THE BOARD’S CONDUCT OF AFFAIRS
The Board’s Role
The Board has oversight of the business performance and affairs of the Group.
The Board leads, directs and works closely with Management, with a view to the long-term success of the various businesses of the Group.
The Board takes on the following key roles and responsibilities:
- Provide entrepreneurial leadership and guidance to Management and steer the Group through its strategy and corporate plan;
- Ensure that the necessary financial and human resources are in place for the Group to meet its objectives;
- Establish a framework of prudent and effective controls which enables risks to be assessed and managed in order to safeguard shareholders’ interests and StarHub’s assets. This framework is supported by clear and robust procedures and delegated authorities;
- Regularly review the performance of Senior Management and the remuneration framework of the Board and Senior Management;
- Review and approve key operational and business initiatives, major funding and investment proposals, acquisitions and divestments;
- Recognise that the perceptions of key stakeholder groups affect StarHub’s reputation, identify the key stakeholder groups (which include customers, suppliers and business partners) and guide Management in StarHub’s strategy and approach in addressing the concerns of these key stakeholder groups;
- Set StarHub’s values and standards (including ethical standards), to ensure that the Group’s obligations to shareholders and stakeholders are well-understood and duly met;
- Provide guidance on the social, ethical and environmental impact of the Group’s activities and monitor compliance with StarHub’s sustainability policies and practices; and
- Ensure the Group’s compliance with all relevant laws and regulations.
The Board and individual Directors are obliged to act in good faith and consider the best interests of StarHub and all its shareholders at all times.
The Board has established a framework on authorisation and approval limits for capital and operating expenditure, as well as specified transactions including acquisitions and disposals of investments, procurement of goods and services, bank facilities and cheque signatories. Within this framework, the Board has set relevant authority and approval sub-limits for delegation to various Management levels to optimise operational efficiency.
Board Committees The Board has established the following Board committees (Board Committees) to facilitate the discharge of its functions:
- the Audit Committee (AC);
- the Strategy Committee (SC);
- the Nominating Committee (NC);
- the Executive Resource and Compensation Committee (ERCC); and
- the Risk Committee (RC).
The composition of the Board Committees and their specific responsibilities are set out in the later sections of this Report. The Terms of Reference of the respective Board Committees are available on the StarHub Investor Relations (IR) website.
Additional Board committees may be formed to undertake specific duties if necessitated by business requirements.
The Board delegates specific areas of responsibilities to each Board Committee. Each Board Committee is required to operate and make decisions on matters within its terms of reference and applicable limits of authority.
The Board reviews the decisions made by each Board Committee regularly. The respective Chairman of each Board Committee updates the Board at Board meetings, in relation to key matters raised and/or decisions made at the last-held meeting of the respective Board Committees. For any matter which requires the Board’s approval, the Board Committees would recommend the course of action to the Board for its consideration and decision. Minutes of the meetings of the AC, the SC, the NC and the RC are also circulated to the Board for its information, while the minutes of the meetings of the ERCC are available to the Directors on request.
For FY2016, the Board held a total of five meetings. In keeping with past practice, a full-day Board Strategy offsite was held to conduct an in-depth review of the Group’s strategy going forward and to consider the Group’s budget for the upcoming financial year.
Throughout the financial year, as and when deemed necessary by the Board, additional Board meetings may be convened to consider urgent proposals or matters that require the Board’s review and approval.
StarHub’s Constitution allows Board meetings to be held via audio and video conferencing to facilitate the Board’s decision-making process.
Board meetings for the upcoming financial year are scheduled in advance before the end of the current financial year so that the Directors are able to plan ahead and attend the upcoming financial year’s Board meetings according to the respective meeting schedules.
The number of Board and Board Committee meetings held in FY2016 and the attendance of the Directors at these meetings as well as the Annual General Meeting (AGM) and the Extraordinary General Meeting (EGM) held in FY2016 are tabulated below:
Board Orientation and Continual Training & Development
StarHub has a comprehensive induction programme for all newly-appointed Directors that is specifically tailored for the Group’s business and operations.
Management conducts briefings for newly-appointed Directors to familiarise them with the Group’s business activities, strategic directions, financials, policies and governance practices, as well as StarHub’s corporate culture and the key developments in the Group and industry. The induction programme also includes meetings with the CEO and Senior Management.
