Singapore Post (SingPost) has released the findings of its Corporate Governance Review and now plans to adopt the majority of its recommendations over the next three months.
The review, conducted by leadership consulting firm Heidrick & Struggles and Singapore law firm Lee & Lee, surveyed and interviewed SingPost directors and members of the SingPost management team between April and mid-May 2016. It also reviewed board papers and meeting minutes relating to key decisions between March 2013 and March 2016.
A total of 15 companies, comprising SGX-listed companies with strong corporate governance ratings and global listed companies within the e-commerce logistics and postal value chain, were used as benchmarks. The recommendations included:
Board processes and practices
The review made recommendations for management succession, conflicts of interest and disclosures, and processes for mergers and acquisitions (M&A) and market disclosures.
The review found that SingPost needed to make significant improvements in building a robust pipeline of future leaders.
Mergers and acquisitions
The review found that SingPost has written guidelines on evaluating and approving M&A transactions. However, the guidelines are not consistent with each other and are not consistently understood. Many of the guidelines are implemented based on the commercial experience of those working on each M&A transaction, with varying interpretations and applications of the principles and guidelines.
The review found that procedures relating to market disclosures and SGX (Singapore Exchange) announcements and responsibilities of those involved in the process were not properly documented.
To address this, the SingPost board will be adopting a disclosure policy that lays out detailed processes and a clear delegation of responsibilities in the drafting, preparation, approval and release of SGX announcements.
A Market Disclosure Committee will also be established to administer and oversee the disclosure policy.
Board composition and structure
The board will work toward a target of 10 directors as advised by the review. The review noted that a high number of directors have full-time professional commitments, which may impact their capacity to contribute to SingPost, and that half the board are considered non-independent, which is at the 50% limit set out in the Code of Corporate Governance 2012. Taking into consideration the directors’ full-time commitments and director independence requirements, SingPost may need to retain up to 12 directors in the short term.
Board culture and dynamics
The review highlighted that inclusiveness, trust, and open and candid dialog are critical to a group of highly capable individuals translating into a high performing team. It found that SingPost’s board could further enhance its effectiveness through more frank and rigorous discussion.
Board partnership with management
The review advised that the board continues to play an active role in contributing to strategy but called for clearer delineation between the role of the board in contributing to the strategy in partnership with management and the role of the SingPost management team in executing the strategy.
The review said it is important to build a highly collaborative partnership between the chairman and new group CEO and to consider the chemistry fit and how the two can complement each other.
Simon Israel, chairman of SingPost, said, “The board is fully committed to the implementation of the recommendations, both in form and in spirit. A number of the major recommendations have already been implemented and the rest will be prioritized and substantially implemented as soon as possible and no later than the end of September this year.
“With this important review behind us, it is now time for the board to look forward and focus on SingPost’s business and most importantly, the appointment of the group CEO.”
July 6, 2016