Hikma is committed to high standards of corporate governance and we work hard to ensure compliance with the Principles and Provisions of the UK Corporate Governance Code (the Code) published in July 2018 and the Markets Law of the Dubai Financial Services Authority (the Markets Law). The Annual Report on pages 72 to 129 describes how the Board has applied the Code and Markets Law throughout the year ended 31 December 2022. The Board considers that this Annual Report provides the information shareholders need to evaluate how we have complied with our current obligations under the Code and Markets Law. Except as referred to in the following section on the Executive Chairman, Hikma has complied with all relevant Principles and Provisions of the Code throughout the year.
Provision 9 of the Code states that the chair should be independent on appointment when assessed against the circumstances set out in Provision 10. The roles of chair and chief executive should not be exercised by the same individual. A chief executive should not become chair of the same company. If exceptionally, this is proposed by the board, major shareholders should be consulted ahead of appointment. The board should set out its reasons to all shareholders at the time of the appointment and also publish these on the company website.
Provision 19 of the Code states that the chair should not remain in post beyond nine years from the date of their first appointment to the board.
The Board acknowledges that Said Darwazah’s position as Executive Chairman and CEO and his overall tenure as Director are departures from Provisions 9 and 19 of the Code. Each point is discussed in turn below:
– Joint role of Executive Chairman and CEO:
since the resignation of Siggi Olafsson as CEO on 24 June 2022, the Board agreed that Said Darwazah, as former CEO, would step in and assume all CEO responsibilities while the Board initiated a search to identify and appoint a new CEO. This is a temporary measure designed to ensure continued drive and delivery of Hikma’s strategy until a new CEO is appointed. Recognising the importance of robust governance arrangements during this time, we reviewed our delegated authorities to ensure that no one individual had unfettered powers of decision-making. On appointment of a new CEO, Said will relinquish all CEO responsibilities and resume the role of Executive Chairman, which will return the Hikma Board to a clear division of roles. Further detail on the CEO search process can be found on page 86
– Executive Chairman and tenure: the Executive Chairman role was created in February 2018, following the appointment of Siggi Olafsson as CEO. Previously, Said Darwazah was the Chairman and CEO. The Board considers that it is important to retain corporate memory, important relationships and the culture of the organisation. Therefore, it is valuable to retain Said’s services in a strategic capacity. The Board consulted shareholders prior to Said’s appointment as Executive Chairman and CEO in May 2014 and following the change to the position of Executive Chairman in February 2018. The Independent Non-Executive Directors met as a group during 2022 to review the Board structure and concluded that the Executive Chairman role should continue.
The Board is focused on the commercial success of Hikma and believes that continuing the position of Executive Chairman for a period of time is the best way to achieve success for Hikma for the following reasons:
– Continuity of strategy: Said has been a driving force behind the strategic success of the business since 2007 and the Board believes that it is important for the continued success of the Group that he remains in a strategic role. The Executive Chairman’s role is to develop the Group’s strategy in conjunction with the CEO. The division of responsibilities for our Executive Chairman and CEO are available on our website.
– Executive Chairman’s role: the Executive Chairman position is highly visible inside and outside Hikma, providing leadership to the Board and management of the Company, acting as an ambassador with business partners and advisers to the organisation
– Business partners: a significant number of Hikma’s key political and commercial relationships across the MENA region, Asia and some continental European countries are built on the long-term trust and respect for the Darwazah family such that the role of the Executive Chairman remains key.
The Board continues to operate the following enhanced controls:
– Governance structure review: the Independent Non-Executive Directors meet at least bi-annually in a private session chaired by the Senior Independent Director. This meeting includes consideration of the appropriateness of the governance structure, the division of responsibilities between the Executive Chairman and the CEO and safeguards for shareholders
– Senior Independent Director role: the Senior Independent Director has an enhanced role at Hikma, taking joint responsibility, with the Executive Chairman, for setting the Board agenda, agreeing action points and the minutes of the meetings
– Committee Chair roles: the Chairs of the Board Committees and the Director responsible for employee engagement, undertake a significant amount of work in the discharge of their responsibilities
– Transparency and engagement: Hikma has always had the highest regard for shareholders, with several of the original investors from before listing still investing and supporting Hikma today. Over the c.17 years since flotation Hikma has maintained the highest standards of shareholder engagement, which reflects the importance placed in maintaining strong investor relations and governance
The Board considers that the role of Executive Chairman is likely to continue for the medium term. Should shareholders require any further information relating to these matters, questions may be directed to the Company Secretary.