To ensure that all Directors have relevant information and up-to-date working knowledge of the Group’s business and operations, each Director is issued with a tablet which enables him or her to access the StarHub Board Portal.
The StarHub Board Portal is specifically designed to provide information in accordance with the principles and guidelines of the Code including:
- information on Directors’ duties and how to discharge those duties;
- the contact details of the Board and Senior Management;
- the terms of reference of the respective Board Committees; and
- the insider trading policy and Directors’ share trading policy of StarHub.
The Board encourages the Directors to continually develop and refresh their knowledge and skills, and keep themselves abreast of relevant developments in the Group’s business and the regulatory and industry-specific environments in which the Group operates. The Company Secretary facilitates the arrangement of internal briefings as well as external seminars and trainings for the Directors (including those conducted by StarHub’s panel of law firms and the Singapore Institute of Directors in conjunction with the SGX-ST). In addition, the Company Secretary and members of Senior Management also provide regular updates to keep the Directors abreast of relevant developments, including:
- updates on key legal, regulatory, industry and accounting changes which affect the Group, given during Board meetings or via email; and
- articles and reports (including industry news and analyst reports) relevant to the Group’s business, regularly circulated to the Directors and uploaded onto the StarHub Board Portal for their reference.
In addition, the Directors are free to conduct independent or collective discussions with Management and subject matter experts on any area of interest or concern. Where needed, operational site visits are organised to enable the Directors to have a clear understanding of issues faced by the Group.
BOARD COMPOSITION AND GUIDANCE
Currently, the Board comprises 11 Directors. During FY2016, Mr Robert J. Sachs stepped down from the Board as an independent Director on 30 December 2016, after having served on the Board for 11 years. After the end of FY2016, Mr Peter Seah Lim Huat and Mr Sio Tat Hiang stepped down from the Board as non-executive Directors on 1 January 2017, after having served on the Board for 14 years and 4 years respectively. The Board thanks Mr Sachs, Mr Seah and Mr Sio for their past service and invaluable contributions to the Group.
As part of StarHub’s ongoing renewal of the Board, Mr Stephen Geoffrey Miller was appointed to the Board as a non-executive Director, the RC Chairman, a SC member and an ERCC member in January 2017. The following changes to the Board also took effect in January 2017:
- Mr Steven Terrell Clontz was appointed as a NC member;
- Mr Ma Kah Woh, an independent Director, was appointed as a RC member;
- Mr Peter Seah Lim Huat stepped down from the Board and ceased to be the NC Chairman and the ERCC Chairman (as well as a NC member and an ERCC member);
- Mr Teo Ek Tor, an independent Director, was appointed as the ERCC Chairman, succeeding Mr Peter Seah Lim Huat. Mr Teo also ceased to be the RC Chairman (and a RC member);
- Mr Sio Tat Hiang stepped down from the Board and ceased to be a NC member, an ERCC member and a RC member; and
- Ms Rachel Eng Yaag Ngee, an independent Director, was appointed as the NC Chairman, succeeding Mr Peter Seah Lim Huat.
Mr Tan Tong Hai, the Group CEO, remains the sole executive Director on the Board.
The independent Directors on the Board are Mr Ma Kah Woh, Mr Nihal Vijaya Devadas Kaviratne CBE, Ms Rachel Eng Yaag Ngee, Mr Teo Ek Tor and Mr Liu Chee Ming, representing more than one-third of the Board. The Chairman, Mr Steven Terrell Clontz, is not an independent Director within the meaning of the Code given his executive position at Singapore Technologies Telemedia Pte Ltd.
The individual profile of the Directors and all principal directorships and chairmanships in any listed companies held by the Directors currently and in the preceding three years, are found in the ‘Board of Directors’ and ‘Directors’ Particulars’ sections of the Annual Report.
