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Send to friendThe Board informs the shareholders on the application of its corporate governance model for the financial year ended 30 June 2011, as set out hereunder.
In discharging its duties, the Board of Directors of Maybank is constantly mindful of the need to safeguard the interests of the Group’s shareholders, customers, and all other stakeholders. In order to facilitate the effective discharge of its duties, the Board is guided by the Board Manual (“Manual”), which provides reference for directors in relation to the Board’s role, powers, duties and functions.
The Manual reflects not only current best practices and the applicable rules and regulations, but also outlines processes and procedures to ensure the Group’s boards’ and their committees’ effectiveness and efficiency. It is a dynamic document to be updated from time to time to reflect changes to the Bank’s policies, procedures and processes as well as amended relevant rules and regulations, or to be reviewed at least once in two years, whichever is earlier.
The Board encourages the Group’s subsidiaries and associates’ boards to adopt similar manuals for their respective corporate entities.
The Manual comprises, amongst others, well defined terms of reference as well as authority limits for the Board and its committees, and the various relevant internal policies.
The chapters covered under the Manual are as follows:
(i) Group’s standard of business conduct
(ii) Directors’ duties and obligations
(iii) Appointment and resignation of Directors
(iv) Governance structure
(v) Board and board committee proceedings
(vi) Remuneration and benefits for Directors
(vii)Supply of information to the Board
(viii)Training and induction programmes
(ix) Annual Board assessment
(x) Conflict of interest and related party transactions
(xi) Other key policies of the Bank and the Group
The Board has the responsibility to periodically review and approve the overall strategies, business, organisation, and significant policies of the Bank and the Group. The Board also sets the Group’s core values and adopts proper standards to ensure that the Bank operates with integrity and complies with the relevant rules and regulations.
The Board has a formal schedule of matters reserved for its decision which include, amongst others, the following:
Other than as specifically reserved to the Board in the Board’s Terms of Reference, the responsibility of managing Maybank’s business activities is delegated to the President & Chief Executive Officer (“PCEO”) of the Bank, who is accountable to the Board.
The Board of Maybank currently comprises 12 Directors. Eight Directors are Independent Non-Executive Directors, three are Non-Independent Non-Executive Directors (nominees of Permodalan Nasional Berhad (“PNB”)) and one who is a Non-Independent Executive Director (the PCEO).
The current composition of the Board is in compliance with Chapter 15.02 of the Listing Requirements as more than half of its members are Independent Directors.
The Board is committed to ensure diversity and inclusiveness in its deliberations.
The Directors bring to the Board a wealth of knowledge, experience and skills in the key areas of accountancy, law, international business operations and development, finance and risk management, amongst others. A brief profile of each member of the Board is presented on pages 186 to 193 of this Annual Report.
The Board affirms that the selection of Directors is based on merit, and guided by the criteria outlined in the Group’s Policy on Fit and Proper Criteria for Appointment as Chairman, Directors and Chief Executive Officers of Licensed Institutions in Maybank Group (“Fit and Proper Policy”) as duly assessed by the Nomination and Remuneration Committee (“NRC”).
The current composition of the Board, with a high proportion of Independent Non-Executive Directors, ensures and provides strong and meaningful oversight over management. The composition also reflects the interest of the Bank’s majority shareholder which is adequately represented by the appointment of its nominee directors, balancing the interest of the minority shareholders. The Non-Executive Directors do not participate in the day-to-day management of the Bank and do not engage in any business dealing or other relationships with the Bank (other than in situations permitted by the applicable regulations) in order to ensure that they remain truly capable of exercising independent judgement and act in the best interests of the Group and its shareholders. Further, the Board is satisfied and assured that no individual or group of Directors has unfettered powers of decision that could create a potential conflict of interest.
The Non-Executive Directors of Maybank continue to proactively engage with senior management and other relevant parties such as the external/internal auditors as well as the Bank’s Compliance and Risk units, to ensure that the various concerns and issues relevant to the management and oversight of the business and operations of the Bank and the Group are properly addressed. The Board’s commitment to ensure good governance in its deliberation of key issues is evident with the introduction of “Board Time Without Management” as a permanent item in the monthly Board meeting agenda (at the end of each meeting).
BNM/GP1 further outlines that an Independent Non-Executive Director, amongst others, shall not have more than 5% equity interest in the licensed institution or in its related companies, or be connected to a substantial shareholder of the licensed institution. Currently, all of the Bank’s Independent Non-Executive Directors comply with this requirement.
In addition to the aforesaid requirements, the Board ensures that all Independent Non-Executive Directors possess the following qualities:
The Board considers that the eight Independent Non-Executive Directors (“NEDs”), namely Dato’ Mohd Salleh bin Hj Harun, Tan Sri Datuk Dr Hadenan bin A. Jalil, Dato’ Seri Ismail bin Shahudin, Dato’ Dr Tan Tat Wai, Dato’ Johan bin Ariffin, Mr Cheah Teik Seng, Mr Alister Maitland and Datuk Mohaiyani binti Shamsudin; meet the said requirements.
In line with best practices on corporate governance, Tan Sri Datuk Dr Hadenan bin A. Jalil continues to play his role as the Senior Independent Director (“SID”) of the Board to whom concerns of shareholders and stakeholders may be conveyed. He is responsible for addressing concerns that may be raised by the shareholders.
He can be contacted at his email address:
adenan.aj@maybank.com.my.
There is a formal and transparent procedure for the appointment of new Directors to the Board, the primary responsibility of which has been delegated to the Nomination and Remuneration Committee (“NRC”), formerly two separate Board Committees, namely the Nomination Committee and the Remuneration & Establishment Committee. The NRC comprises exclusively Non-Executive Directors, with its Chairman and the majority of whom are independent. This composition ensures that any decisions made are impartial and are in the best interest of the Bank. Guided by the Group’s Fit and Proper Policy (which has been implemented since August 2006) and in line with BNM/GP1, the NRC recommends to the Board suitable candidates for directorships and appointment of key senior management of the Bank and relevant subsidiaries. The NRC also ensures candidates satisfy the requisite skills and core competencies to be deemed fit and proper, and to be appointed as Director in accordance with the Fit and Proper Policy.
