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Axiata Group Berhad | Annual Report 2016
GOVERNANCE
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Axiata Board’s structured approach in designing the Board composition
is mirrored throughout the whole Group with OpCos adopting their
own Board composition framework which takes into consideration the
companies requirements, local laws and regulations and agreements with
partners. The framework ensures sufficient oversight and connectivity with
Axiata Board, CC, Management and OpCos Management. It sees each
OpCo having a maximum of nine members made up of Axiata INED, Group
Management representatives, OpCos CEO and partner’s representatives
with good mix of skillsets and diversity covering operations strategy and
finance.
Board Gender Diversity Policies and Targets
Axiata did not set a specific target on gender diversity but it is entrenched
in its Board Charter that the Board would actively work towards meeting
the Government’s target of 30% women’s participation on Boards. This is
implemented by having a requirement for third party recruitment firms
to shortlist at least 50% qualified women candidates in their search for
Board candidates. Outcomes have not always been favourable, but it puts
much emphasis on Axiata’s efforts to pursue this agenda and strengthen
the Group and Board’s performance. This approach has enabled Axiata
to make progress in this regard without compromising on the normal
selection criteria of a Director.
In the last two years, Axiata has appointed the following capable and
qualified individuals on its Board and the Boards of its OpCos:-
i)
Dato Dr. Nik Ramlah Nik Mahmood as INED of Axiata;
ii) Dian Siswarini Soetiman as President Director of XL;
iii) Khatijah Shah Mohamed as INED of Celcom; and
iv) Rosanna Annizah Ahmad Rashid as INED of edotco Group.
Independence
Axiata measures the independence of its Directors based on the criteria
prescribed under the Main LR in which a Director should be independent
and free from any business or other relationship that could interfere with
the exercise of independent judgment or the ability to act in the best
interest of the Company. A Director should also be willing to express his
opinion at the Board free of concern about his position or the position of
any third party. The Board believes that it is impractical to formulate a list of
criteria which is appropriate to characterise, in all circumstances, whether
a NED is independent and instead choose to assess the INEDs based
on intrinsic independent values demonstrated by the INEDs. Objective
assessment of the independence of Directors based on the provisions of
the Main LR is carried out before the appointment of Directors and re-
affirmed annually. The review of Directors’ independence also form part of
the annual Individual Director Peer and Self Review carried out by the BNC
whereby INEDs are essentially assessed based on the spirit, intent, purpose
and attitude of each INED as well as readiness to challenge and debate,
which is considered as exhibiting independent judgment and ability to act
in the best interest of Axiata.
During the financial year 2016, none of Axiata INEDs disclosed any
relationships that could materially interfere with, or be perceived to
materially interfere with their independent judgement and ability to act in
the best interest of Axiata. Based on the feedback from BEE for 2016, the
Board was rated highly in having a suitably strong element of independence
and the INEDs were rated highly on their ability to demonstrate the values
and principles associated with independence during Board discussions
such as impartiality, objectivity and consideration of all stakeholders’
interest and ability to effectively delineate their role of providing oversight
as Independent Directors.
Independence Term Limit
The Board subscribes to the nine-year independence limit prescribed in
MCCG 2012. Notwithstanding the tenure limit, the Board recognises that
INEDs would have developed a good understanding of Axiata Group’s
businesses over time and Axiata could lose their valuable contributions
simply by phasing out INEDs who have reached the limit. In this regard,
the Board still believes that term limits do not in any way interfere with an
INED’s judgement and ability to act in the best interest of the Company
and as such, the INEDs could be re-designated as NINED or retained as
independent Director as prescribed under MCCG 2012. Assessment,
however, will be carried out by the BNC based on ‘independence’ criteria
adopted by the Company to assess whether a Director can remain as an
INED after serving a cumulative term of nine years. Recommendations
by the Board and justifications to shareholders will be provided in
circumstances where a Director is to remain as INED despite serving more
than nine years.
As at the date of the Annual Report, three of Axiata INEDs; namely, Tan
Sri Ghazzali Sheikh Abdul Khalid, Datuk Azzat Kamaludin and David Lau
Nai Pek have reached the nine years’ cumulative term as Independent
Directors. In accordance with the recommendation of the MCCG 2012,
shareholders’ approval will be sought for the three Directors to be retained
as INEDs. Details of BNC and Board review on the independent status of
the said INEDs are provided under the section on Review of Directors for
Re-Election/Re-Appointment on page 82 of this Annual Report.
Board Refresh and Succession Planning
A report from one of the previous Board Effectiveness Evaluation
highlighted that most Axiata INEDs would reach the nine year cumulative
term limit under the MCCG 2012 at about the same time in 2017. It was
proposed that a phased retirement plan be put in place to ensure smooth
transition. This proposal was followed through by the Board through the
BNC which spent a considerable amount of time consulting each Board
member on their individual plans and deliberating on the same in the
context of the overall Board composition requirements.
The Board was able to conduct an open and transparent discussion on
Board refresh and succession planning with a clear objective to achieve a
more balanced board tenure and mitigate the potential risk of ‘groupthink’
often observed in cohesive teams that have been together for an extended
period of time.
In 2016, a clear phased retirement plan has been adopted around the
following parameters:-
i)
Axiata INEDs tenure as independent directors shall not exceed
cumulative term of 12 years;
ii) Phased retirement plan for Axiata INEDs from 2016-2020;
iii) Where the skillset is unique, the successor will overlap the retiring INED
for a period of transition; and
iv) Continue to observe the gender diversity agenda on best effort basis.
STATEMENT ON CORPORATE GOVERNANCE