Explanations under the UK Corporate Governance Code

Executive Chairman position

The Board acknowledges that Said Darwazah’s position as Executive
Chairman, having previously served as Chief Executive Officer, and
his tenure as a Director are departures from the UK Code.
The Executive Chairman role was created in February 2018, following the appointment of Siggi Olafsson as Chief Executive Officer. Previously, Said Darwazah was the Chairman and Chief Executive Officer. The change of roles and appointment of a Chief Executive Officer has caused a reduction in Said’s executive responsibilities, whilst still retaining his strategic input. The Board considers that the transfer of responsibilities from Said to Siggi has been very successful and that the Chief Executive Officer has been fully empowered by the Executive Chairman. The Board considers it is important to retain corporate memory, important relationships and the family culture of the organisation. Therefore, it is essential to retain Said Darwazah’s services in a strategic capacity.
The Board consulted shareholders prior to Said’s appointment as
Chairman and Chief Executive Officer in May 2014 and following the
change to the position of Executive Chairman in February 2018. The
Independent Non-Executive Directors met twice during 2019 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, because:
—Continuity of strategy: Said Darwazah 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
—Executive Chairman’s role: the Executive Chairman position is
highly visible inside and outside Hikma, acting as an ambassador
with business partners and adviser to the businesses
—Business partners: a significant number of Hikma’s key political and commercial relationships across the MENA region are built on the long-term trust and respect for the Darwazah family where the role of the Executive Chairman remains key


The Board continues to operate the following enhanced controls:
—Governance structure review: the Independent 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
Chief Executive Officer and safeguards for shareholders
—Committee Chair roles: the Chairs of the Board Committees and
the Director responsible for employee engagement, undertake a
significant amount of work in the oversight 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
circa 15 years since flotation Hikma has maintained the highest
standards of shareholder engagement, which is reflective of the
importance placed in maintaining strong investor relations and
governance
—Senior Independent Director role: the Senior Independent Director has joint responsibility, with the Executive Chairman, for setting the Board agenda, agreeing action points and the minutes of the meetings

Independence

The Board rigorously reviewed and considered the independence of
each Non-Executive Director during the year as part of the annual
corporate governance review, which included consideration of
progressive refreshment of the Board. The Board considers Robert
Pickering, Pat Butler, Dr Pamela Kirby, John Castellani, Nina Henderson and Cynthia Schwalm to be independent. These individuals provide extensive experience of international pharmaceutical, financial, corporate governance and regulatory matters and were not associated with Hikma prior to joining the Board.


The Board does not view Ali Al-Husry as an Independent Director due to the length of his association with Hikma, holding an executive position with Hikma prior to listing and his involvement with Darhold Limited, Hikma’s largest shareholder. However, he continues to bring to the Board broad corporate finance experience, in-depth awareness of the Group’s history, and a detailed knowledge of the MENA region, which is an important and specialist part of the Group’s business.


The Board does not view Dr Jochen Gann as an Independent Director due to his appointment being in accordance with the shareholder agreement with Boehringer Ingelheim, a major shareholder and his primary employer. However, Jochen brings significant M&A and corporate finance experience with a particular focus on the pharmaceutical sector and, together with Ali Al-Husry, ensures that the Board is aware of the perspectives of shareholders when making decisions.