The Fit and Proper Policy outlines the attributes and qualifications required of a candidate to determine his/her suitability, amongst others, in respect of his/her management and leadership experience, which has to be at the most senior level in a reputable local or international financial services group, public corporation or professional firm/body. In respect of the candidate’s skills, expertise and background, the candidate should ideally and to the extent available, possess a diverse range of skills, including in particular, business, legal and financial expertise, professional knowledge and financial industry experience, as well as experience in regional and international markets.
In making the selection, the Board as assisted by the NRC also considers the following aspects:
(i) Probity, personal integrity and reputation – the person must have the personal qualities such as honesty, integrity, diligence, independence of mind and fairness.
(ii) Competence and capability – the person must have the necessary skills, ability and commitment to carry out the role.
(iii) Financial integrity – the person must manage his/her debts or financial affairs prudently.
The Fit and Proper Policy is also critical as a guiding mechanism to identify the gaps in skills of the composition of the Board. The Fit and Proper Policy outlines the requirement for Non-Executive Directors of Maybank who have reached the age of 70 and above, and those who have served the Board for 12 years or more to submit their resignation letters annually to the NRC six months before the Annual General Meeting (“AGM”), for appropriate recommendations to be made to the Board. The Board acknowledges the view of the Minority Shareholders Watchdog Group among others that an appropriate term for Independent Non-Executive Directors should not be more than nine years and may consider this in the next review of the Fit and Proper Policy. One director, Mr Alister Maitland, who turned 70 this year, has been recommended by the NRC and the Board to be re-appointed based on the need for his continued invaluable contribution to the Board and the Group, in light of his wide international experience as a former banker.
The Policy on the Nomination Process for the Appointment of Chairman, Director and CEO of Licensed Institutions in the Group (“Policy on Nomination Process”) sets out a clear and transparent nomination process on the same. The nomination process involves the following five stages:-
Upon the approval by the relevant boards in the Group, the application for the appointment of such candidates would thereafter be submitted to BNM for the requisite approval under the Banking and Financial Institutions Act, 1989 (BAFIA), Insurance Act 1996 and Takaful Act 1984, as the case may be.
The appointment process for Executive Directors would in essence include the identification process of potential candidates by a special committee of the Board based on the expectation of the roles and capabilities described and required by the Board. This is subsequently followed by a submission to the NRC for deliberation to be followed by the final recommendation to the Board for approval, and ultimately submission to BNM for approval.
All directors of the Bank, including the PCEO, are subject to re-election by the shareholders at their first opportunity after their appointment, and are subject to re-election at least once every three years in accordance with the Bank’s Articles of Association. Board support for a Director’s re-election is not automatic and is subject to satisfactory assessment of performance.
Directors who are due for re-election at the AGM will be first assessed by the NRC, which will then submit its recommendation to the Board for deliberation and approval. Upon obtaining the Board’s endorsement, the relevant submission including the justifications for such re-appointment is thereafter made to BNM for approval if the relevant director’s BNM’s term of appointment is expiring.
The Board has determined that the five Directors who are due for re-election and re-appointment at the forthcoming AGM have continued to perform in an exemplary manner as demonstrated by inter alia their contribution to the Board’s deliberations and have met the Board’s expectations.
Annually, the NRC provides a formal and transparent procedure for the assessment of the effectiveness of individual Directors, the Board as a whole and its committees, as well as the performance of the PCEO in respect of their respective skills and experience.
The Board and Peer Annual Assessment exercise is primarily based on answers to a detailed questionnaire prepared internally by Corporate & Legal Services of Maybank. The assessment questionnaire is distributed to all the respective Board members and covers topics which include, amongst others, the responsibilities of the Board in relation to strategic planning, risk management, performance management, financial reporting, audit and internal process, human capital management, corporate social responsibility, communication, corporate governance, and shareholders’ interest and value. Other areas being assessed include Board composition and size, the contribution of each and every member of the Board at meetings, the Board’s decision-making and output, information and support rendered to the Board as well as meeting arrangements.
The results of the Board and committee assessment are reviewed at the NRC and Board and actionable improvement programmes identified, which may include training needs of individual Directors, to be reviewed quarterly thereafter. The Chairman would discuss with individual members on the peer assessment whilst the Chairman of the NRC would discuss with the Chairman of the Board on the latter’s assessment results.
The Board has considered its composition and is satisfied with it to ensure an efficient and effective conduct of board deliberation pursuant to BNM/GP1. The current Board size enables the Board to discharge its function in a professional manner in consideration of the size, breadth and complexity of the Group’s business activities, domestically as well as internationally. Future changes to the Board may be made to enhance complementarity of skills or enable proper succession planning.
The Chairman always tries to ensure that the Board’s decisions are based on consensus (failing which, reflect the will of the majority), and any concern or dissenting view expressed by any Director on any matter deliberated at meetings of the Board or any of its Committees as well as the meeting’s decision, will accordingly be addressed and duly recorded in the relevant minutes of meetings.
In line with the best practices and to ensure appropriate supervision of the Management, the roles and responsibilities of the Chairman and the PCEO are separated with clear division of responsibilities, defined and documented as approved by the Board. This distinction allows for a better understanding and distribution of jurisdictional responsibilities and accountabilities. The clear hierarchical structure with its focused approach and attendant authority limits also facilitates efficiency and expedites informed decision-making.
Tan Sri Dato Megat Zaharuddin Megat Mohd Nor is the Chairman of Maybank. Prior to his appointment as the Chairman of Maybank on 1 October 2009, he was an Independent Non-Executive Director of Maybank from July 2004 until February 2009. He has never assumed an executive position in Maybank. Previously, he has also chaired two other public listed companies, namely Shell Refining Company Berhad and Maxis Communications Berhad.
