The Board aims to create value for shareholders and ensure the long-term success of the Group by focusing on the development of the right strategy, business model, risk appetite, management, succession plan and compensation framework. It also seeks to align the interests of the Board and Management with that of shareholders, and balance the interests of all stakeholders. In addition, the Board sets the tone for the entire organisation where ethics and values are concerned.
The Board oversees the business affairs of the Singtel Group. It assumes responsibility for the Group’s overall strategic plans and performance objectives, financial plans and annual budget, key operational initiatives, major funding and investment proposals, financial performance reviews, compliance and accountability systems, and corporate governance practices. The Board also appoints the Group CEO, approves policies and guidelines on remuneration, as well as the remuneration for Board and Senior Management, and approves the appointment of Directors. In line with best practices in corporate governance, the Board also oversees long-term succession planning for Senior Management.
Singtel has established financial authorisation and approval limits for operating and capital expenditure, the procurement of goods and services, and the acquisition and disposal of investments. Apart from matters that specifically require the Board’s approval, such as the issue of shares, dividend distributions and other returns to shareholders, the Board approves transactions exceeding certain threshold limits, while delegating authority for transactions below those limits to Board Committees and the Management Committee to optimise operational efficiency.
The Board meets regularly, and sets aside time at each scheduled meeting to meet without the presence of Management. Board meetings generally last a full day and include presentations by senior executives and external consultants/experts on strategic issues relating to specific business areas, as well as presentations by the Group’s associates during the course of the year, to allow the Board to develop a good understanding of the Group’s businesses and to promote active engagement with the Group’s partners and key executives. Typically, at least one Board meeting a year is held overseas, in a country where the Group has a significant investment, has an interest in investing, or where Board members can be exposed to new technology relevant to the Group’s growth strategy.
On such occasions, the Board may meet with local business leaders and government officials, so as to help Board members gain greater insight into such countries. The Board also meets Singtel’s partners and key customers in those countries to develop stronger relationships with such partners and customers. Singtel also arranges for the Board to meet with renowned experts in the technology/digital space to enhance their knowledge in new growth areas and enable the Board to make more informed decisions. In addition to approximately seven scheduled meetings each year, the Board meets as and when warranted by particular circumstances. Eight Board meetings were held in the financial year ended 31 March 2013. Meetings via telephone or video conference are permitted by Singtel’s Articles of Association.
A record of the Directors’ attendance at Board meetings during the financial year ended 31 March 2013 is set out below:
| Scheduled Board Meetings | Ad Hoc Board Meetings | |||
| Name of Director | Number of Meetings Held | Number of Meetings Attended | Number of Meetings Held | Number of Meetings Attended |
| Simon Israel | 7 | 7 | 1 | 1 |
| Chua Sock Koong | 7 | 7 | 1 | 1 |
| Bobby Chin(2) | 6 | 6 | 1 | 1 |
| Fang Ai Lian | 7 | 7 | 1 | 1 |
| David Gonski AC(3)(4) | - | - | - | - |
| Dominic Ho | 7 | 6 | 1 | 1 |
| Low Check Kian | 7 | 7 | 1 | 1 |
| Peter Mason AM(5) | 7 | 6 | 1 | 1 |
| Kaikhushru Nargolwala | 7 | 7 | 1 | - |
| Peter Ong | 7 | 7 | 1 | 1 |
| Ong Peng Tsin | 7 | 7 | 1 | 1 |
Directors are required to act in good faith and in the interests of Singtel. All new Directors appointed to the Board are briefed on the Group’s business activities, strategic direction and policies, key business risks, and the regulatory environment in which the Group operates, as well as their statutory and other duties and responsibilities as Directors. In line with best practices in corporate governance, the Singapore Code and the ASX Code, new Directors also sign a letter of appointment from the Company stating clearly the role of the Board and non-executive Directors, the time commitment that the Director would be expected to allocate, and other relevant matters.