The NC rigorously reviews the independence of each non-executive Director annually, particularly those who have served more than nine years. As at 1 January 2017, three independent Directors, namely Mr Nihal Vijaya Devadas Kaviratne CBE, Mr Teo Ek Tor and Mr Liu Chee Ming, have served on the Board for more than nine years. The NC recommends, and the Board takes the view, that the key consideration in ascertaining the effectiveness of a Director’s independence is his ability to exercise independence of mind and objectivity of judgement to act honestly and in the best interest of the Group. When assessing objectivity and independent judgement, the NC and the Board consider, inter alia, the approach, character and attitude of each nonexecutive Director, including whether such Director:
- is free from any interest and any business or other relationship which could, or could reasonably be perceived to, interfere with the exercise of the Director’s independent business judgement with a view to the best interests of the Group; and
- has any material contractual relationship with the Group other than as a Director.
After careful rigorous review, the NC recommends, and the Board is of the firm view, that Mr Nihal Vijaya Devadas Kaviratne CBE, Mr Teo Ek Tor and Mr Liu Chee Ming have each demonstrated the essential independence of mind and objectivity of judgement to act honestly and in the best interests of the Group in the discharge of their Directors’ duties, and therefore considers them to be independent.
Any Director who has an interest or relationship which is likely to impact on his/her independence or conflict with a subject under discussion by the Board is required to immediately declare his/her interest or relationship to the Board, remove himself/herself from the information flow, and abstain from participating in any further discussion or voting on the subject matter.
Interested person transactions (IPTs) entered into by any of the entities in the Group are governed by the Shareholders’ Mandate for Interested Person Transactions as approved by shareholders each year at StarHub’s EGM, as well as the disclosure and shareholder approval requirements under Chapter 9 of the SGX-ST Listing Manual. Review procedures have been established by StarHub to ensure that all IPTs are undertaken on an arm’s length basis and on normal commercial terms, and are not prejudicial to the interests of StarHub and its minority shareholders. Under the review procedures, the IPT terms and pricing are to be (a) consistent with StarHub’s usual business practices and policies and no more favourable to the interested persons than those extended to unrelated third parties; and (b) fair and reasonable. StarHub will also consider factors such as specification compliance, track record, experience and expertise, as well as preferential rates/discounts for bulk purchase. An authorised senior officer who does not have any conflict of interest in relation to the IPT will determine whether the price and terms are fair and reasonable.
Where possible, competitive quotations or tenders for purchase transactions are procured.
In FY2016, there were no IPTs or related party transactions that can be classified as financial assistance to entities other than StarHub’s whollyowned subsidiary companies as well as associated company, SHINE Systems Assets Pte. Ltd..
StarHub does not provide loans to Directors as a matter of corporate policy and therefore no loans have been provided by StarHub to the Directors in FY2016.
The Board, through the NC, annually examines its size and composition to ensure its overall effectiveness. Given the scope and nature of the Group’s operations, the Board is of the view that its current size of 11 is conducive and facilitates effective decision-making.
In this regard, the Board has also taken into account the complexity and requirements of the Group’s business.
The Board consists of Directors who are business leaders and professionals of high calibre and integrity. They possess a broad range of core competencies and experience in banking, accounting and finance, legal, regulatory, technical, business and industry knowledge, management and strategic planning experience, and customer-based experience and knowledge. The Board, as a group, constantly seeks to maintain an appropriate mix of expertise, experience (both local and international), knowledge, gender, culture and nationality. It encourages robust and quality deliberations among the Directors, and mitigates ‘group thinking’ in decision-making. The Board enjoys the unique contribution that each Director brings to the development of the overall strategy of the Group by way of alternative perspectives and fresh challenges during discussions. The immense network of contacts across the industries which such diversity provides has proven invaluable to StarHub.
The Chairman and Directors support the CEO in stakeholder engagements, including with shareholders, business partners and regulators.
In furtherance of their duties, the Directors are given access to independent professional advice at StarHub’s expense should they deem such advice necessary. At least once a year, non-executive Directors meet to discuss, inter alia, Management’s performance without the presence of Management.
CHAIRMAN AND CEO
In StarHub, there is a clear division in responsibilities between the leadership of the Board and Management. The Chairman and the CEO of StarHub are separate persons, ensuring an appropriate balance of powers, increased accountability and greater capacity for the Board to make independent decisions. No one individual holds considerable concentration of power within the Group.