The Chairman leads the Board and is also responsible for the effective performance of the Board. The Chairman continuously works together with the rest of the Board in setting the policy framework and strategies to align the business activities driven by the senior management with the Group’s objectives and aspirations, and monitors its implementation.
The Chairman ensures orderly conduct and proceedings of the Board, where healthy debate on issues being deliberated is encouraged to reflect an appropriate level of scepticism and independence.
The Chairman takes the lead to ensure the appropriateness and effectiveness of the succession-planning programme for the Board and senior management levels. He also promotes a healthy working relationship with the PCEO and provides the necessary support and advice as appropriate. He continues to demonstrate the highest standards of corporate governance practices and ensures that these practices are regularly communicated to the stakeholders.
Dato’ Sri Abdul Wahid bin Omar has been the PCEO and Executive Director of Maybank since May 2008.
As PCEO, he has been delegated certain responsibilities by the Board and is primarily accountable for overseeing the day-to-day operations to ensure the smooth and effective running of the Group. Furthermore, he is responsible for mapping the medium to longer term plans for Board approval, and is accountable for implementing the policies and decisions of the Board, as well as coordinating the development and implementation of business and corporate strategies, specifically by making sure that they are carried through to their desired outcomes, especially in the institution of remedial measures to address identified shortcomings. He is also responsible for developing and translating the strategies into a set of manageable goals and priorities, and setting the overall strategic policy and direction of the business operations, investment and other activities based on effective risk management controls.
The PCEO ensures that the financial management practice is performed at the highest level of integrity and transparency for the benefit of the shareholders and that the business and affairs of the Bank are carried out in an ethical manner and in full compliance with the relevant laws and regulations. His other responsibilities include ensuring that whilst the ultimate objective is maximising total shareholders return, social and environmental factors are not neglected, and also developing and maintaining strong communication programmes and dialogues with the shareholders, investors, analysts as well as employees, and providing the effective leadership to the Group organisation. He is also responsible for ensuring high management competency as well as the emplacement of an effective management succession plan to sustain continuity of operations. The PCEO, by virtue of his position as a Board member, also functions as the intermediary between the Board and senior management.
The Board meets every month with additional meetings convened as and when urgent issues and/or important decisions are required to be taken between the scheduled meetings. During the financial year ended 30 June 2011, the Board met 22 times to deliberate and consider a variety of significant matters that required its guidance and approval.
All Directors have complied with the requirement that Directors must attend at least 75% of Board meetings held in the financial year in accordance with BNM/GP1, and attended at least 50% of Board meetings held in the financial year pursuant to the Listing Requirements.
Additionally, three of the 22 Board meetings were held at regional offices located outside of Kuala Lumpur, to enable the members to visit the numerous operations centres not only to provide more effective oversight but also to better understand the Group’s operations and customer needs and issues as well as meet with the management and staff at Group and regional level at sessions and events organised in conjunction with the Board meetings.
The current practice of appointing Board members to sit on subsidiary boards, in particular the key overseas subsidiaries, is continued in order to maintain oversight and ensure the operations of the respective subsidiaries are aligned with the Group’s strategies and objectives.
During the financial year, a Board Offsite session was held on 25 November 2010 in Singapore, whereby the Board took the opportunity to discuss key matters in relation to its role in promoting organisational innovation and monitoring strategy execution, and initiatives to further enhance Board effectiveness and processes, as well as how the Board could work better with senior management to achieve shared goals.
Details of attendance of each Director on the Board and respective Board Committees during the financial year ended 30 June 2011 are as follows:
Note:-
1 Appointed as a member of the CRC with effect from 6 July 2010. Subsequently, he resigned as a member of the ACB and RMC with effect from 16 July 2010 and 22 October 2010.
2 Resigned as a member of the ACB with effect from 27 October 2010.
3 Appointed as a member of the ACB with effect from 27 October 2010.
4 Appointed as a member of the RMC with effect from 31 March 2011.
5 Datuk Mohaiyani Shamsudin, who is not included in the above summary of attendance, was appointed as Director on
22 August 2011.
Directors’ remuneration is generally determined at levels which would continue to attract and retain Directors of such calibre to provide the necessary skills and experience as required and commensurate with the responsibilities for the effective management and operations of the Group.
For the Executive Director, the component parts of remuneration are structured so as to link short and long-term rewards to corporate and individual performance. A significant portion of the Executive Director’s compensation package has been made variable in nature to be determined by the Group’s performance during the year against the individual Key Performance Indicators in a scorecard aligned with the corporate objectives, and approved by the Board.
For Non-Executive Directors (“NEDs”), the level of remuneration generally reflects the experience and level of responsibilities undertaken. The determination of remuneration packages for NEDs including the non-executive Chairman, is a matter for the Board as a whole following the relevant recommendation made by the NRC.
The current remuneration policy of the Directors comprises the following:-
(a) Basic salary
Basic salary of the Executive Director is based on the recommendation of the NRC.
(b) Director’s fees and meeting allowances (effective 1 July 2010)
For the Board of Directors, RM300,000 per annum for the Chairman, RM285,000 per annum for the Vice Chairman and RM190,000 per annum for each NED. The meeting allowance for the Board is RM1,500 per meeting.
For the Board Committees, RM45,000 per annum for the Board Committee Chairman and RM30,000 per annum for each Committee member. The meeting allowance for Board Committees is RM1,000 per meeting.
(c) Benefits-in-kind and emoluments
Benefits for NEDs include medical coverage, insurance coverage (Group Personal Accident, Group Term Life and Directors & Officers’ Liability), travel benefits, mobile electronic devices and use of Maybank holiday apartments/ bungalows.
The Chairman is also paid monthly other emoluments which commensurate with responsibilities befitting his position, for example in representing the Group and facilitating organisation capability building.
The Board in 2007 had approved certain benefits for retired NEDs which would be enjoyed by Directors who have served on the Board for five years or more, amongst others banking products at privileged rates and use of the Maybank holiday apartments/ bungalows.
