THE BOARD’S CONDUCT OF AFFAIRS
The Board oversees the business performance and affairs of the StarHub Group (Group), and is collectively responsible for its long-term success. The Board leads, directs and works closely with Management to ensure the alignment of interests of the Board and Management with that of shareholders particularly, and with stakeholders more broadly.
The Board’s key roles and responsibilities are:
- Set StarHub’s values and standards (including ethical standards) and corresponding corporate culture, to ensure that our obligations to shareholders and stakeholders are well-understood and duly met;
- Provide proactive and focused leadership and guidance to Management and steer the Group through determining the appropriate strategy and enacting its corporate plan;
- Review and approve key operational and business initiatives, annual budgets, major funding and investment proposals, acquisitions and divestments;
- Establish a framework of prudent and effective controls supported by clear and robust procedures and delegated authorities, which enables risks to be assessed and managed in order to safeguard shareholders’ interests and StarHub’s assets;
- Ensure that the necessary financial and human resources are in place for the Group to meet its objectives;
- Ensure regular and transparent communications with shareholders and guide Management to manage relationships with identified key stakeholder groups (which include staff, customers, suppliers and business partners);
- Regularly review the performance of Management and the remuneration framework of the Board and Management, and perform succession planning for the Board and Management;
- Consider sustainability in steering the Group’s strategy and corporate plan, and ensure compliance with environmental, social and governance (ESG) factors; and
- Ensure the Group’s compliance with all relevant laws and regulations (including legal, regulatory and financial compliance), ethical standards and the implementation of related processes and policies, and ensure proper accountability.
The Board has established a framework on approval and authorisation 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 approval and authority sub-limits for delegation to various Management levels to optimise operational efficiency when undertaking the day-to-day running of the business.
The Board and individual Directors act in good faith and make decisions objectively in the best interests of StarHub and all our shareholders.
The Chairman and the Directors support the Chief Executive and Management in stakeholder engagements, including with shareholders, business partners and regulators.
Access to Management, Advisers and Information
In furtherance of their duties, the Directors are given access, when necessary, to independent professional advice at StarHub’s expense. At least once a year, non-executive Directors (NED) meet to discuss, inter alia, Management’s performance without the presence of Management. In FY2020, a NED meeting and an independent Directors’ meeting were held, as chaired by the Chairman and the lead independent Director (ID) respectively.
All Directors have direct access to the StarHub Board Portal, which allows the Directors to securely access and read Board and Board Committee materials electronically at their convenience. The Board Portal also provides relevant information and up-todate policies that will help them discharge their duties, including:
- Board meeting information and Board papers;
- Information on Directors’ statutory and other duties and responsibilities;
- Terms of Reference of the respective Board Committees;
- Insider trading policy and Directors’ share trading policy of StarHub securities; and
- Key industry news and analyst reports.
At least five business days prior to each Board or Board Committee meeting, Management provides the Directors with timely and relevant information pertaining to matters on the agenda, save for sensitive matters to be tabled at the meeting itself. All sensitive Board materials that are communicated electronically are encrypted with passwords to safeguard their security.
Quarterly reports by the Chief Executive on the state of the business, as well as regular analysts’ reports and media articles on StarHub and the industry, are circulated to the Board for their information. In respect of the Group’s budgets, any material variance between projections and actual results are disclosed and explained. Other related business reports and updates are also provided to the Board regularly and upon request by the Board. Collectively, this enables the Directors to keep abreast of key issues and developments in the business and the industry as well as challenges and opportunities for the Group, thereby facilitating sound decisions.
Management is available at all times to answer any queries raised by the Directors and to provide additional information as needed. 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 related information, allowing them to better focus, strategise and guide StarHub in their role as Directors.
Delegation to Board Committees
The Board has constituted the following principal Board Committees to assist the Board in the discharge of its functions.
Note: Composition reflected is as at 9 March 2021.
The composition of the Board Committees and their specific responsibilities and authority are set out in the relevant sections of this report. Each committee has clear written Terms of Reference setting out its composition, authorities and duties, which are available on the StarHub Investor Relations (IR) website. A Board Committee is required to operate and make decisions on matters within its Terms of Reference.
Additional Board Committees may be formed to undertake specific duties if necessitated by business requirements. Upon receipt of Mr Peter Kaliaropoulos’ letter of retirement as Chief Executive in July 2020, an ad-hoc Board Executive Committee (Board ExCo), chaired by Mr Stephen Geoffrey Miller, was established to provide close support to Management during the Chief Executive transition period. The Board ExCo comprised Mr Miller, Mr Steven Terrell Clontz, Mr Nihal Vijaya Devadas Kaviratne CBE and Ms Nayantara Bali. It was subsequently dissolved on 1 April 2021 after Mr Nikhil Eapen was appointed as Chief Executive on 1 January 2021.
