BNRC Dialogue & Networking – Session #1 (Repeat)

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 Datuk Mohd Radzif bin Mohd Yunus, ICDM, Ms Rowina Ghazali Seth, ICDM and Mr Shai Ganu, ICDM. 

Some of the hot-button issues and priorities to start you thinking hard and to be discussed under the Chatham House Rule:

1. 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 talents to fill the gaps?
2. 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?
3. 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 a NINED? Do you have a formal succession plan in place for boards and senior management?
4. 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?
5. 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?
6. 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?
7. 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.