At the Extraordinary General Meeting of Maybank held on 13 June 2011, its shareholders had approved the Employees’ Share Scheme (“ESS”) which provides for the offer and grant of options to eligible employees. The EGM also approved the allocation of options and/or grant of shares to the PCEO, to subscribe up to a maximum of 5,000,000 Maybank Shares. The number of shares to be offered to the PCEO, being an eligible employee, under the ESS will be based on the Group as well as his performance achievement at the end of financial year, as specified in the Group/PCEO Balance Score Card.
The Bank’s previous Employees’ Share Option Scheme (“ESOS”) which was also applicable to certain eligible NEDs had lapsed in August 2009, following a decision made in May 2006 to discontinue it for fiscal reasons. The NEDs are not eligible to participate in the current ESS.
A summary of the total remuneration of the Directors, distinguishing between Executive and Non-Executive Directors, in aggregate with categorisation into appropriate components for the financial year ended 30 June 2011 are as follows:-
Notes:
Executive Director’s Other Emoluments include allowance, EPF, SOCSO and EPF on bonus.
The Board has full and unrestricted access to all information pertaining to the Group’s businesses and affairs to enable it to discharge its duties effectively. Directors also have full and unrestricted access to the advice and services of the senior management of the Group. In addition to formal Board meetings, the Chairman maintains regular contact with the PCEO to discuss specific matters, and the latter assisted by the Company Secretary ensures that frequent and timely communication between the senior management and the Board is maintained at all times as appropriate.
Directors are also regularly updated and apprised of any new regulations and guidelines, as well as any amendments thereto issued by Bank Negara Malaysia, Bursa Malaysia Securities Berhad, Securities Commission, the Companies Commission of Malaysia and other relevant regulatory authorities including recommendations on corporate law reform in respect of Malaysian as well as relevant foreign jurisdictions, particularly the effects of such new or amended regulations and guidelines on directors specifically, and the Bank and the Group generally.
Board meetings for the ensuing financial year are scheduled in advance before the end of the financial year, specifically before the end of the calendar year, so as to allow members of the Board to plan ahead and fit the coming year’s Board and Board Committees meetings into their respective schedules.
The mechanism of the Annual Board Outline Agenda (developed in the last financial year) aims to highlight to the Board and relevant Board Committees as well as the senior management subject matters other than ‘routine’ for the year to facilitate better planning and for greater time effectiveness of various parties. It also gives a greater sense of discipline on the part of senior management to commit to the said outline. At the same time, such focus allows the Board to deliberate on and contribute towards achieving a higher level of value-added discussions on such identified issues and other relevant matters.
Prior to each Board meeting, an agenda together with appropriate papers for each agenda item to be discussed is forwarded to each Director at least five clear days before the scheduled meeting to enable the Directors to obtain further clarification or explanation, where necessary, in order to be adequately apprised before the meeting.
Further, the Bank’s minutes of meetings of the Board and various Board Committees incorporate the discussions of the members at the meetings in arriving at decisions and are concise and accurate in accordance with the recommendations of the Code. The draft minutes of the meeting are circulated within one week of the meetings to the Board for early feedback and suggestions prior to tabling at the subsequent meetings for formal confirmation.
Senior management members are invited to attend Board meetings to report on matters relating to their areas of responsibility, and also to brief and present details to the Directors on recommendations submitted for the Board’s consideration. Additional information or clarification may be required to be furnished, particularly in respect of complex and technical issues tabled to the Board.
The General Counsel & Company Secretary, in his function as the Company Secretary, is responsible for advising the Board on issues relating to corporate compliance with the relevant laws, rules, procedures and regulations affecting the Board and the Group, as well as best practices of governance. He is also responsible for advising the Directors of their obligations and duties to disclose their interest in securities, disclosure of any conflict of interest in a transaction involving the Bank, prohibition on dealing in securities and restrictions on disclosure of price-sensitive information.
The duties of the Company Secretary also include, amongst others, the following:
All Directors have access to the advice and services of the Company Secretary.
Individual Directors may seek independent professional advice at the Bank’s expense where necessary, in the furtherance of their duties in accordance with the Bank’s Policy and Procedure on Access to Independent Professional Advice, Senior Management and Company Secretary by Directors of Maybank Group. Copies of any reports, advice and recommendations provided by the independent professional adviser to the relevant Director, would be forwarded by the said Director to the Company Secretary, who will, where appropriate, circulate them to other Directors to ensure that they are kept informed of pertinent issues, which may have an impact on the Group’s interest growth and performance.
In the financial year, none of the Directors had invoked this process for independent professional advice.
The BSI demonstrates an important initiative to ensure continuing adequate support is provided to the Board, to assist Directors in discharging their duties effectively. The BSI exercise was conducted in July 2011 for the financial year ended 30 June 2011. The areas of assessment cover transactional and operational efficiency, which includes the quality of the minutes of the Board and Board Committees, of papers and meeting arrangements, and of training and knowledge management, as well as advisory services on matters concerning Directors’ duties, such as disclosure of interests and prohibition against trading.
Based on feedback received from Board members, the Board was generally satisfied with the support provided for the period under review and several areas had been identified for further improvement.
The Board is responsible for further enhancing the skills and knowledge of its members on relevant new laws and regulations and changing commercial risks, as well as to keep abreast with developments in the financial services industry through a Structured Training Programme for Directors (“STPD”). The STPD requires that each Director attend at least one training programme, which is to be specifically developed by the organisation for its Directors during the financial year.
For the period under review, all Board members have complied with the aforesaid internal policy by attending various training programmes and workshops on issues relevant to the Group, which were organised internally, as well as in collaboration with external training providers. The main training programme for the year was organised by Bank Negara Malaysia – namely the Financial Institutions Directors’ Education (“FIDE”) programmes. Besides attending the core training modules organised by FIDE, directors are also encouraged to attend elective training programmes which are being offered by FIDE throughout its training calendar year.