The Board Committee Chairmen provide updates to the Board at Board meetings, on key matters discussed and / or decisions made at the last-held meeting of each Board Committee. For matters which require the Board’s approval, the Board Committees would also recommend the course of action to the Board for its consideration and decision. Minutes of the Board Committee meetings are made available to the Board for its information.
Board and Board Committee meetings for the upcoming financial year are scheduled in advance before the end of the current financial year to enable Directors to plan ahead and attend the meetings according to the respective meeting schedules.
For FY2020, the Board held a total of 6 meetings, including the annual Board Strategy meeting to review and discuss in detail the Group’s strategic direction, and to consider the Group’s budget for the upcoming financial year. It provided a key opportunity to discuss, challenge and develop the Group’s strategy, alongside Management. Additional Board meetings were also convened to consider urgent proposals or matters which required the Board’s approval. In view of the COVID-19 situation, all Board and Board Committee meetings for FY2020 were held using video-conferencing facilities, as allowed under StarHub’s Constitution, to facilitate the decision-making process.
Directors’ attendance at Board and Board Committee meetings, the Annual General Meeting (AGM) and the Extraordinary General Meeting (EGM) held in FY2020, is set out in the table below:
Table 1 (Directors’ Attendance at Board/General Meetings During FY2020)
Board Orientation and Continual Training & Development
All newly-appointed Directors participate in a comprehensive orientation programme that is bespoke for the Group’s business and operations, including the opportunity to meet with the Chief Executive and Management, to be given an overview of the Group’s business activities, strategic directions, financials, policies, governance practices, corporate culture as well as key regulatory, legal and industry developments which affect the Group. The Company Secretaries assist to facilitate the newly appointed Directors’ understanding of their Board and Board Committee membership details, director fees, statutory and other duties and responsibilities. Arrangements are also made for newly-appointed Directors without prior experience as a director of a listed company on the SGX-ST, to undergo mandatory training conducted by the Singapore Institute of Directors on their roles and responsibilities.
The Board recognises that ongoing professional development is important for the Directors to serve effectively and contribute to the Board. The Directors are encouraged to continually develop and refresh their professional knowledge and skills, and to keep themselves abreast of relevant developments in the Group’s business and the regulatory and industry-specific environments in which the Group operates. To this end, the Company Secretaries arrange internal briefings as well as external seminars for the Directors. In addition, the Company Secretaries and members of Management also provide regular updates to the Directors during Board meetings, as well as through emails and the StarHub Board Portal, on key industry, technology, legal, regulatory and accounting updates which affect the Group. In FY2020, the professional development programmes attended by the Directors included the following:
- Temasek Trust Conversation 2020; and
- Stewardship & Sustainability: Moving from Intent to Impact.
In addition, the Directors are free to conduct independent or collective discussions with Management and subject matter experts on any areas of interest or concern.
The Directors have separate and independent access to the Company Secretaries, who are qualified lawyers and trained in company secretarial practices. The Company Secretaries administer, attend and prepare minutes of all Board and Board Committee meetings (except for the ERCC) and are responsible for ensuring that board procedures are adhered to, and that the Group’s Constitution and applicable laws and regulations are complied with. Under the direction of the Chairman, they advise the Board on all legal and corporate governance matters, and facilitate good communication within the Board and Board Committees, as well as between the Board and Management. The Company Secretaries are the primary channel of communication between StarHub and the SGX-ST and the Accounting and Corporate Regulatory Authority (ACRA). They also facilitate the orientation of new Directors and assist in arranging training for the Directors. The appointment and removal of the Company Secretaries are subject to the Board’s approval.
BOARD COMPOSITION AND GUIDANCE
Board Size, Composition and Diversity
The Board comprises 12 NEDs, half of whom are IDs from 1 September 2020. From 1 January 2020 to 31 August 2020, the Board comprised a majority of IDs. The change was due to the re-designation of Mr Teo Ek Tor as non-independent NED of StarHub, upon his appointment as non-executive Chairman of ST Telemedia. Prior to that, Mr Teo had been an ID of StarHub since 2004. From 1 May 2021, the Board will comprise a majority of IDs.
The Chairman of the Board, Mr Steven Terrell Clontz, is not regarded an ID within the meaning of the Code and SGX-ST Listing Rule 210(5)(d)(i), given his executive position at ST Telemedia.