The Chairman is Mr Steven Terrell Clontz, who is a non-executive Director and unrelated to the CEO. He:
- leads the Board to ensure its effectiveness on all aspects of its role;
- sets the agenda and ensures that adequate time is available for discussion of all agenda items, in particular strategic issues;
- promotes a culture of openness and constructive debate at the Board;
- ensures that the Directors receive complete, adequate and timely information. He works with the CEO in relation to the Board’s requirements for information in order to contribute effectively to the Board decision-making process;
- encourages effective communication with shareholders;
- encourages constructive relations within the Board and between the Board and Management. As the primary link between the Board and Management, he provides continuity between Board meetings and thereby oversees the effective implementation of the Board’s decisions;
- facilitates the effective contribution of non-executive Directors; and
- promotes high standards of corporate governance.
The CEO is Mr Tan Tong Hai. He leads the Management and is responsible for the day-to-day running of the Group’s business operations as well as the effective implementation of the Group’s strategies and policies.
The Board does not have a lead independent Director. The NC and the Board are of the view that the appointment of a lead independent director is not necessary as the Board has sufficient independence given that: (a) the Chairman and the CEO are separate persons; (b) the Chairman and the CEO are not family members; (c) the Chairman is not part of the Management team; and (d) the Directors are able to exercise objective and independent judgement.
StarHub has instituted a formal and transparent process for the selection, appointment and re-appointment of Directors to the Board. To this end, the Board has established the NC to lead and facilitate this process with written terms of reference that clearly set out its authority and duties.
Currently, the NC comprises the following non-executive Directors, who are independent of Management:
- Ms Rachel Eng Yaag Ngee, NC Chairman and independent Director (appointed to the NC with effect from 1 January 2017)
- Mr Steven Terrell Clontz, nonexecutive Chairman of the Board (appointed to the NC with effect from 1 January 2017)
- Mr Teo Ek Tor, independent Director During FY2016, the NC held 3 meetings.
The Board notes that Mr Steven Terrell Clontz is not considered independent within the meaning of the Code in view of his executive role at Singapore Technologies Telemedia Pte Ltd.
However, after due consideration, the Board and the NC are of the view that his appointment does not interfere with the exercise of his independent judgement on the Board or prevent him from acting objectively in the best interests of the Group in carrying out his duties. The Board and the NC further note that Mr Clontz is not involved in the day-today running of the Group’s business and operations, and is independent of Management, with a clear separation of role between Management and the deliberations of the NC.
In proposing a Director as a candidate for appointment or re-election, the NC considers several factors, including the composition, the diversity and the need for progressive renewal of the Board, each candidate’s competencies, commitment, contribution and performance (including attendance, preparedness, participation and candour) as well as potential conflicts of interest. This is to ensure that an appropriate balance of skills, experience, expertise and diversity is maintained on the Board, enabling the Board to stay engaged and agile in meeting the needs of the Group. External consultants are engaged to assist with the selection process if necessary. All new appointments to the Board are subject to the approval of StarHub’s regulator, namely the Info-communications Media Development Authority of Singapore.
In accordance with StarHub’s Constitution, all Directors who are appointed by the Board during the financial year are required to retire and stand for election by shareholders at the first AGM of StarHub after their appointment. The Code requires all Directors to retire and stand for re-election by shareholders at least once in every three-year period.
The NC reviews and considers the independence of each Director on an annual basis. If the NC considers that a Director is independent notwithstanding the existence of specific relationships or circumstances mentioned in the Code, it provides its view to the Board for the Board’s determination. The NC will consider factors such as the Director’s independent business judgement, objectivity, integrity and conduct in acting honestly in the best interests of the Group. Conversely, the NC has the discretion to consider that a Director is not independent even in the absence of specific relationships or circumstances mentioned in the Code, and will similarly provide its views to the Board for the Board’s determination. The NC has considered and is of the view that all the independent Directors are sufficiently independent and are able to objectively exercise their judgement in the best interests of the Group.