A comprehensive induction programme coordinated by Corporate & Legal Services for new Directors is usually conducted to provide new Directors with the necessary information and overview to assist them in understanding the Group’s operations and appreciating the challenges and issues the Group faces in achieving its objectives. The programme covers subject matters, amongst others, the Group’s business and strategy, work processes and Board Committees, and the duties and responsibilities of Directors of financial institutions.
The key areas of focus for training programmes attended by the Directors for the period ended 30 June 2011 are as follows:-
Board Effectiveness:-
– BNM – FIDE Programme (Module 1 on effective boardroom deliberations)
– BNM – FIDE (Module 4 on building effective Board team)
Corporate Governance:-
– 2nd Annual Corporate Governance Summit 2010
– Corporate Directors Conference 2011
Risk Management:-
– BNM – FIDE programme (Module 2 on enterprise risk management)
– BNM – FIDE programme (Module 3 on internal controls and audit oversight)
As at the end of the financial year, all Directors have attended and successfully completed the Mandatory Accreditation Programme in compliance with the Listing Requirements.
Apart from attending the various training programmes, some of the Directors have also been invited to speak at conferences and seminars organised by regulatory bodies and professional associations.
Pursuant to the Listing Requirements, each member of the Board holds less than 10 directorships in public listed companies and less than 15 directorships in non-public listed companies. Furthermore, the Directors also comply with the best practices recommendation of the Green Book which states that directors should not sit on the boards of more than five listed companies to ensure that their commitment, resources and time are more focused to enable them to discharge their duties effectively.
The Board values the experience and perspective gained by the Non-Executive Directors from their services on the boards of other companies, organisations and associations. However, prior to the acceptance of any relevant external appointments such as directorship of other listed companies, the Board Manual stipulates that Non-Executive Directors should first consult the Chairman to ensure that such appointments would not unduly affect their time commitments and responsibilities to the Maybank Board and the Group’s schedules and activities.
Further, although the Independent Non-Executive Directors hold directorships in several companies in the Maybank Group, the NRC assesses the independence of the said Directors pursuant to a declaration made that they are not taking instructions from any person including Maybank. In this respect, all the Independent Non-Executive Directors of Maybank complied with the relevant requirements of BNM/GP1. In addition, the respective key subsidiaries within the Group also appoint Independent Non-Executive Directors who are not members of the Maybank Board to ensure an optimal balance between board members in terms of independent internal and external directors.
In line with various statutory requirements on the disclosure of director’s interest, it has been the practice of Maybank that members of the Board make a declaration to that effect at the Board meeting in the event they have interest in proposals being considered by the Board, including where such interest arises through close family members. Any interested Directors would then abstain from deliberations and decisions of the Board on the subject proposal and, where appropriate, excuse themselves from being present in the deliberations.
In accordance with the Listing Requirements and the relevant provisions of the Capital Markets & Services Act 2007, Directors, key management personnel and principal officers of the Maybank Group are prohibited from trading in securities or any kind of property based on price sensitive information and knowledge which have not been publicly announced. Notices on the closed period for trading in Maybank’s securities are circulated to Directors, key management personnel and principal officers who are deemed to be privy to any price sensitive information and knowledge, in advance of whenever the closed period is applicable.
Directors and officers of the Maybank Group are covered against liabilities arising from holding office as Directors by virtue of the Directors’ and Officers’ Insurance coverage which is put in place by the Bank. The policy covers personal liability of Directors in the form of professional indemnity insurance, which includes any breach of trust, breach of duty, neglect, error, omission, misstatement, misleading statements, breach of warranty or authority committed in their capacity as Directors. Even though the Directors contribute a part of the premium paid for the insurance policy annually, such policy does not provide coverage in the event the Directors are proven to have acted fraudulently, dishonestly or maliciously.
The Board delegates certain of its governance responsibilities to the following Board Committees, which operate within clearly defined terms of references, primarily to assist the Board in the execution of its duties and responsibilities. Although the Board has granted such discretionary authority to these Board Committees to deliberate and decide on certain operational matters, the ultimate responsibility for final decision on all matters lies with the entire Board.
The Audit Committee is authorised by the Board to investigate any activities within its Terms of Reference and has unrestricted access to both the internal and external auditors and members of the senior management of the Group. The activities carried out by the Audit Committee, which met 16 times during the year under review, are summarised in the Audit Committee Report and its Terms of Reference as stated on page 226 of this Annual Report. Members of the Audit Committee are as indicated on page 226 of this Annual Report.
The responsibilities of the Credit Review Committee include, amongst others, the following:
(i) To review/veto all loans approved by the Group Management Credit Committee (“GMCC”) in respect of applications for fresh or additional facilities exceeding GMCC’s discretionary power;
(ii) To review/veto, with powers to object or to support proposals recommended by the GMCC to the Board for approval or affirmation, including statute and policy loans eg. any Director and Staff-related loans.
The Committee meets weekly and during the financial year under review, the Committee had met 50 times. Members of the Credit Review Committee and details of attendance of meetings by members are stated on page 208 of this Annual Report.
The NRC comprises exclusively Non-Executive Directors.
The broad responsibilities of the NRC as outlined in its Terms of Reference are as follows:
The specific responsibilities of the NRC include, amongst others, the following:
(i) To recommend to the Maybank Board, the appointment, promotion and remuneration as well as compensation policies for executives in key management positions;
(ii) To recommend to the Maybank Board, a Leadership Development framework for the Group;
(iii) To oversee the general composition of the Maybank Board (size, skill and balance between Executive Directors and Non-Executive Directors);
(iv) To recommend to the Maybank Board, a framework of remuneration for Directors, covering fees, allowances and benefits-in-kind in their work as Directors of all boards and committees;
(v) To recommend to the Maybank Board a policy regarding the period of service for the Executive and Non-Executive Directors;
(vi) To assess the performance and effectiveness of individuals and collective members of the Boards and Board Committees of the Group and its subsidiaries, as well as the procedure for the assessment.
