Corporate of Good Governance, Manage Transparently
KEY PERFORMANCE IN 2019
CP ALL Plc. and its subsidiaries (“the Company”) believes that good corporate governance guideline helps create the foundation of corporate sustainability, enabling the Company’s growth and enhancing competitiveness. This may be in the form of drawing increased interests from investors, and enhancing operational plan for greater efficiency. Effective management systems’ results also provided a clear reflection of the Company’s quality management system. Good systems build long-term trusts for stakeholders. In tandem, governance is another key global trend and challenge that the Company monitors and prioritize. Specific components the Company prioritizes comprise board composition and qualification, per investor groups’ expectation on the Board’s effectiveness assessment. Similarly, the Board’s diversity is another issue that investors around the world pay attention to, along with deeper focus on oversight of corporate culture, the Company’s image and reputation. These factors can directly affect business operations, employees’ attraction and retention. Furthermore, ESG (Economic, Social and Governance) integration with governance is another point investors are interested in, as part of the Board’s duty to integrate sustainability issues with key business strategy. The Company therefore established a governance structure that is efficient, transparent and traceable, within the framework of business ethics and laws. This optimizes benefits to the Company, as well as ensure communication and understanding among employees regarding corporate governance and sustainable development; which was challenging for any given business operations.
The Board of Directors has set up a corporate governance structure, and appointed Sustainability and Governance Committee to be in charge. The Committee is tasked with setting up corporate governance policy, anti-corruption policy, sustainability policy and guideline, including business ethics and code of conduct. The Committee also reviews and revises corporate governance policy to ensure suitability and alignment with governing principles established by relevant governmental authority and international standards. As of 2019, the Company has revised corporate standards and regulations to address climate change more. The Company has also modified the structure of Sustainability and Governance Committee, and set up Governance Sub-Committee and Sustainable Development Sub-Committee. Operations will be within the Company’s governance guideline and policy, as follows
In parallel, the Board has appointed 3 sub-committees to work under the Board. All of which are independent. The sub-committees comprise 1) Audit Committee 2) Sustainability and Governance Committee 3) Remuneration and Nomination Committee. Their roles and responsibilities are as follows
Key Project in 2019
Business Ethics Handbook and Code of Conduct
Objective To ensure knowledge and understanding of ethical performance guidelines for the Board, Company employees, supplier and contractor.
1) Created factual guidelines for the Board, Company employees, supplier and contractor
2) Communicate of ethical performance guidelines to relevant unit via meeting, lecture and component of corporate governance policy and announcement
2) The training of relevant business laws as Personal Data Protection Act B.E. 2562 (2019) to ensure that all stakeholders will be compliance with the law
3) Conduct trainings and assessments for E-Learning curriculums on governance and anti-corruption, as well as Digital Mindset through the use of animation
4) Provide recommendation to the unit involving high risk of non-compliance
Results and Benefits
Mister & Miss Good Governance
Objective To elevates the visibility of governance’s importance and ensures all functions recognize it.
Mister & Miss Good Governance was a space for new generations of CP ALL’s business groups to demonstrate their talents and their opinions on current governance. The representatives were thoroughly trained by experts, and they were able to responses to questions that assess their attitude, perspective and practice on governance. Mister & Miss Good Governance winners are tasked with the following:
Results and Benefits
Over 124 youth representatives from 62 offices/functions within CP ALL’s business groups
Management Structure by the Company’s Board of Directors
Board of Directors
As of 31 December 2019, the Company’s Board of Directors consists of 15 members including:
1) Executive Directors 5 persons
2) Non-Executive Directors 10 persons, which are as follows:
- Independent Directors 5 persons (account for one-third of Board members)
- Nonexecutive Directors 5 persons
1) Executive Directors: The directors who hold a position in the management and are involved in the day-to-day operations of the organization.
2) Non–Executive Directors: The directors who do not hold a position in the management, may or may not be an independent director, and are not involved in the day-to-day operations of the organization.