The Board, through the NGC, reviews the size and composition of the Board annually to ensure its overall effectiveness. Given the scope and nature of the Group’s operations and considering the complexity and requirements of the Group’s business, the Board is of the view that its current size of 12 is conducive and facilitates effective discussion and decision-making.
The Board consists of Directors who are business leaders and professionals of high calibre and integrity, with a broad range of core competencies and experience in enterprise and banking, accounting and finance, investment, risk management, legal, regulatory, technology, cybersecurity, business and industry knowledge, management and strategic planning experience, as well as customer-based experience and knowledge. Collectively, the Board constantly seeks to identify areas of focus and maintain an optimal mix of expertise, experience (both local and international), knowledge and diversity of gender, age, background, geography and ethnicity. In this regard, the NGC has developed a skills matrix as one criterion for Director appointments, which is reviewed by the Board on an annual basis. In FY2020, the skills matrix was updated to include skills pertaining to innovation, challenging the norms, enabling technology, new agile ways of working and integrating sustainability into the business.
StarHub firmly believes that a well-balanced and diverse Board will contribute positively in overseeing the delivery of the Group’s strategy, bringing fresh perspectives and providing constructive challenges to Management. The immense network of contacts across various industries has proven invaluable to StarHub. Diversity is a key consideration in the appointment or re-election of Directors. Since FY2018, the Board has a 25% female representation on the Board. The continual Board refresh also reflects an improved age diversity, with Directors’ ages ranging from 47 to 77.
Lead Independent Director
The lead ID, Mr Nihal Vijaya Devadas Kaviratne CBE, is also the NGC Chairman, and has been serving as the lead ID since 1 October 2018. His role includes:
- Ensuring he is available to shareholders for consultation and direct communication, where they have concerns on matters where contact via the normal channels of the Chairman, the Chief Executive or the Chief Financial Officer (CFO) has failed to resolve or is inappropriate;
- Serving as a liaison between the Chairman and the IDs;
- Providing a channel to NEDs for confidential discussions on any concerns and to resolve conflicts of interest as and when necessary; and
- Having the authority to call for and lead meetings of IDs without the presence of Management and provide feedback to the Chairman as appropriate.
CHAIRMAN AND CHIEF EXECUTIVE
StarHub has a clear division in responsibilities between the leadership of the Board and Management. The Chairman and the Chief Executive are separate persons, ensuring an appropriate balance of powers, increased accountability and greater capacity for the Board to make independent decisions. No single individual has unfettered powers of decision-making within the Group.
The Chairman, Mr Steven Terrell Clontz, is a NED and unrelated to the Chief Executive. 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 open interaction and constructive debate at the Board level;
- Ensures that the Directors receive complete, adequate and timely information. He works with the Chief Executive in relation to the Board’s requirements for information in order to contribute effectively to the Board decisionmaking 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 all Board decisions;
- Facilitates the effective contribution of NEDs; and
- Promotes high standards of corporate governance.
The former Chief Executive, Mr Peter Kaliaropoulos, who retired on 31 October 2020, led the Management and had full executive responsibility 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. Mr Nikhil Eapen was appointed as the Chief Executive of StarHub with effect from 1 January 2021.
The NGC has been delegated responsibility to review and make recommendations to the Board regarding Board composition. It leads and facilitates the Director nomination process based on written Terms of Reference that set out its authority and duties.
Process and Criteria for New Board Appointment and Re-election
In proposing candidates for appointment or re-election as Directors, the NGC considers several factors, including (a) the composition, the diversity and the need for progressive renewal of the Board, (b) each candidate’s competencies, commitment, contribution and performance (including attendance, preparedness, participation and candour) and (c) potential conflicts of interest. This ensures that the Board composition reflects an appropriate mix having regard to skills, experience, expertise, diversity and independence, which enables the Board to stay engaged and agile in meeting the needs of the Group. External consultants can be engaged to assist with the selection process if necessary. All new appointments to the Board are also subject to the approval of StarHub’s industry regulator, the Infocomm Media Development Authority of Singapore.
In accordance with StarHub’s Constitution, all Directors who are appointed by the Board during the course of the financial year are required to retire and offer themselves for re-election by shareholders at the first AGM of StarHub after their appointment. In line with the Code and SGX-ST Listing Rule 720(5), StarHub also requires all Directors to retire and offer themselves for reelection by shareholders at least once every three years, if the Board, on the recommendation of the NGC, deems it appropriate that they remain in office.