(vii) To recommend measures to upgrade the effectiveness of the Boards and Board Committees;
(viii) To recommend to the Maybank Board, a Performance Management framework/model, including setting of the appropriate performance target parameters and benchmark for the Group Balanced Scorecard at the start of each financial year;
(ix) To oversee the succession planning, management and performance evaluation of executives in key management positions;
(x) To consider and recommend solutions on issues of conflict of interest affecting Directors; and
(xi) To assess annually that Directors and key senior management executives are not disqualified under section 56 of the BAFIA.
The NRC held twelve meetings during the financial year under review.
Members of the NRC and details of attendance of meetings by members are stated on page 208 of this Annual Report.
The responsibilities of the Risk Management Committee for risk oversight include, amongst others, the following:
(i) To develop and foster a risk aware culture within the Bank;
(ii) To review and approve risk management strategies, risk frameworks, policies, risk tolerance and risk appetite limits;
(iii) To review and assess adequacy of risk management policies and framework in identifying, measuring, monitoring and controlling risks and the extent to which they operate effectively;
(iv) To ensure infrastructure, resources and systems are in place for risk management, i.e. that the staff responsible for implementing risk management systems perform those duties independently of the financial institution’s risk taking activities;
(v) To review and assess the appropriate levels of capital for the Bank, vis-à-vis its risk profile;
(vi) To review and recommend strategic actions to be taken by the Bank arising from Basel II implementation for Board’s approval;
(vii) To review and approve new products and ensure compliance with the prevailing guidelines issued by BNM or other relevant regulatory body;
(viii) To oversee the resolution of BNM Composite Risk Rating findings for Maybank Group;
(ix) To oversee the specific risk management concerns in the business units that leverage on the Embedded Risk Units in the business units; and
(x) To review and approve model risk management and validation framework.
The RMC meets monthly with additional meetings convened to attend to urgent matters that require its deliberation. During the financial year under review, 12 meetings were held. The Chairman and a majority of the Committee’s members are Independent Non-Executive Directors. Members of the RMC and details of attendance of meetings by members are stated on page 208 of this Annual Report.
At an Extraordinary General Meeting held on 13 June 2011, shareholders had approved the establishment of an Employees’ Share Scheme (“ESS”) which shall be valid for seven years from 23 June 2011 to 22 June 2018. The introduction of the ESS is intended to serve as a long-term incentive plan as well as to align the interests of employees with the objectives of Maybank Group to create sustainable value enhancement for the organisation and the shareholders.
The Board had delegated to the ESS Committee, which had been established on 28 April 2011, the responsibility of determining all questions of policy and expediency arising from the administration of ESS and to generally undertake the necessary to promote the Bank’s best interest.
The ESS Committee is also tasked to review the rules and regulations relating to ESS and to ensure the Scheme is implemented in accordance with the Bye-Laws, amongst others, in respect of the terms on eligibility, the offer and date of offer, basis of allotment, termination and appeals.
All members of the ESS Committee are Non-Executive Directors. Meetings are held as and when the ESS Committee is required to deliberate on urgent matters.
One meeting of the ESS Committee was held during the financial year under review.
The members of the Employees’ Share Scheme Committee are as follows:
Dato’ Mohd Salleh Hj Harun (Chairman)
Tan Sri Dr Hadenan A. Jalil
Dato’ Dr Tan Tat Wai
Encik Zainal Abidin Jamal
Mr Alister Maitland
The Board IT Steering Committee was formalised on 26 August 2010 and was responsible for overseeing activities and the outcomes of the strategic planning within the IT Transformation Programme. The Committee was formed on an interim basis to provide a platform for Management to deliberate and receive guidance and advice on strategic IT initiatives.
The members of the Board IT Steering Committee were as follows:-
Tan Sri Dato’ Megat Zaharuddin Megat Mohd Nor
Dato’ Sri Abdul Wahid Omar
Dato’ Seri Ismail Shahudin
Mr Cheah Teik Seng
The Committee was disbanded on 16 December 2010 and the oversight function over the Group’s IT initiatives was thereafter continued by the executive level Group IT Steering Committee. From time to time, updates on the progress of the Group’s IT Transformation Programme are tabled to the Board for deliberation.
The PCEO, with Board support, has established various ELCs and delegated some of his authority to assist and support the relevant Board Committees in the operations of the Bank. The key ELCs, which are mostly chaired by the PCEO or the Group Chief Financial Officer, are as follows:-
Investor Relations (“IR”) is an important part of Maybank’s corporate governance framework to ensure that shareholders, stakeholders, investors and the investment community, both local and international, are provided with relevant, timely and comprehensive information about the Group. Maybank’s dedicated IR unit is committed to providing effective and open communication in order to improve disclosure and transparency.
Maybank is guided by its Investor Relations Policy which provides a framework of procedures and processes upon which Maybank can successfully implement its Investor Relations programme while providing guidance for communication through its designated spokespersons. An Investor Relations programme is carried during the year to ensure a planned sequence of activities are conducted throughout the year in communicating its financial results and material developments to Bursa Malaysia Securities Berhad, analysts, investors, shareholders and other stakeholders in a timely, open and comprehensive manner. The IR unit also engages with its counterparts in other countries, eg. in Indonesia, to coordinate IR activities for analysts and investors seeking meetings with the management of Maybank’s subsidiary, Bank Internasional Indonesia.
For its quarterly financial results, the Group convenes media and analyst briefings and/or conference calls. Media and analyst briefings are conducted with concurrent conference calls facilities during the half-year and full year financial results while conference calls are conducted for the first and third quarter. Presentation slides are publicly available and can be downloaded via the corporate website at www.maybank.com to provide stakeholders with a better understanding of Maybank’s performance.
Stakeholders engagement are also done through conferences and roadshow conducted locally or overseas whereby senior management will communicate the Group’s strategy, progress of its various initiatives and updates for stakeholders to understand Maybank’s operations better.
Maybank’s corporate website is also another channel of communication to better engage with the stakeholders. The website houses information of the Group at www.maybank.com which includes corporate profile, senior management, investor information, financial results, corporate news and Maybank’s subsidiaries. Visitors can also get the latest updates on Maybank by email and RSS. Bursa Link is another source of information to the stakeholders which is available on Bursa Malaysia website at
www.bursamalaysia.com.
