Succession Planning Policy

A change in executive leadership is inevitable for all organizations and can be a very challenging time; HSG Berhad (“HSG”) and all its subsidiaries have established a succession plan to provide continuity in leadership. Succession planning requires collaboration across the organization. It is a process designed to ensure that the Group identifies and develops a talent pool of employees for high level management positions through mentoring, training and job rotation to fill vacant positions due to retirement, resignation, death or new business opportunities.

A Succession Planning Policy is developed to ensure the stability and accountability of the organization by preparing for an eventual permanent change in leadership, either planned or unplanned, so as to ensure continuity support in operation and service when the Managing Director, Executive Director, Senior Management or key business leader leave their positions.

The Company aimed to develop a diverse pool of candidates by developing career paths for employees to ensure sufficient supply of suitably qualified employees for higher roles and responsibilities. Employees career paths development will also facilitate the Group’s ability to recruit, train and retain top-performing or talented employees.

To develop a diverse pool of candidates, the Board has to assess the permanent leadership needs of HSG to ensure the selection of a qualified and capable leader who is a good fit for the HSG’s mission, vision, and objectives; coupled with the necessary skills for HSG.

Hence, it is vital for the Board to develop reliable assessment procedures and ensure that these procedures are applied systematically across the Group.

Key positions are identified as follows:

• Managing Director;
• Executive Directors;
• Non-Executive Directors; and
• Key Senior Management.

The Board with the assistance of the Board Nomination and Remuneration Committee (“BNRC”), is responsible for succession planning for the Managing Director, Executive Directors, Non-Executive Directors and Key Senior Management positions.

The Board should consider either to hire or to internally promote the new Managing Director, Executive Directors and Key Senior Management, when anyone of the mentioned position leaves and to ensure the successor has the required skills to implement the Group wide strategies.

Whereas, the Managing Director is responsible for ensuring a succession plan is in place for the key positions in the Group with the assistance from the Executive Directors and Key Senior Management.

A. The Board with the assistance from the BNRC will work with the Executive Directors and Human Resources Department to oversee the Succession Plans of the key positions in the Company.

B. The successors for the Managing Director and Executive Directors shall be identified by the BNRC from among the Senior Management or external sources as the Board deems fit.

C. An emergency succession contingency plan should be developed to prevent unforeseen circumstances such as death or disability that stops the Managing Directors or Executive Directors from continuing to serve. The plan identifies the individuals who will act in an emergency and their responsibilities. The contingency plan is reviewed by the Board annually and revised as appropriate. Identify required Group capabilities and talent needs, based on strategic business plan and Company’s Vision and Mission;

D. Determine the required capabilities for critical positions;

E. List down competency profile of the selected talents or employees;

F. Analyze and match the competencies between the critical position and select employee to identify the gaps;

G. Develop and implement high level leadership development plan such as coaching and mentoring programmes for the selected employees to grow into target positions;

H. Assess the performance of the selected employees on annual basis;

I. Monitor and track the overall progress;

J. Successful transition of the key positions particularly the Managing Director or Executive Directors is essential to maintain the confidence of stakeholders. The vacancies of key positions should be planned ahead and be organized in a manner that ensures proper and smooth transition; and

K. New Managing Director should be identified and be appointed at least 6 months before the outgoing Managing Director leaves the Company. Outgoing and incoming Managing Director should meet frequently for in-depth discussion regarding the operating styles, histories and expectations of board members, senior management, stakeholders as well as other key players. Outgoing Managing Director should properly coach the incoming Managing Director and pass on the baton to the incoming Managing Director for orderly succession to support delivery of the Company’s strategic initiatives.

The support from the Board of Directors, the Managing Director, Executive Directors and Senior Management are important for the succession planning process. This will give all employees an understanding and emphasis on the importance of succession planning to the Company. Regular review and update for the succession plan is vital to ensure the Company has reevaluated the hiring needs and assess the development progress of the selected candidates. Not forgetting that succession shall be linked to the Company’s strategic planning and future investment.

Review and Compliance: This policy will be reviewed annually by BNRC to ensure it remains relevant and effective.

Effective Date:

Approval: This policy has been approved by the BNRC of HSG.