3) Independent Directors: Independent or outside directors who are not engaged in the day-to-day management of the organization and are not major shareholders. Furthermore, independent directors must have no such connection with a major shareholder, group of major shareholders, or other stakeholders.*
4) Authorized Directors: Certification documents of the Company stipulate that the binding signatures must include 2 authorized directors – consisting of any authorized director from both Executive1 and Non-Executive2 members, excluding the Chairman and Independent Directors for the existence of independence in compliance with good corporate governance principles. Both directors must sign and affix the Company’s seal.*
* Qualification of Directors Reference to CP ALL’s Board Charter
The Company’s Board plays an important role in driving the organization, entrusted with the responsibility to ensure our corporate governance approach facilitates the Company towards the objectives and the goals of creating the highest value. Good corporate governance is built on the foundation of social and environmental responsibility, equal treatments to stakeholders—guided by the Corporate Governance and Anti-Corruption Policies. The Company’s corporate governance approach, defector, complies with relevant legal requirements, corporate goals and regulations, the Board’s charters, guidelines, and resolutions, as well as Shareholders’ resolutions.
Diversity and Qualification for the Board of Directors
The Remuneration and Nomination Committee considering criteria and procedures for recruiting qualified persons to be directors in accordance with the business strategy of the Company by creating a board skill matrix to assemble in recruiting including selecting persons according to the nomination process that has been defined for example, considering the names and profiles of those who were nominated as directors from the previous committee; whereas shareholders to nominate directors to take positions or consider the use of external consulting firms or consider a person from a career committee By considering qualifications that are suitable and varied in terms of qualifications, skills, age, experience, gender, race, nationality, religion, country of origin or cultural background, expertise and specific talents that are required in the Board of Directors. As well as being involved in creating benefits for the Company and proposing comments to the Board of Directors.
The Board of Directors Positions in Sub-Committees
Board of Directors’ Meeting
- The Board of Directors’ Meeting is held once every quarter on a normal basis. Directors must regularly attend the Board of Directors’ Meetings to be informed of and jointly make decisions on the Company’s business operations. At least 7 Board of Directors’ Meetings are organized each year.
- The Company encourage all director to attend at least 75% of all board meetings held during the year by predetermined the dates of the Board of Directors’ Meetings one year in advance so that directors can arrange their schedule to attend the meeting. However, additional meetings may be called if there are special matters that require the Board’s approval or urgent matters that require the Board’s consideration.
- In 2019, a total of 7 Board of Directors’ Meetings were held which was appropriate for the duties and responsibilities of the Board and the operations of the Company in the previous year. 95% of the Directors attended the meetings. The Company also held the Non-Executive Directors Meeting in 2019 which Non-Executive Directors attended 100%.
- The meeting’s invitation, agenda and relevant documents were sent to the directors at least 7 days prior to the meeting date to allow sufficient time for the directors to study the information before decision-making. In the consideration of any issue, the directors are entitled to look at or check the related documents and ask the management to provide additional information.
- The Company have yet been implemented the policy for the minimum quorum of at least 2/3 of the Board member for board decisions to be valid to facilitate the participation in the board meeting. The Company, however, continuing act in accordance with this rule for many years which is shown in the table of Names of the Board of Directors and Board Members Attendance for the Year 2019 (Number of times attending during directorship period).
- In every meeting, the management had been asked on questions raised by directors. The directors exercised careful, independent and transparent judgment with fair consideration for the interests of shareholders and stakeholders. Directors with vested interests in the matter under consideration must leave the meeting during consideration of that matter. The Chairman also provided sufficient time for directors to discuss problems and possible solutions. Management related to the presented agenda item were invited to the meeting to provide additional details and answer questions, which is also a good opportunity for the management to get to know the high-level executives for further job-handover.
- After the Board of Directors’ Meetings, the minutes of meeting were prepared, approved by the Board and filed at the Company Secretary Office for future reference and verification by directors and related persons. In addition, the Company Secretary coordinated to all departments to strictly perform its duties in line with the resolutions of the Board of Directors.
- In some cases, the Company organized for outside consultants or experts to provide advice or additional information to the Board of Directors, at the Company’s expense.