Maybank’s annual report provides a comprehensive report on the Group’s direction and financial performance. The annual report provides full disclosure and is in compliance with the relevant regulation to ensure greater transparency. The annual reports are also printed in summary form together with a CD-ROM. An online version of the Annual Report is also available at Maybank’s corporate website.
Media coverage on the Group and senior management, either through print media or TV coverage is also initiated proactively at regular intervals to provide wider publicity and improve general understanding of the Group’s business among investors and the public.
Maybank maintains its credit ratings by rating agencies Standard and Poor’s, Fitch Ratings and Moody’s Investors Services, RAM Ratings and MARC as part of providing an independent flow of information to stakeholders as well as to the general public.
For more information on the investor relations activities conducted during the year, please refer to page 178.
Contact Details of IR Spokesperson
Khairussaleh Ramli
Group Chief Financial Officer
Contact: (6)03 2074 4288
Email: khairul@maybank.com.my
Hazimi Kassim
Head, Strategy and Corporate Finance
Contact: (6)03 2074 8101
Email: hazimik@maybank.com.my
Raja Indra Putra Raja Ismail
Head, Investor Relations
Contact: (6)03 2074 8582
Email: rajaindra@maybank.com.my
The Group’s EGMs and AGMs represent the primary platforms for direct two-way interaction between the shareholders, Board and Management of the Group. In deference to shareholder democracy and the transparency policy adopted by the Group, shareholders’ approval is required on all material issues including, but not limited to, the election and appointment of Directors, material mergers, acquisitions and divestments exercises, as well as the appointment of auditors and dividend payments.
The attendance of shareholders at the Group’s general meetings has always been high as evidenced by the presence of about 2,000 shareholders at the AGM for the FY2011 and the EGM in June 2011 despite the institutional bias in the investor base.
In addition to the AGMs and EGMs, shareholders and market observers are also welcomed to raise queries at any time through the Corporate Affairs and Strategy and Corporate Finance Divisions.
The shares of Maybank are widely held with institutional shareholders dominating the ownership structure of Maybank. As at 30 June 2011, the top three shareholders are Skim Amanah Saham Bumiputra (ASB) with 45.13%, Employees Provident Fund Board with 10.68% and Permodalan Nasional Berhad (PNB) with 5.73%, accounting in aggregate for a combined 61.54%.
Although the three top shareholders of Maybank accounted for more than half of the total paid up share capital of Maybank, Maybank is not subject to any biased influence from these shareholders and they do not hold management positions within the organisation. This arrangement ensures a high level of corporate governance and permits the Group to focus on continuously building value for all its shareholders.
Maybank’s shareholding structure is transparent and is disclosed on pages 49, 50 and 534 of this Annual Report. Any updates on the shareholding structure can be obtained on request from the designated management personnel on Investors Relations matters. The existing share structure consists entirely of Ordinary Shares and there are no different classes of Ordinary Shares. There is no foreign shareholding limit and the Bank’s Memorandum and Articles of Association does not have any explicit provision(s) that may discourage any acquisition. However, the Bank is subject to BAFIA, which contains certain restrictions on share ownership.
As part of Maybank’s effort to expand its liquidity and shareholder base, it has established a Sponsored Level 1 American Depository Receipt Programme (ADR) which is traded Over-the-Counter in United States of America since May 2005 on the basis of 1 ADR equivalent to 2 Maybank shares. Maybank Custody Services holds the securities for Maybank and the total number of ADRs outstanding is 6,759,683 as at 30 June 2011. The percentage of the securities for which the ADRs are issued against Maybank’s issued and paid-up share capital is 0.09%.
The Board has a fiduciary responsibility and takes it upon itself to present to the shareholders and the public at large, a clear, balanced and meaningful evaluation of the Group’s financial position, performance and prospects. In order to meet the fiduciary responsibility expected of the Board, the Board with the assistance of the Audit Committee oversees the financial reporting process and the quality of the Group’s financial statements to ensure that the reports present a true and fair view of the Group’s performance.
The Board also ensures that the financial treatment of the consolidated accounts under the Group is based on the more stringent requirements and that the financial statements of Maybank are in compliance with the Malaysian Accounting Standards Board (“MASB”)’s requirements, which in turn are in accordance with the International Accounting Standards (“IAS”).
The scope of the disclosure includes a review of the main sources of revenue by business activity and geography, past year performance analysis and financial adequacy, together with detailed explanation of the changes in the Balance Sheet and Profit and Loss Statement, to facilitate better understanding of the Group’s operations. In addition to the Audited Report, the Group also releases its unaudited quarterly financial results on a timely basis. These are accessible on Maybank and Bursa Malaysia’s websites.
The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Group and of the Bank as at the end of the accounting period and of the profit and loss and cashflow for the period then ended.
In preparing the financial statements, the Directors have applied suitable accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent. The Directors have also ensured that all applicable accounting standards have been followed and prepared financial statements on a going concern basis as the Directors have a reasonable expectation, having made enquiries, that the Group has adequate resources to continue in operational existence for the foreseeable future.
The Directors also have responsibility for ensuring that the Bank keeps accounting records which disclose with reasonable accuracy the financial position of the Group and of the Bank and which enable them to ensure that the financial statements comply with the provisions of the Companies Act, 1965. The Directors generally have the duty to take such steps as are reasonably open to them to safeguard the assets of the Group to prevent and detect fraud and other irregularities.
The Board has overall responsibility for maintaining sound internal control systems that cover financial controls, operational and compliance controls and risk management to ensure shareholders’ investments, customers’ interests and the Group’s assets are safeguarded.
The systems of internal controls are continuously reviewed to ensure that they are working via the ongoing review through internal audit process. The Audit Committee (AC) regularly evaluates the effectiveness and adequacy of the Group’s internal control systems by reviewing the actions taken on internal control issues identified in reports prepared by Group Internal Audit during its monthly meetings. The AC also reviews audit recommendations and management’s responses to these recommendations.
