StarBiz: In what is seen as the first high-profile removal of the head of a government-linked company, Sime Darby Bhd's board of directors has asked its president and group chief executive Datuk Ahmad Zubir Murshid to take a leave of absence prior to the expiry of his contract on Nov 26, 2010.
Sime Darby chairman Tun Musa Hitam said at a press conference yesterday afternoon that Zubir's leaving was in connection with the cost overruns that the group's energy and utilities division had suffered in carrying out projects in Qatar and the Bakun hydro-electric dam.
Datuk Azhar Abdul Hamid, currently head of Sime Darby Plantations, has been appointed as acting group chief executive.
Sime Darby also said it would take a hit of RM964mil in its second half earnings from losses from its energy division.
|Primary Purpose|| |
The Board of Directors has primary responsibility for the governance and management of the Company, and fiduciary responsibility for the financial health of the Company.
In line with the Best Practices of the Malaysian Code of Corporate Governance, the Board of Directors has the following responsibilities:
Review and approve the annual corporate plan for the Group, which includes the overall corporate strategy, business development and marketing plan, human resources plan, IT plan, financial plan, budget, regulatory plan and risk management plan
Review and approve strategic initiatives including corporate business restructuring or streamlining and strategic alliances
Oversee the conduct of the Group's businesses to evaluate whether the businesses are being properly managed
Identify principal risks and ensure the implementation of appropriate systems to manage these risks
Approval on nomination, selection, compensation and succession policies for the Management Committee members, Board Committee members and Consultative Panel members and the annual manpower budget for the Group, including managing succession planning, appointing, training, fixing the compensation of, and where appropriate replacing senior management
Develop and implement an 'investor relations programme' or 'shareholder communications policy' for the Group
Review the adequacy and integrity of the Group's internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines (including Listing Requirements, Securities Laws and Companies Act)
Review and approve the Financial Statements encompassing annual audited accounts and quarterly reports, dividend policy, credit facilities from financial institutions and guarantees
Review and approve the Audit Committee Report and Internal Control Statement for the Annual Report
Review and approve the Annual Regulatory Report prepared in accordance with Section 16 of the CMSA
Prepare a Corporate Governance Statement on compliance with the Malaysian Code of Corporate Governance for the Annual Report
Review and approve investment policies and guidelines for the Company's surplus funds, asset allocation policy and policy on exposure limits on investment with banking institutions
Review and approve the capital expenditure, purchase of fixed assets, operating expenditure, variation order and any other matters in accordance with the Authority Limits Document
Approval on appointment of external auditors and their related audit fees
I applaud the board of Sime Darby, its a big decision but what is more interesting is that this development is viewed by investors as out-of-the-norm. We should be seeing boards taking more proactive decisions like this. We have had reams of articles and high level meetings on corporate governance, and it would take a misguided person who believe that the majority of board of directors of listed companies on Bursa are truly carrying out their duties, and have teeth. I dare anyone to prove to me otherwise.
All listed companies should do an internal evaluation of the "strength and independence" of their board of directors. As we have many family owned companies on Bursa, many of these boards may still be beholden to the owners of the companies. More importantly, the independent directors may not be as "independent" as the word would suggests.
Do we have a body that oversees the performance of directors, in particular, the independent directors? I think the SC has that role. There are plenty of companies rolling into PN17, and seriously, I think the independent directors could have been more vigilant in many cases. A company does not run itself to the ground overnight. If you look at the the roles and responsibilities stated above, I wonder how many are truly carrying out the tasks properly.
I still think there is plenty of room for improvement. I think especially for those family owned companies in particular. If there is stricter enforcement and regular "request for independent directors to clarify and explain" from SC, I think we will see a tremendous culture change. We need boards to be empowered as they are really supposed to look out for things on behalf of minority shareholders. Confidence in the impartiality of directors is paramount, especially for independent directors.