Nomination and Remuneration Committee Terms of Reference

MESB Berhad [199501008356 (337554-D)]

1.   Composition

The Nomination and Remuneration Committee (“NRC or the Committee”) shall be appointed from amongst the Board and shall comprise exclusively non-executive directors and a majority of whom are independent. The Committee shall consist of not less than three (3) members.

2.  Chairman

The Chairman of the NRC should be an Independent Non-Executive Director. In the absence of the Committee Chairman, the remaining members present shall elect one of their number present to chair the meeting, who should be an independent director.

3.    Secretary

The Company Secretary or any authorised person shall be the secretary of the NRC (the “Secretary”). The Secretary shall provide assistance to the members of the Committee, including but not limited to assist the NRC Chairman in planning the work of the Committee, formulating meeting agendas, maintenance of committee minutes, collation and distribution of information required by the NRC and provide practical support, as and when needed.

4.    Meetings

•    The Committee shall meet at least once a year or as and when required, and report to the Board of Directors after each meeting.

•    The quorum for a meeting shall be two (2) members. The NRC Chairman shall have a second or casting vote. However, where only 2 members (including Chairman) are competent to vote on question at issue, the Chairman shall not have a casting vote.

•    The Committee has the right to pass circular resolutions in writing by a simple majority vote from the Committee.

•    The Committee may invite any person to attend part or all of any meeting of the Committee as it considers appropriate.

5.    Authority

a)    The Committee has the right to seek internal and external advice when it considers such advice necessary in order to fulfil its responsibilities at the Company’s expenses.

b)  The Committee must ensure that it obtains sufficient information to enable it to make informed decisions with respect to the advice and recommendations it provides to the Board.

c)    A member of the Committee is not entitled to be present at a Committee meeting, nor give advice or recommendations to the Board, regarding:

i)    the level or composition of his or her remuneration; and

ii)   the evaluation of his or her performance as a director of the Company.

d)   The Committee shall review its Terms of Reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

6.   Responsibilities and Functions of the Committee

The responsibilities and functions of the NRC shall include inter-alia the following:-

6.1          Nomination Function

a)  To identify, assess and recommend to the Board, candidates for appointment as the Chairman, director, Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). In making its recommendations, to consider the candidates’ skills, knowledge, expertise and experience, professionalism, integrity and time efficiency and in the case of candidate for the position of independent non-executive directors, to evaluate the candidates’ ability, independence and time to discharge such responsibilities/functions as expected from independent non-executive directors. The results of such evaluation should be explained to the Board.

b)  To develop, maintain and review the criteria to be used in the appointment and recruitment process and annual assessment of the Board as whole, the Board Committees and the individual Directors including Non-Executive Directors, CEO and CFO.

c)   To recommend the Directors to sit on respective Board committees.

d)   To review the term of office and performance of the Audit Committee and each of its members annually to determine whether the Audit Committee and members have carried out their duties in accordance with their terms of reference.

e)   To conduct the annual assessment of Directors, including a review of the required mix of skill, qualification and competencies of the Board as a whole, the committees of the board including reviewing the financial literacy of the members of the Audit Committee, and for assessing the contribution and performance of each individual director, including the CEO and the CFO. All assessments and evaluations carried out must be properly documented and the results of such evaluations should be explained to the Board.

f)    To conduct annual assessment of the independence of a director, whereby a director would be an “independent director” if director is independent of management and free from any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company;

g)   To make recommendation to the Board on the re-designation of an independent director who has served on the Board for a tenure exceeding a cumulative term of nine (9) years as a non-independent director, unless shareholders’ approval has been obtained by the Board to retain the said director’s designation as “independent”;

h)  To facilitate appropriate educational and training programmes for newly appointed Directors and existing Directors;

i)    To assess, review and recommend to the Board on Succession Planning for the Directors, CEO and working with the Board to evaluate potential succession, if necessary.

j)    To review  the  structure,  size  and  composition  of  the  Board   and recommend any changes it considers necessary  for Board’s approval.

k)   To recommend to the Board a gender diversity policy to ensure that due consideration is given to female candidates as directors and/or Board Committee members and facilitate achievement of such policies and targets.

l)    To ensure that a statement on the activities in the discharge of its nomination duties is provided in the Company’s annual report pursuant to the Main Market Listing Requirements.

6.2         Remuneration Function

a)   To recommend and advise the Board of Directors the remuneration and terms of conditions (and where appropriate, severance payments) of the Executive Directors.

b)   To establish  a  formal  and  transparent  procedure  for  developing  policy  on  Directors’  and  Senior  Management’s remuneration and to make recommendation to the Board on the remuneration packages of individual Executive Directors and senior management, taking into consideration the following:

·   In case of executive directors and senior management, the component parts of remuneration should be structured on the basis of their merit, qualification and competence, having regard to the company’s operating results, individual performance and comparable market.

·   In the case of non-executive directors, the level of remuneration should reflect the experience and level of responsibility undertaken by the non-executive concerned.

·   The remuneration of the non-executive directors shall be a matter for the Board.

c)   Where possible, and to allow it to meet its duties, the Committee should seek comparative information on remuneration and conditions of service in comparable organisations, within and without sectors of industry. The Remuneration Committee may engage remuneration consultants and other advisers or otherwise obtain such independent legal or other professional services as it requires, at the expense of the Company, with prior consent of the Board.

d)   When considering severance payments, the Committee should bear in mind that it must represent the public interest and avoid any inappropriate use of public funds. Care should be taken to avoid determining a severance package that public opinion might deem to be excessive.

e)    To review the recommendations of the CEO on remuneration, compensation and benefits package of the senior management, to ensure their contributions for the year are competitive and consistent with the Group’s culture and strategy.

f)    To review and if deemed appropriate, endorse for the Board’s approval, the annual bonus and salary increment framework for the Group’s senior management, as recommended by the CEO.

g)   To recommend to the Board the remuneration policies and procedures for directors and senior management as well as the terms and reference of the Remuneration Committee.

h)   To carry out other responsibilities, functions or assignments as may be defined by the Board from time to time.

7.   Reporting

The Committee Chairman shall report formally to the Board on its proceedings after each meeting on all matters   within   its   duties   and   responsibilities. The   Committee   shall   make   whatever recommendations  to  the  Board  it  deems  appropriate  on  any  area  within  its  remit  where  action or improvement is needed.

The  Committee  shall  assist  the  Board  in  making  certain  disclosures  concerning  the  activities  of the  Committee  such  as  in  the  Corporate  Governance  Statement  to  be  issued  in  the  Annual Report.