The size and composition of the Board are reviewed from time to time by the Corporate Governance and Nominations Committee (CGNC), which seeks to ensure that the size of the Board is conducive to effective discussion and decision making, and that the Board has an appropriate number of independent Directors. The CGNC also seeks to maintain a diversity of expertise, skills and attributes among the Directors, including relevant core competencies in areas such as accounting and finance, business and management, industry knowledge, strategic planning, customer-based experience and knowledge, and regional business expertise, as well as taking into account broader diversity considerations, such as gender, age and nationality/ethnicity, in making appointments. When a Board position becomes vacant or additional Directors are required, the CGNC will select and recommend candidates on the basis of their skills, experience, knowledge and diversity. Any potential conflicts of interest are taken into consideration.
Reflecting the focus of the Group’s business in the region, five of Singtel’s 11 Directors originate from countries outside Singapore, namely, the Chairman, Mr Simon Israel, and non-executive Directors, Messrs David Gonski AC, Dominic Ho, Peter Mason AM and Kaikhushru Nargolwala. In relation to gender diversity, Singtel currently has two female Directors, namely Ms Chua Sock Koong and Mrs Fang Ai Lian. However, Singtel is of the view that gender is only one aspect of diversity and Singtel Directors will continue to be selected on the basis of their experience, skills, knowledge, insight and relevance to the Board.
In order to help attract high calibre international directors to the Singtel Board, especially in the case of candidates who come from jurisdictions where it is common practice for companies to grant Deeds of Indemnity to their directors, Singtel has adopted a policy on the award of Deeds of Indemnity to Directors, to ensure that they are adequately covered against personal liability incurred in the course of performing their professional duties.
The Board, taking into account the views of the CGNC, assesses the independence of each Director in accordance with the guidance in the Singapore Code and the ASX Code for assessing independence. A Director who has no relationship with the Group or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of his independent business judgement in the best interests of Singtel, is considered to be independent. In line with the guidance in the Singapore Code and the ASX Code, the Board takes into account the existence of relationships or circumstances which are relevant in its determination, including the employment of a Director by the Company or any of its related corporations during the financial year in question or any of the previous three financial years; the acceptance by a Director of any significant compensation from the Company or any of its related corporations for the provision of services during the financial year in question or the previous financial year, other than compensation for board service; and a Director being related to any organisation from which Singtel or any of its subsidiaries received significant payments or material services during the financial year in question or the previous financial year. On this basis, Ms Chua Sock Koong, Singtel’s Group CEO, Mr Simon Israel, Chairman of the Singtel Board and Mr Peter Ong, Permanent Secretary of the Ministry of Finance, Singapore are the only non-independent Directors. All other members of the Board are considered to be independent Directors.
In assessing the independence of the Directors, the Board has examined the different relationships identified by the Singapore Code and the ASX Code that might impair the Directors’ independence and objectivity, and is satisfied that the Directors are able to act with independent judgement.
The profile of each Director and other relevant information are set out under “Board of Directors”.
The Chairman of the Board is a non-executive appointment and is separate from the office of the Group CEO. The Chairman leads the Board and is responsible for ensuring the effectiveness of the Board and its governance processes, while the Group CEO is responsible for implementing the Group’s strategies and policies, and for conducting the Group’s business. The Chairman and the Group CEO are not related.
The Chairman is responsible for leadership of the Board and is pivotal in creating the conditions for overall Board, Committee and individual Director effectiveness, both inside and outside the boardroom. This includes setting the agenda of the Board in consultation with the Directors and inputs from Management, and promoting active engagement and an open dialogue among the Directors, as well as between the Board and the Group CEO. The Chairman also provides support and advice to, and acts as a sounding board for the Group CEO, while respecting executive responsibility. He also engages with other members of the senior leadership team regularly. In addition, the Chairman ensures that the performance of the Board is evaluated regularly, and takes the lead in addressing the development needs of the Board. The Chairman plays a key role in the performance appraisal exercise for the Group CEO, as well as in overseeing talent management, and works with the Group CEO to ensure that robust succession plans are in place for the senior leadership team. In addition, the Chairman works with the Board, the relevant Board Committees and Management to establish the boundaries of risk undertaken by the Group and ensure that governance systems and processes are in place and are regularly evaluated.