Directors with multiple board representations and/or other principal commitments (as defined in the Code) must ensure that they are able to devote sufficient time and attention to the affairs of StarHub to adequately carry out their duties as Directors of StarHub. The NC has reviewed the individual performance of each Director and is satisfied that all Directors have dedicated adequate time to the affairs of StarHub and have properly discharged their duties for FY2016, and will continue to do so in the financial year ending 31 December 2017. Although no maximum limit has been formally set by the Board on the number of listed company board representations a Director with multiple board representations may hold, the NC is of the view that the duties of all Directors have been fully discharged based on the time and attention devoted by each Director, their individual abilities and their respective individual contribution of skills, knowledge and experience and their commitment to the affairs of StarHub.
The Board does not have any alternate Directors. All Directors dedicate their personal time and attention to the affairs of StarHub.
StarHub believes that Board performance is ultimately reflected in the performance of the Group.
The NC has the responsibility of assessing the effectiveness of the Board as a whole, and the contribution of the Board Committees and each Director to the effectiveness of the Board.
For FY2016, the Board engaged the assistance of Aon Hewitt Singapore Pte Ltd (Aon Hewitt) as independent external consultants to facilitate the annual review of the performance of the Board and the Board Committees.
The review process identifies key issues pertaining to the effectiveness, efficiency and functioning of the Board and the Board Committees, in particular:
- the adequacy of the Board composition, including the Board size, the degree of Board independence and the mix and diversity of skills, experience and knowledge of the Board;
- information management and Board processes, including level and timeliness of information provided to the Board;
- integrity and corporate social responsibility of the Board;
- managing StarHub’s performance;
- the effectiveness of Board Committees;
- CEO performance and succession planning;
- Director’s training and development; and
- risk management.
As part of the evaluation process, detailed questionnaires were completed by each Director, with feedback on the key areas and individual interviews with each Director were carried out.
The annual review process facilitates consideration by the Board of its membership, including renewal considerations. The results of the performance evaluation exercise are collected, analysed and presented to the NC, in consultation with the Chairman. The NC reviews and recommends to the Board the followup actions required to strengthen the Board’s leadership so as to improve the effectiveness of the Board’s oversight of StarHub. Where appropriate, Management may also be involved in the review process, and will assist in implementing the necessary measures.
The awards and accolades that StarHub has received from the investment community are testament to sound corporate governance. In FY2016, StarHub was ranked eighth in the list of the world’s most sustainable company according to the 2016 Corporate Knights’ Global 100 index, and the significant awards received by StarHub include the Gold – Best Investor Relations Award (Companies with at least S$1 billion in market capitalisation) as well as the Winner – Most Transparent Company Award (Telecommunications and Utilities Category) in the Singapore Corporate Awards 2016 and the Merit – Singapore Corporate Governance Award (Big Cap Category) in the SIAS 17th Investors’ Choice Award.
ACCESS TO INFORMATION
At least three (3) business days prior to each Board and Board Committee meeting, Management provides the Directors with timely information that is relevant to matters on the agenda for the meeting, except for sensitive matters to be tabled at the meeting itself. All sensitive Board materials that are communicated electronically are password-protected to safeguard security. Throughout the financial year, the Board also receives monthly management and financial reports providing updates on key performance indicators and a financial analysis of the Group, and regular analysts’ reports and media articles on StarHub and the industry. Collectively, such reports enable the Directors to constantly keep abreast of key issues and developments in the industry as well as challenges and opportunities for the Group, thereby facilitating informed and sound decisions.
Independent of the information provided to the Directors as described above, Management is available at all times to answer any queries raised by the Directors. Frequent dialogue and interactions take place between Management and the Directors.
Consequently, the Directors are able to gain a deeper understanding of StarHub’s operations and information, allowing them to better strategise and guide StarHub in their role as Directors.
Furthermore, the StarHub Board Portal allows the Directors to securely access and read Board and Board Committee papers and materials electronically using tablet devices provided by StarHub at their convenience.
The Directors have separate and independent access to the Company Secretaries, who are trained in legal and company secretarial practices.
The Company Secretaries attend all Board meetings and are responsible for ensuring that board procedures are followed and that applicable rules and regulations are complied with. Under the direction of the Chairman, they facilitate good information flows within the Board and its Board Committees, between the Board and Management, and advise the Board on all legal and corporate governance matters. The Company Secretaries also facilitate the orientation of new Directors and assist in arranging professional development and training for the Directors as required.
The appointment and the removal of the Company Secretaries are subject to the Board’s approval.