Board of Director and Subcommittee Performance Evaluation
The assessment mechanisms for corporate governance performance is a crucial driver facilitating the performance to meet expectations. It enables more effective development of corporate governance activities. The Company is cognizant of the assessment’s importance and accordingly, set 2 assessments for the Board: one for the Company’s Board as an entire Board, and the other, as an individual. The sub-committee comprises Audit Committee, Sustainability and Corporate Governance Committee, Board Remuneration and Nomination Committee. The Committees’ effective performance is reflected in 2019’s performance score. The performance self-evaluation of the Board of Directors as a group is in ‘Excellent’ with the achieved overall score of 90%; whereby there was a ‘Good’ with an achieved overall score of 10%. The performance self-evaluations of Board Directors on an individual basis is in ‘Excellent’ with the achieved overall score of 89%; whereby there was a ‘Good’ with an achieved overall score of 11%. Furthermore, the Company was rated for Corporate Governance Report of Thai Listed Companies (CGR) conducted by the Thai Institute of Directors (IOD) The Institute itself may be considered an external organization without stakes with the Company. The Report helps the Company ensures its corporate governance is effective and moving towards the right direction. The results show alignment with leading Thai companies’ performance. The Company’s assessment score is 5 stars with the range of ‘Excellent’.
Evaluation and Consideration for Remuneration Payment to Executive Board
The Remuneration and Nomination Committee considers payment criteria and forms of director compensation before presenting to the Board of Directors and the shareholders’ meeting for approval every year. The remuneration of directors is adjusted to be comparable to other companies in the same industry and appealing enough to attract and retain quality directors.
High–Level Executives’ Remuneration Policy and Criteria
The Board of Directors determines the policy on high-level executives’ remuneration to be at an appropriate level, fair, and in line with their responsibility in order to meet the expectations of various stakeholder groups and comply with related laws and regulations (Refer to Annual Report of CP ALL page 172).
The Remuneration and Nomination Committee has hired an independent expert to gather information and provide advice on establishing an appropriate compensation criteria and structure for high-level executives in order to present recommendations to the Board of Directors for approval. The following factors were taken into consideration:
- The Company’s operating results with consideration to various pre-determined business indicators
- Comparison of the Company’s operating results with other companies in the same industry
- Ability to develop business and improve business efficiency of each business unit each year
- Benchmarking with remuneration rates in the same industry
The Nomination and Remuneration Committee has considered the 2019 monthly remuneration and gratuity of Chairman of the Executive Committee, and Managing Director and Chief Executive Officer by taking into account the following matters i.e. conformity with the leading company in large scale in Thailand as well as leading retail company in Asia. It is of the opinion that the remuneration should be in compliance with the management incentive plan (MIP) as approved by the Company’s Board of Director. Not only the above mention matters i.e. KPI and original goal of the outcome that taking into consideration for the special gratuity to members of the Executive Committee, but also the customer’s satisfactory and return to shareholders were equipped. Furthermore, to determine the 2019 gratuity, the Nomination and Remuneration Committee were incorporated additional factor to MIP in relation to the criteria of member selection of DJSI in accordance with sustainability development context. (Refer to board meeting resolution and RNC meeting resolution)
Indicators of the remuneration for executive directors for the year 2019
Indicators and target values to be a special pension criteria for the executive directors of the year 2019 to propose to the Remuneration and Nomination Committee. Considerations are as follows.
Note: The Company does not determined remuneration payment to key executives in the form of common shares or binding with long-term company’s performance and has no rules for key executives to hold common shares of the company. By the way, the company provides Employee Joint Investment Program – EJIP to encourage employees for ownership and incentivize loyalty and determination to grow with the company. To provide incentives and keep personnel working with the Company for a long time. The Employee Joint Investment Program No.3 has duration of 5 years. Executives who are eligible for the EJIP must have been employed with the Company for at least 3 years. The Company deducts 5 percent or 7 percent (on a voluntary basis) from the employee’s monthly salary. The Company contributes 80 percent of the deductible amount from the employee in each month. In 2018, high-level executives joined the EJIP and the Company paid a total of Baht 11.604 million in contribution.
Moreover, the company has realized importance of all executives and staff’s collaboration to achieve the mentioned goal. So, the company considers to set a corporate KPI and the balanced goal of accounting, customers and social focusing, internal process development for excellence and organization learning such as sustainability performance, customer engagement. These KPI’s results will be reviewed every single quarter and year which will be also related to consideration on bonus increasing payment for executives and all staff.