The Statement on Internal Control is furnished on page 222 of this Annual Report, and this provides an overview of the state of internal controls within the Group.
The Board is satisfied that an adequate framework on whistleblowing, specifically the Fraud Reporting Policy is in place, which had been implemented in 2004. All employees can raise their concerns regarding fraud, criminal activities, dishonesty and malpractice committed by another employee or any person who has dealings with the Group via the following Fraud Reporting Hotline established by the Bank:-
(i) Toll Free Message Recording Line
1-800-38-8833
(ii) Protected email address
fraudline@maybank.com.my
(iii) Secured P. O. Box Mail Address
P. O. Box 11635, 50752 Kuala Lumpur
The above mechanism protects employees who contemplate to “blow the whistle” against victimisation or harassment. The confidentiality of all matters raised and the identity of the whistleblower are protected under the Policy. Concerns raised anonymously may also be considered provided they are clear and specific. Further details of the Fraud Reporting Policy are set out on page 223 of this Annual Report.
Internal Auditors
The Group Internal Audit function is independent of the activities or operations of other operating units and reports functionally to the Audit Committee (AC) of the Bank and has unrestricted access to the AC. The Group Internal Audit regularly audits the risk management, operating effectiveness of internal controls, compliance with internal and regulatory requirements across the Bank and the Group. The audit reports which provide the results of the audit conducted along with audit recommendations and management’s responses to these recommendations are tabled to the AC on monthly basis. The Chief Audit Executive is invited to attend the AC meetings to facilitate the deliberation of the audit reports. The minutes of the AC meetings are subsequently tabled to the Board for information and serve as useful references especially if there are pertinent issues that the AC members wish to highlight to the full Board.
External Auditors
The AC and the Board place great emphasis on the objectivity and independence of the Bank’s Auditors, namely Messrs. Ernst & Young, in providing the relevant and transparent reports to the shareholders. As a measure of ensuring full disclosure of matters, the Bank’s Auditors are regularly invited to attend the AC meetings (as well as the Annual General Meetings), apart from the twice yearly discussions with the AC without the presence of the senior management.
A full report of the AC outlining its role in relation to the internal and external auditors is set out on pages 226-231 of this Annual Report.
Apart from the Directors’ Code of Ethics as set out in the BNM/GP7-Part 1 Code of Ethics: Guidelines on the Code of Conduct for Directors, Officers and Employees in the Banking Industry, and the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia, the Group also has a Code of Ethics and Conduct that sets out the sound principles and standards of good practice in the financial services industry, which are observed by the Directors and employees. Both Directors and employees are required to uphold the highest integrity in discharging their duties and in dealings with stakeholders, customers, fellow employees and regulators. This is in line with the Group’s Core Values which give emphasis on behavioural ethics when dealing with third parties and fellow employees.
The Group communicates the Code to all employees upon commencement of their employment and is deemed to be part of the Terms and Conditions of Service. Further details of the Code of Ethics and Conduct can be found on page 21 of this Annual Report.
During the year, the Bank organised various activities and workshops conducted by the relevant departments/units to reinforce and renew the commitment of the Directors and employees to uphold the Code as a reflection of professionalism and a lasting impression when dealing with customers, colleagues, shareholders, suppliers, communities and the environment.
The Board is satisfied that a good balance has been achieved between value creation and corporate responsibility. Details of the Group’s corporate responsibility initiatives are set out on pages 170-176 of this Annual Report.
(a) Maybank Islamic Berhad (“MIB”)’s Issuance of Tier 2 Capital Islamic Subordinated Sukuk of RM1.0 billion in Nominal Value (“Subordinated Sukuk”) – issued on
31 March 2011.
The proceeds from the issuance of the Subordinated Sukuk will be used for MIB’s working capital, general banking, business banking, business expansion programme, and other corporate purposes.
(b) SGD1.0 billion Tier 2 Capital Subordinated Notes – issued on 28 April 2011.
The proceeds raised from the SGD Subordinated Notes will be utilised to fund Maybank’s working capital, general banking, and other corporate purposes.
(c) Dividend Reinvestment Plan (“DRP”) – Ongoing
The net proceeds from the DRP (after deducting estimated expenses for the DRP) will be utilised to fund the continuing growth and expansion of the Maybank Group.
(d) Bank International Indonesia (“BII”)’s issuance of IDR1.5 trillion subordinated debt due in May 2018 – issued on
19 May 2011.
The proceeds from the issuance of the subordinated debt will be used for BII’s working capital and general banking requirements.
Maybank did not make any proposal for share buy-back during the financial year under review.
Maybank did not issue any options, warrants or convertible securities during the financial year ended 30 June 2011, save and except for the options issued pursuant to the Employees’ Share Scheme.
There were no sanctions and/or penalties imposed on Maybank and its subsidiaries, directors or management by the relevant regulatory bodies, which were made public during the financial year under review.
Non-audit fees payable to the external auditors, Ernst & Young, for the year amounted to RM3,863,000 for the Group and RM3,161,000 for the Bank.
There was no profit forecast issued by Maybank and its subsidiary companies during the year.
There was no profit guarantee issued by Maybank and its subsidiary companies during the year.
There were no material contracts entered into by the Company and its subsidiaries involving Directors and substantial shareholders, either still subsisting at the end of the financial year under review or entered into since the end of the previous financial year.
The Company does not value its landed properties classified as Property and Equipment. The revaluation policy on landed properties classified as Investment Properties are disclosed in Note 3 (xii) of the financial statements.
The Company did not seek any mandate from its shareholders nor enter into RRPT, which are necessary for its day-to-day operation on terms not more favourable to the related party than those generally available to the public and are not to the detriment of the minority shareholders for the financial year under review.
This statement is made in accordance with a resolution of the Board dated 22 August 2011.
Tan Sri Dato’ Megat Zaharuddin
Megat Mohd Nor
Chairman of the Board
