MSM Malaysia Holdings Berhad Annual Report 2020

REMUNERATION REVIEW FOR NON-EXECUTIVE DIRECTORS On 20 July 2020, Messrs. KPMG Management & Risk Consulting Sdn Bhd (“KPMG MRC”) was engaged to undertake a high level review and perform an in-depth benchmarking on MSM Non-Executive Directors’ (“NED”) remuneration structure (“Review”) which is timely as the revision of the remuneration policy has been overdue. The Directors Remuneration Policy was last reviewed and revised on 23 August 2016. The objective of the engagement is to assist the Board in establishing a transparent and robust remuneration framework for Non-Executive Directors that takes into account the demands and complexities of MSM as well as the skills and experience required of the Non-Executive Directors. The kick-off meeting was held with the Company Secretary on 21 July 2020 and KPMG MRC has completed the fieldwork for the Review approximately within four weeks from the date of the appointment. In undertaking this Review exercise, KPMG MRC performed macro/market analysis, sectorial analysis and comparator analysis for which the identified comparators have been determined by KPMG MRC in consultation with MSM. The said analyses were performed with a view of understanding the quantum and composition of remuneration that can serve as a benchmark for MSM in making enhancements to the prevailing remuneration framework of its Non-Executive Directors. KPMG MRC presented the final report to NRC on 2 September 2020 and subsequently to the Board on 23 November 2020 where at this Board meeting, KPMG was requested to undertake an extended scope of work to review additional recommendations highlighted by the Board on the remuneration review whilst taking into account the initial findings which have surfaced from the native remuneration review analysis that was presented. The extended work commenced in late January 2021 and completed in mid-February 2021. The final report was presented to the NRC on 15 March 2021 and subsequently approved by the Board. The revised remuneration structure will be tabled at MSM’s 10 th AGM for Shareholders’ approval, and if approved, it will be implemented accordingly based on the details of the remuneration disclosed in the AGM notice. The outcome of the BEA 2019/2020 concluded that: • There are promising signs of improved Board dynamics, quality of the discourse, oversight and direction following the Board refreshment exercise in May 2020. There is a general consensus that the better mix of skills and capabilities have enhanced the Board effectiveness and would ultimately lead to improved MSM’s performance with a capable, experienced and well-respected Chair helming the Board. • The relationship and level of trust with Management has improved and could further improve over time with more engagement and physical interactions. • The leadership of the Board Committees have been strengthened and the recently appointed Independent Directors have exhibited a capacity for objectivity and impartiality which augurs well for MSM. They also bring with them with a high level of integrity and professionalism on their subject matter domain and knowledge. The BEA 2020 final report was presented to the Chairman of the Board and Chairman of the NRC in April 2021. The final report contains several observations and key recommendations centered mainly on improving strategic focus of Board agendas and meetings time management, Board processes and quality of Board information which the Board has approved for implementation to enhance Board’s effectiveness. The MSM Chairman had also completed the one-to-one sessions with each Director separately to discuss their respective Individual Directors Performance Report and development plans. To ensure Board performance is sustainable, the Board has agreed that actions and recommendations from this Board effectiveness assessment is implemented and monitored closely in order for the Board to move to the next stage of the Board maturity framework. Pursuant to Paragraph 15.20 of MMLR, the NRC also reviewed the performance of Audit, Governance and Risk Committee and concluded that the Audit, Governance and Risk Committee and its members have discharged their functions, duties and responsibilities in accordance with its TOR. MSM MALAYSIA HOLDINGS BERHAD Annual Repor t 2020 105 SUSTAINABILITY REPORT EFFECTIVE LEADERSHIP CORPORATE GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION DETAILS OF THE ANNUAL GENERAL MEETING