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Board effectiveness

Skills and experience

The Board keeps the skills and experience of its members under constant review. The Directors believe in the necessity for constructive challenge and debate in the boardroom and consider that existing Board dynamics and processes encourage honest and open debate with the Executive Directors. 

Hikma knowledge

Board members frequently visit the business units and meet management teams to fully understand and advise on the important issues facing the Group. During the year, Non-Executive Directors visited facilities in Jordan, Portugal and the US including the newly acquired site, West-Ward Columbus. The Executive Directors and Ali Al-Husry have extensive experience of Hikma from its earliest days to today. The Directors maintain regular contact with senior management and the Company Secretary ensures that Directors are kept up to date with major developments in the Group’s business. 

Board experience

* Diagram as at 31 March 2017. Mr Michael Ashton stepped down from the Board on 19 May 2017.

Country of origin

* Diagram as at 31 March 2017.  Mr Michael Ashton stepped down from the Board on 19 May 2017.

Geographical experience

* Diagram as at 31 March 2017.  Mr Michael Ashton stepped down from the Board on 19 May 2017.

Training

The Chairman considers the development needs of Directors as part of his ongoing assessment of Board effectiveness and ensures that these requirements are met by the Company Secretary organising appropriate training opportunities. The main Board training and development activities this year were:

  • External advisers provided the Board with training sessions on governance, anti-bribery and anti-corruption, and financial reporting requirements
  • Directors attended several externally provided seminars and discussion forums. Further training is scheduled for 2017
  • Hikma’s brokers and financial advisers presented industry and market updates to the Board on several occasions
  • The Company Secretary made regular updates to the Directors on relevant regulatory and governance matters

Independent advice

The Board Governance Manual provides for any Director to have access to independent professional advice at Hikma’s expense.

External commitments

The Directors’ external commitments are detailed in their profiles in the Leadership Section. The Nomination Committee operates, monitors and reviews the conflicts of interest procedures, which have operated effectively during the year. A register of external commitments is maintained by the Company Secretary and is reviewed at each Nomination and Governance Committee and Board meeting. Where new commitments are proposed, these are reviewed in advance by the Nomination Committee and, where appropriate, recommendations on necessary controls are made to the Board. The Board considers that a degree of outside commitments enhances a Director’s ability to perform the role.

 

Time

The Directors commit an appropriate amount of time to their roles and are readily available at short notice. The Non-Executive Directors are required to commit 20 days during each year to the execution of their duties. However, all of the Non-Executive Directors devote at least 30 days per annum to their Hikma responsibilities. In addition, the Committee Chairmen spend a significant amount of time on their respective areas of responsibility and Non-Executive Directors take time to meet with management and visit operations where there are particular areas of interest. Consequently, the Independent Non-Executive Directors dedicate substantially more time to Hikma than their appointment requires. The duties of the Chairman and Chief Executive, Directors and Committee Chairs are set out in the Board Governance Manual. 

Evaluation and performance

The Board re-assessed its approach to evaluation during the year. The conclusion from this exercise was that a full, externally moderated, interview-based evaluation should be conducted every three years.

Process

  • The process is co-ordinated by the Senior Independent Director at the request of the Chairman
  • Lintstock, an external moderator which has no other connection with the Company, led the process with a thematic questionnaire and interview process
  • Lintstock reported independently to the Chairman and the Senior Independent Director
  • Lintstock presented the results and findings to the full Board and provided their independent feedback on the results
  • A similar process was followed for each Committee of the Board
  • The results of the evaluation process formed part of the Chairman’s appraisal of the overall effectiveness of the Board and its members
  • Regularly during the year, the Directors fed back to the Company Secretary improvements and enhancements that they considered should be progressed outside the evaluation timetable

Elements assessed

  • Board Composition, Expertise & Dynamics
  • Time Management
  • Board Support & Committees
  • Strategic Oversight
  • Risk Management
  • Succession Planning and Human Resource Management
  • Priorities for Change

Conclusions and action

Key conclusions and observations from the 2016 evaluation:

  • Board composition
  • Understanding of the key markets in North America and the MENA region
  • Interaction and atmosphere providing for good, healthy discussions and challenges
  • Non-Executive Directors provide support and constructive challenge to management
  • Oversight of risk management

Areas where further work is being undertaken by management and the Company Secretary:

  • Knowledge of European and emerging markets
  • Review of past decisions
  • Length of reports and presentations
  • Training and development opportunities for directors
  • Executive development

Progress on previously identified issues

Observations Action taken
Independence and tenure Following extensive work by the Nomination and Governance Committee, the Company announced the appointment of additional independent directors and confirmed the tenure of longer serving directors.
Time The schedule of committee and board meetings was extended in order to allow further time for important business.
Strategic focus An extensive strategic review was conducted and presented to the Board for challenge and insight. The strategic review led to the development of a new, detailed business plan.
Committee structure The membership of board committees was extended to ensure that all relevant skills and experiences were available. The remit of the Nomination Committee was extended to provide closer oversight of governance.
Timeliness Management reviewed their processes for board papers to ensure that directors had more time for considering issues in advance.

Chairman’s appraisal

The Non-Executive Directors regularly meet in private during the course of the year. The performance of the Chairman and the Board is discussed during these meetings. Additionally, the Senior Independent Director met with the Non-Executive Directors to undertake a formal appraisal of the performance of the Chairman. This review addressed:

  • Board efficiency and openness
  • The effectiveness of the Chairman’s leadership
  • The setting of the Board agenda
  • Communication with shareholders
  • Internal communication and Board efficiency

The conclusion of this process was that the Chairman gave clear leadership and direction to the Board, and that the Board is run in an appropriate and effective manner.

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