The Chairman plays a significant leadership role by providing clear oversight, advice and guidance to the Group CEO and Management in the drive to transform Singtel’s businesses. This involves developing a keen understanding of the Group’s diverse and complex businesses, the industry, partners, regulators and competitors. The Chairman also maintains effective communications with major shareholders and supports the Group CEO in engaging with a wide range of other stakeholders such as partners, governments and regulators. In this connection, he takes the time to travel overseas to visit the Group’s key associates in the region and in the process, fosters strong relationships with the Group’s partners and gathers valuable feedback for Management to consider and follow up on.
The scope and extent of the Chairman’s and the Board’s responsibilities and obligations have been expanding due to the increased focus on risk management and corporate governance, and enhanced regulatory requirements in the aftermath of the global financial crises. Given the increased demands on the Board and the Chairman, the Chairman has been spending, and is expected to spend, more time on and be more hands-on in, the affairs of the Group. In this regard, the Board has agreed with the Chairman that he will commit a significant proportion of his time to his role and will manage his other time commitments accordingly.
The Lead Independent Director is appointed by the Board to serve in a lead capacity to coordinate the activities of the non-executive Directors in circumstances where it would be inappropriate for the Chairman to serve in such capacity, and to assist the Chairman and the Board to assure effective corporate governance in managing the affairs of the Board and the Company.
The Lead Independent Director serves as chairman of the CGNC. The role of the Lead Independent Director includes meeting with the non-executive Directors without the Chairman present at least annually to appraise the Chairman’s performance and on such other occasions as are deemed appropriate. He will also be available to shareholders if they have concerns relating to matters which contact through the normal channels of the Chairman, Group CEO or Group CFO has failed to resolve, or where such contact is inappropriate.
The CGNC establishes and reviews the profile required of Board members and makes recommendations to the Board on the appointment, re-nomination and retirement of Directors.
When an existing Director chooses to retire or is required to retire from office by rotation, or the need for a new Director arises, the CGNC reviews the range of expertise, skills and attributes of the Board and the composition of the Board. The CGNC then identifies Singtel’s needs and prepares a shortlist of candidates with the appropriate profile for nomination or re-nomination. Where necessary, the CGNC may seek advice from external search consultants.
The CGNC takes factors such as attendance, preparedness, participation and candour into consideration when evaluating the past performance and contributions of a Director for recommendation to the Board. However, the re-nomination or replacement of a Director does not necessarily reflect the Director’s performance or contributions to the Board. The CGNC may have to consider the need to position and shape the Board in line with the evolving needs of Singtel and the business. In order to ensure Board renewal, the Board has in place guidelines on the tenure of the Chairman and Directors.
Directors must ensure that they are able to give sufficient time and attention to the affairs of Singtel and, as part of its review process, the CGNC decides whether or not a Director is able to do so and whether he has been adequately carrying out his duties as a Director of Singtel. The Board has also adopted an internal guideline that seeks to address the competing time commitments that may be faced when a Director holds multiple board appointments. The guideline provides that, as a general rule, each Director should hold no more than six principal board appointments. The guideline includes the following: (1) in support of their candidature for directorship or re-election, Directors are to provide the CGNC with details of other commitments and an indication of the time involved; and (2) non-executive Directors should consult the Chairman or chairman of the CGNC before accepting any new appointments as Directors.
A Director must retire from office at the third Annual General Meeting (AGM) after the Director was elected or last re-elected. A retiring Director is eligible for re-election by Singtel shareholders at the AGM. In addition, a Director appointed by the Board to fill a casual vacancy or appointed as an additional Director may only hold office until the next AGM, at which time he will be eligible for re-election by shareholders. If at any AGM, fewer than three Directors would retire pursuant to the requirements set out above, the additional Directors to retire at that AGM shall be those who have been longest in office since their last re-election or appointment. The Group CEO, as a Director, is subject to the same retirement by rotation, resignation and removal provisions as the other Directors and such provisions will not be subject to any contractual terms that may have been entered into with the Company. Shareholders are provided with relevant information on the candidates for election or re-election.
The Board and the CGNC strive to ensure that Directors on the Board possess the experience, knowledge and skills critical to the Group’s business so as to enable the Board to make sound and well-considered decisions.
