CAHYA MATA SARAWAK ANNUAL REPORT 2016

www.cmsb .com.my Section 06 Governance Cahya Mata Sarawak Berhad 60 Due to the wide range of businesses within the Group, it is a policy that each Division (outside of the Information & Communication Technology Division for the moment) should have at least one (1) active Board meeting at least quarterly comprising Senior Management of the Division and/or Executive Directors of CMS, Non-Executive Directors of CMS and, if appropriate, representative(s) of joint venture partners. These Boards are tasked with overseeing in more detail, than is possible at the CMS Board level, each Division’s operations, performance and plans and, under the Group LOA Manual, certain approving and endorsing functions are delegated to such Boards giving them a meaningful role both to oversee and to ensure the operations of the Divisions are optimised and in line with CMS Board approved budgets, directions and strategies. With Non-Executive Directors of CMS sitting on these Boards as well it provides a direct link between the apex CMS Board and the Boards of CMS’ subsidiaries thus ensuring more two-way information flows and informed discussions take place at Board meetings. In November 2016, the Board approved the NRC’s recommendation for an interim PCP for the year 2016 to all eligible employees in the Group including the Executive Directors. In February 2017, the NRC reviewed the proposed final PCP for 2016 and annual salary increment for 2017 for the Group. Consideration was given to the Group’s financial performance and profitability, inflation rate and industry/market data. At the same meeting the NRC assessed the Senior Management’s performance based on their respective Strategic Performance Management and/or KPIs. The Executive Directors and Senior Management’s proposed final PCP and salary increment for 2016 were put to the Board for decision in February 2017. Directors’ remuneration for the financial year 2016 is broadly categorised into the following bands: Range of Remuneration (RM) Executive Non- Executive RM100,001 to RM150,000 - 2 RM150,001 to RM200,000 - 2 RM250,001 to RM300,000 - 1 RM750,001 to RM800,000 - 1 RM850,001 to RM900,000 - 1 RM1,550,001 to RM1,600,000 1 - RM1,900,001 to RM1,950,000 1 - The Board is of the view that transparency and accountability with regard to Directors’ remuneration is met by this disclosure method. The Directors’ aggregate remuneration for the financial year 2016 is as follows: Remuneration (RM’000) Executive Non- Executive Total Salaries & other emoluments 3,109 1,591 4,700 Defined contribution plans 374 130 504 Fees - 853 853 Estimated money value of benefits-in-kind 292 108 400 Total 3,775 2,682 6,457 The Board will seek shareholders’ approval at the 42 nd AGM for the payment of Non-Executive Directors’ remuneration other than directors’ fees payable to the Non-Executive Chairman and each of the Non-Executive Directors for financial year ending 2017 pursuant to Section 230(1) of the Act which extends to all benefits payable to Directors. All the Directors have the benefit of Directors & Officers Liability Insurance in respect of any liabilities arising from acts committed in their capacity as Directors. The Directors are required to contribute jointly towards the premium of the said policy which is renewed annually. REINFORCE INDEPENDENCE Annual Assessment of Independence Pursuant to its TOR and in line with Recommendation 3.1 of the Code, the NRC conducts an annual assessment of the independent directors to continuously enhance the Board’s overall performance. Each Independent Non-Executive Director submits an annual declaration regarding his independence. The NRC has assessed the independence of the four (4) Independent Non-Executive Directors (including Independent Non-Executive Chairman) for 2016 in conjunction with the BEE for 2016. The NRC and Board are satisfied with the level of independence demonstrated by these Directors. All these Directors met the criteria under the definition of Independent Director set out in Chapter 1 of the MMLR. Tenure of Independent Non-Executive Director In the interest of ensuring a continual supply of new talent to the Board, in 2016 the Board approved the NRC’s recommendation for an independent director to serve for a maximum of four (4) terms i.e. up to a maximum of twelve (12) years unless there are exceptional circumstances. The NRC and Board’s view is that tenure is not the absolute indicator of a Director’s independence but more importantly is whether the Director is able to Statement on Corporate Governance