Executive Chairman position
The Board acknowledges that Said Darwazah’s position as Executive Chairman is a departure from the UK Code. The role was created in February 2018, following the appointment of Siggi Olafsson as Chief Executive Officer. Previously, Mr Darwazah was the Chairman and Chief Executive Officer.
The change of roles and appointment of a Chief Executive Officer has caused a significant reduction in Mr Darwazah’s executive responsibilities. However the Board considers that, as the Company moves into a new era, it is essential to retain Mr Darwazah’s services in an executive capacity for a time period sufficient to ensure a controlled and orderly transfer of responsibilities.
The Board consulted shareholders prior to his appointment in May 2014 and following the change of role in February 2018. The Independent Non-Executive Directors met twice during the year to review the Board structure including consideration of whether the combined role should continue. As a result of these meetings and discussions with the Chairman and Chief Executive, a new CEO was appointed and the role of Executive Chairman was created.
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:
- Chairman’s role: The Chairman position is highly visible inside and outside Hikma, acting as an ambassador with business partners and adviser to the divisions. It is essential the Chairman intimately understands MENA culture and has strong relationships in the region, can speak Arabic and has extensive pharmaceutical knowledge.
- Business partners: A significant number of the Company’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 Chairman remains key.
- Continuity of success: Said Darwazah has been a driving force behind the operational success of the business since 2007 and the Board believes that it is important to the continued success of the Group that he remains in the lead executive role.
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 and safeguards for shareholders.
- Committee Chair roles: The Chairs of the Board Committees, all of whom are Independent Non-Executive Directors, undertake a significant amount of work in the oversight of the functions that report to their Committees and have in-depth relationships with the relevant executives.
- Transparency and engagement: Hikma has always had the highest regard for external shareholders. Many of the original investors from before listing still invest and support Hikma today. Over 13 years since flotation the Company has maintained the highest standards of shareholder engagement, which is reflective of the importance placed in maintaining strong investor relations and governance. Hikma has won and been shortlisted for several transparency and governance awards.
- Senior Independent 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.
The Board considers Robert Pickering, Dr Ronald Goode, Pat Butler, Dr Pamela Kirby, John Castellani and Nina Henderson 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 its listing in 2005.
The Board reviewed and considered the independence of the Non-Executive Directors during the year as part of the annual corporate governance review. It recognises that Dr Ronald Goode has served in excess of nine years and therefore this constitutes a departure from the UK Corporate Governance Code. However, in accordance with the previously communicated succession plan, Dr Ronald Goode will retire from the Board in May 2018.
The Board wishes to retain the services of Dr Ronald Goode for a time period sufficient to transfer his responsibilities and knowledge in an orderly manner whilst ensuring continuity and ongoing challenge. The Board considers this to be appropriate as Hikma is a maturing company in which historical knowledge and personal relationships are important to the successful oversight of the business.
The Board is of the view that Dr Ronald Goode remains independent because:
- His character and the manner in which he performs his role clearly demonstrate independent thought and judgement.
- He continues to ask difficult and challenging questions of management and request additional information when required.
- None of the Independent Directors receives additional remuneration apart from Directors’ fees, and they do not participate in the Group’s share plans or pension schemes.
- There are no conflicts of interest between any Independent Non-Executive Directors and management or significant shareholders.
The Board does not view Ali Al-Husry as an Independent Director due to the length of his association with the Company, because he was an executive with Hikma prior to listing and because of his involvement with Darhold Limited, Hikma’s largest shareholder. However, he continues to bring to the Board broad corporate financial experience 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 Jochen Gann as an Independent Director as his appointment was part of 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.