The NGC assesses the independence of each Director annually, and as and when circumstances require. Evaluation of director candidates’ independence is an important factor for NGC’s annual review of the composition of the Board. To facilitate the assessment, StarHub has adopted an annual verification procedure on director independence, conflicts of interest, interested person transactions and other commitments that could compromise a Director’s independence. Directors are required to provide sufficient information for the evaluation of his/her independence, including their professional engagements, positions and directorships, and notify the Board of any changes in such information
Directors’ independence is assessed based on the independence criteria under the Code and SGX-ST Listing Rule 210(5)(d), as well as other factors and circumstances that may potentially affect the status or perception of a Director’s independence, in the overall evaluation from the standpoint of both StarHub and the Directors.
When assessing objectivity and independent judgement, the NGC and the Board consider, inter alia, the approach, character and attitude of each Director and the value each Director brings, 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;
- Has been employed by StarHub or any of our related corporations during the financial year in question or in any of the previous three financial years;
- Has an immediate family member who is employed or has been employed by StarHub or any of our related corporations for the past three financial years, and whose remuneration is determined by the ERCC; or
- Has any material contractual relationship with the Group other than as a Director.
The NGC also has the discretion to consider that a Director is not independent even in the absence of specific relationships or circumstances described in the Code and SGX-ST Listing Rule 210(5)(d), and similarly provides its views to the Board for the Board’s determination. The NGC has considered and is of the view that as of 31 December 2020, all the IDs are sufficiently independent and are able to objectively exercise their judgement in the best interests of the Group.
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.
Where a Director’s tenure exceeds nine years, their independence is carefully reviewed and monitored. As of 31 December 2020, one ID, namely Mr Nihal Vijaya Devadas Kaviratne CBE, has served on the Board for more than nine years. After careful rigorous review, the NGC recommends, and the Board is of the firm view that (a) Mr Kaviratne has 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 his Director’s duties, and (b) his independence is not compromised due to his long service history, and no other factors or circumstances have been identified that could impair his independence. Therefore, the NGC and the Board have considered Mr Kaviratne to be independent. Mr Kaviratne abstained from participating in the NGC and Board discussions and voting on his status of independence in view of his conflict of interest.
In compliance with the SGX-ST Rules (Transitional Practice Note 3 – Transitional Arrangements Regarding Code of Corporate Governance 2018), Mr Kaviratne’s continued appointment as an ID shall be sought for approval in separate resolutions at the upcoming AGM in the financial year ending 31 December 2021 (FY2021) by (a) all shareholders, and (b) all shareholders excluding shareholders who also serve as the Directors or Chief Executive (and their associates).
Board’s Time Commitment
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 NGC 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 in FY2020, and will continue to do so in FY2021. Although no maximum limit has been formally set by the Board on the number of listed company board representations a Director may hold, the NGC is of the view that all Directors have fully discharged their duties as Directors of StarHub based on the time and attention devoted by each Director, their individual abilities and their respective contribution of skills, knowledge and experience as well as 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 NGC has the responsibility of assessing the effectiveness of the Board as a whole, as well as the contribution of the Board Committees and each Director to the effectiveness of the Board.
For FY2020, the Board engaged the assistance of Aon Hewitt Singapore Pte Ltd (Aon) as independent external consultants to facilitate the annual evaluation of the performance of the Board and the Board Committees. The evaluation process identifies key issues pertaining to the effectiveness, efficiency and functioning of the Board and the Board Committees, in particular the following:
- Adequacy of the Board composition, including the Board size, the degree of Board independence, the mix and diversity of skills, experience, gender, knowledge and background of the Board and the Board’s diversity policy for board refresh;
- Information management and Board processes, including adequacy and timeliness of information provided to the Board, insights by industry experts, and appropriate thresholds for escalating information surrounding material strategic or operational issues to the Board;
- Sustainability & Environmental, Social and Governance (ESG), including appropriate consideration for a holistic view of material stakeholder and ESG objectives for StarHub’s long-term sustainability;
- Managing StarHub’s performance and the Board’s role in providing stewardship for the organisation and steering growth;
- Effectiveness of Board Committees and time spent on activities including strategy, execution and performance management;
- Chief Executive performance and succession planning;
- Director development and management, including training and evaluation; and
- Reviewing the Group’s risk management processes and addressing new or disruptive risks.
As part of the evaluation process, detailed questionnaires were completed by each Director, with feedback on the key areas.
One-on-one Director interviews are also conducted every two years.
The annual review process facilitates consideration by the Board of its membership, including renewal considerations. The
results of the evaluation are collected, analysed and presented to the NGC, in consultation with the Chairman. The NGC reviews
and recommends to the Board the follow-up actions required to strengthen the Board’s leadership in order 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.