Directors also participate in an annual offsite workshop with Senior Management to strategise and plan the Group’s longer term strategy. Training and development programmes for Directors include talks and presentations by renowned experts and professionals in various fields, such as telecommunications, technology, regulatory matters and the economic/business environment in relevant markets. The Directors may also attend other appropriate courses, conferences and seminars. In addition, Board meetings may be held in overseas locations where Board members can be exposed to new technology relevant to the Group’s growth strategy, such as the Board’s visit to Silicon Valley in 2011 and thriving innovation hubs in New York and Boston in 2012. The Board may also hold meetings in conjunction with key industry events where relevant experts would be invited to speak on issues relevant to the Group’s businesses.
Each year, the CGNC undertakes a process to assess the effectiveness of the Board as a whole and the Board Committees, as well as the contributions by each Director. The Board, led by the Lead Independent Director, also assesses the effectiveness of the Chairman. This year the Board took a more rigorous approach to the evaluation process by engaging an independent governance specialist. The methodology for the evaluation was based on widely accepted international best practice in corporate governance, and included the review of publicly available company and governance materials, case studies of Board decisions, tailored interviews with all Directors and key senior management, and detailed questionnaires completed by all Directors and key senior management. The questionnaires invited feedback on a number of key areas including the composition of the Board, the skills and experience of the Directors, Director training and development, group/meeting dynamics, attributes and behaviour of Directors, information management, decision processes, monitoring and evaluation of performance by the Board, and an assessment of where the Board has added value.
In addition to the appraisal exercise, the contributions and performance of each Director were assessed by the CGNC as part of its periodic reviews of the composition of the Board and the various Board Committees. In the process, the CGNC was able to identify areas for improving the effectiveness of the Board and its Committees. The Board was also able to assess the Board Committees through their regular reports to the Board on their activities.
Prior to each Board meeting, Singtel’s Management provides the Board with information relevant to matters on the agenda for the meeting. The Board also receives regular reports pertaining to the operational and financial performance of the Group, as well as weekly updates which include information on the Group’s competitors, and industry and technological developments. In addition, Directors receive analysts’ reports on Singtel and other telecommunications and digital companies on a quarterly basis. Such reports enable the Directors to keep abreast of key issues and developments in the industry, as well as challenges and opportunities for the Group. In line with Singtel’s commitment to conservation of the environment, as well as technology advancement, Singtel has done away with hard copy Board papers and Directors are instead provided with tablet devices to enable them to access and read Board and Board Committee papers prior to and at meetings.
The Board has separate and independent access to the Senior Management and the Company Secretary at all times. The Company Secretary attends all Board meetings and is responsible for, among other things, ensuring that Board procedures are observed and that applicable rules and regulations are complied with. Procedures are in place for Directors and Board Committees, where necessary, to seek independent professional advice, paid for by Singtel.
The following Board Committees assist the Board in executing its duties:
Each Board Committee may make decisions on matters within its terms of reference and applicable limits of authority. The terms of reference of each Committee are reviewed from time to time, as are the Committee structure and membership.
The selection of Board Committee members requires careful management to ensure that each Committee comprises Directors with appropriate qualifications and skills, and that there is an equitable distribution of responsibilities among Board members. The need to maximise the effectiveness of the Board, and encourage active participation and contribution from Board members, is also taken into consideration.
A record of each Director’s Board Committee memberships and attendance at Board Committee meetings during the financial year ended 31 March 2013 is set out here.
