strategic process, recommendations for the Board and these will form always with a focus as to ‘where the Company part of our key focus areas for FY2017. The resulting wants to be and how to get there.’ development themes that arose from the evaluation are discussed from pages 141 to 143. 114 Innovating for the Future Annual Report 2016 Sime Darby Berhad STATEMENT ON CORPORATE GOVERNANCE Composition, Diversity and Inclusiveness Dialogues with Stakeholders The Board and I are committed to work towards The Board recognises that regular communication greater diversity in the boardroom. In addition to results in engaged stakeholders. During the year, gender, we will look to achieve diversity in age, we have continued our work in promoting greater nationalities and balance of skills, experience, and more effective engagement with our knowledge and independence, so as to bring institutional investors and analysts. The President relevant perspectives to Board discussions. & Group Chief Executive and I, along with our Group Chief Financial Officer have met with our I am pleased that we have made demonstrable major institutional investors on several occasions progress to increase the number of women to discuss, among others, the strengthening of our Directors on our Board. Most recently, Datuk Wan market position and the Group’s key investments. Selamah Wan Sulaiman, the former Accountant- I have also met with our major shareholder both in General, joined the Board as an Independent my capacity as Chairman of Sime Darby and as Non-Executive Director with effect from Chairman of the NRC on the composition of the 15 January 2016. Board. Currently, 23% of our Board members are women We will continue to engage with our shareholders and the Board aspires to meet the Government’s call over the course of the coming financial year. of having 30% women representation on Board. Governance Debate and Consultation Exercises The new appointments ensure that the Board remains effective and cohesive with optimum We continue to engage in the wider governance balance of skills, experience, knowledge, debate and consultation exercises that have taken independence and personal attributes. The place during the year. Among others, we have recruitment process was led by me as Chairman of responded to the public consultation paper on the the Nomination & Remuneration Committee (NRC) Proposed Draft of the Malaysian Code on with the full involvement and support of the Corporate Governance 2016 issued by the members of the NRC and is explained in more Securities Commission Malaysia, and the Proposed detail in the NRC Report. Review of the Main Market Listing Requirements relating to Disclosure and Corporate Governance Requirements, Stakeholders Feedback to Improve on the Standard of Disclosure by Listed Issuers and the consultation paper on Sustainability issued by Bursa Malaysia Securities Berhad. You will find that some of the proposed governance practices outlined in the public consultation paper on the Malaysian Code on Corporate Governance 2016 have been integrated into this Statement. I am pleased to share that the Company has adopted many of these recommendations even prior to the issuance of the public consultation paper. The Board believes in the Company taking leadership position and becoming the agent of change in continuously raising the bar on governance standards and best practices. Sime Darby Berhad Annual Report 2016 Corporate Governance 115 Culture and Values In Sime Darby, it is the people that makes the The year 2016 has not been without its challenges Company great. As a Board, we set the ‘tone at the and I thank Management and our employees for top’ in terms of the Company’s culture and values. their relentless efforts and innovative ideas to The Board recognises the importance of adhering counter the challenges in the competitive to Sime Darby’s founding values during any operating environment. We must strive to maintain transformational change. our leadership position to take forward the execution of our strategy, deliver our priorities and In everything we do, in the decisions that we make, generate the long-term sustainable value that will we uphold a culture of doing the ‘right thing’ in the benefit the stakeholders and society at large. way we operate, locally and globally. We are governed by our Code of Business Conduct to The Annual General Meeting is a platform for ensure that we do the right things in the right way. meaningful engagement with our shareholders. The Board and I look forward to seeing you at the 2016 The Board and I recently endorsed the Sime Darby Annual General Meeting for an open and Group Slavery and Human Trafficking Statement constructive discussion. for the financial year 2015/2016 which is a governance framework on human rights, slavery and human trafficking under the UK Modern TAN SRI DATO’ ABDUL GHANI OTHMAN Slavery Act 2015. You can read the Statement on Chairman page 386. Although the Group is not required to publish the Statement as the Group’s current operations do not meet the revenue threshold requirements, Sime Darby has decided to take the leadership role in publishing the Statement in our continuous Human Rights journey. Reporting This annual report marks the third year in our Integrated Reporting journey and I am pleased with the progress we are making to keep our annual report interesting and engaging and ensuring that key messages are clear, concise and easy to locate. I would like to thank the Chairmen and members of the Board Committees for their commitment and devoting their time to our reporting. In this corporate governance statement, we aim to provide an insight into the workings of the Board and its Committees over the last financial year and the Corporate Governance Framework. The Board is satisfied that all committees are working effectively to deliver strong oversight and governance over their respective areas of responsibility, and are reporting appropriately to the Board. I would like to thank my fellow Board members, the Chairmen and members of the Board Committees for their exceptional support and commitment during the course of FY2016. 116 Innovating for the Future Annual Report 2016 Sime Darby Berhad BOARD OF DIRECTORS Tan Sri Dato’ Abdul Ghani Othman Tan Sri Dato’ Sri Dr Wan Abdul Aziz Tan Sri Samsudin Osman Chairman, Independent Wan Abdullah Non-Independent Non-Executive Director Deputy Chairman, Non-Executive Director Non-Independent Non-Executive Director Malaysian, age 69 M Malaysian, age 64 M Malaysian, age 69 M NRC NRC RMC Date of Appointment: 1 July 2013 Date of Appointment: 10 December Date of Appointment: 19 December Areas of Expertise: 2012 2008 Public Administration and Areas of Expertise: Areas of Expertise: Economics.