| Finance and Investment Committee | Audit Committee | Risk Committee | Executive Resource and Compensation Committee | Corporate Governance and Nominations Committee | Optus Advisory Committee | |||||||
| Name of Director | Number of Meetings Held | Number of Meetings Attended | Number of Meetings Held | Number of Meetings Attended | Number of Meetings Held | Number of Meetings Attended | Number of Meetings Held | Number of Meetings Attended | Number of Meetings Held | Number of Meetings Attended | Number of Meetings Held | Number of Meetings Attended |
| Simon Israel | 5 | 5 | 4 | 4 | 2 | 2 | 3 | 3 | ||||
| Chua Sock Koong3 | 5 | 5 | 4 | 4 | 3 | 3 | 4 | 4 | 2 | 2 | 3 | 3 |
| Bobby Chin4 | 1 | 1 | 3 | 3 | ||||||||
| Fang Ai Lian | 4 | 4 | 4 | 3 | ||||||||
| Dominic Ho | 4 | 4 | 2 | 2 | ||||||||
| David Gonski AC5 | 1 | 1 | 1 | 1 | ||||||||
| Low Check Kian | 5 | 5 | 2 | 2 | ||||||||
| Peter Mason AM | 4 | 4 | 3 | 3 | ||||||||
| Kaikhushru Nargolwala6 | 1 | 1 | 3 | 3 | 4 | 4 | 2 | 2 | ||||
| Peter Ong7 | 4 | 4 | 3 | 3 | 1 | 1 | ||||||
| Ong Peng Tsin8 | 5 | 5 | 3 | 3 | - | - | ||||||
The FIC comprises at least three Directors, the majority of whom shall be independent Directors. Membership of the AC and the FIC is mutually exclusive.
The main responsibilities of the FIC include the provision of advisory support on the development of the Singtel Group’s overall strategy, review of strategic issues, approval of investments and divestments, review of the Group’s Investment and Treasury Policies, evaluation and approval of any financial offers and banking facilities and management of the Group’s liabilities in accordance with the policies and directives of the Board. In addition, the FIC reviews and approves guarantees, letters of comfort and letters of awareness, and approves consultancy fees, capital expenditure and write-off of irrecoverable debts in accordance with the Singtel Board’s policies and directives.
The FIC also oversees any on-market share repurchases pursuant to Singtel’s share purchase mandate.
The AC comprises at least three Directors, all of whom shall be non-executive Directors and the majority of whom, including the chairman, shall be independent Directors. At least two members of the AC, including the AC chairman, must have recent and relevant accounting or related financial management expertise or experience. As required by the terms of reference of the AC, the chairman of the AC is a Director other than the Chairman of the Board. The AC members are all non-executive Directors, and the majority of the members, including the chairman, are independent.
The AC has explicit authority to investigate any matter within its terms of reference, and has the full cooperation of and access to Management. It has direct access to the internal and external auditors, and full discretion to invite any Director or executive officer to attend its meetings.
The main responsibilities of the AC are to assist the Board in discharging its statutory and other responsibilities relating to internal controls, financial and accounting matters, compliance, and business and financial risk management.
The AC reports to the Board on the results of the audits undertaken by the internal and external auditors, the adequacy of disclosure of information, and the appropriateness and quality of the system of risk management and internal controls. It reviews the quarterly and annual financial statements with Management and the external auditors, reviews and approves the annual audit plans for the internal and external auditors, and reviews the internal and external auditors’ evaluation of the Group’s system of internal controls.
The AC is responsible for evaluating the cost-effectiveness of audits, the independence and objectivity of the external auditors, and the nature and extent of the non-audit services provided by the external auditors to ensure that the independence of the external auditors is not compromised. It also makes recommendations to the Board on the appointment or re-appointment of the external auditors. In addition, the AC reviews and approves the Singtel Internal Audit Charter to ensure the independence and effectiveness of the internal audit function. At the same time, it ensures that the internal audit function is adequately resourced and has appropriate standing within Singtel. The AC also reviews the performance of Internal Audit, including the performance and compensation of the Group Chief Internal Auditor.
During the financial year, the AC reviewed the Management’s and Singtel Internal Audit’s assessment of fraud risk and held discussions with the external auditors to obtain reasonable assurance that adequate measures were put in place to mitigate fraud risk exposure in the Group. The AC also reviewed the adequacy of the whistle-blower arrangements instituted by the Group through which staff and external parties may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. All whistle-blower complaints were reviewed by the AC at its quarterly meetings to ensure independent and thorough investigation and adequate follow-up.
The AC met four times during the financial year. At these meetings, the Group CEO, Group CFO, Vice President (Group Finance), Group Chief Internal Auditor and the respective CEOs and CFOs of the businesses were also in attendance. During the financial year, the AC reviewed the quarterly financial statements prior to approving or recommending to the Board, as applicable, that such statements be released. It reviewed the results of audits performed by Singtel Internal Audit based on the approved audit plan, significant litigation and fraud investigations, Singtel’s register of interested person transactions and non-audit services rendered by the external auditors. The AC also met with the internal and external auditors, without the presence of Management, during the financial year.
The external auditors provided regular updates and periodic briefings to the AC on changes or amendments to accounting standards to enable the members of the AC to keep abreast of such changes and its corresponding impact on the financial statements, if any.
The role of the RC is to assist the Board in fulfilling its responsibilities in relation to governance of material risks in the Group’s business. These responsibilities include ensuring that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the Group’s assets, and determining the nature and extent of the material risks which the Board is willing to take in achieving the Group’s strategic objectives.
The RC comprises at least three members, the majority of whom, including the chairman, shall be independent. Members of the RC shall be appointed by the Board, on the recommendation of the CGNC. There shall be at least one common member between the RC and the AC.
The RC shall review the Group’s strategy, policies, framework, processes and procedures for the identification, measurement, reporting and mitigation of material risks in the Group’s business and shall report any significant matters, findings and recommendations in this regard to the Board.
The RC shall meet at least three times a year, with additional meetings to be convened as deemed necessary by the chairman of the RC.
The ERCC plays an important role in helping to ensure that the Group is able to attract, recruit, motivate and retain the best talents through competitive remuneration and progressive and robust policies so as to achieve the Group’s goals and deliver sustainable shareholder value.
The ERCC comprises at least three Directors, all of whom shall be non-executive and the majority of whom shall be independent. The ERCC is chaired by an independent non-executive Director.
The main responsibilities of the ERCC, as delegated by the Board, are to oversee the remuneration of the Board and Senior Management. It sets appropriate remuneration framework and policies, including long-term incentive schemes, to deliver annual and long-term performance of the Group.
The ERCC has been tasked by the Board to approve or recommend to the Board the appointment, promotion and remuneration of Senior Management. The ERCC also recommends the Directors’ compensation for the Board’s endorsement. Directors’ compensation is subject to the approval of shareholders at the AGM. The ERCC’s recommendations covers all aspects of remuneration for Directors and Senior Management, including but not limited to Director’s fees, salaries, allowances, bonuses, options, share-based incentives, management awards, and benefits-in-kind.
The ERCC seeks expert advice and views on remuneration and governance matters from both within and outside the Group as appropriate. The ERCC draws on a pool of independent consultants for diversified views and specific expertise. The ERCC will ensure that existing relationships, if any, between the Group and its appointed remuneration consultants will not affect the independence and objectivity of the remuneration consultants.
The ERCC approves or recommends termination payments, retirement payments, gratuities, ex-gratia payments, severance payments and other similar payments to Senior Management. The ERCC ensures that contracts of service for Senior Management contain fair and reasonable termination clauses which are not overly generous.
The ERCC also ensures that appropriate recruitment, development and succession planning programmes are in place for key executive roles with the objective of building strong and sound leadership bench strength for long-term sustainability of the business. The ERCC conducts, on an annual basis, a succession planning review of Senior Management.
The Group CEO, who is not a member of the ERCC, may attend meetings of the ERCC but does not attend discussions relating to her own performance and remuneration.
Singtel’s remuneration policy and remuneration for Directors and Senior Management are discussed in this report here.
The CGNC comprises at least three Directors, the majority of whom, including the chairman, shall be independent.
The main functions of the CGNC are outlined in the commentaries on “Board Composition, Diversity and Balance”, “Board Membership” and “Board Performance”. The CGNC is also responsible for the development and review of Singtel’s corporate governance principles and practices, taking into account relevant local and international developments in the area of corporate governance.
The OAC comprises at least three Directors, the majority of whom shall be non-executive Directors. The Committee reviews strategic business issues relating to the Australian business.
In addition to the six Board Committees, Singtel has a Management Committee that comprises the Group CEO, CEO Group Consumer, CEO Group Digital L!fe, CEO Group Enterprise, Group CFO, Group Chief Information Officer and Group Director Human Resources. The Management Committee meets every week to review and direct Management on operational policies and activities.
The Management Committee meets every week to review and direct Management on operational policies and activities.