Board Committees

The board has appointed a number of committees to discharge the board functions. Sufficient resources are provided to enable the board committees to undertake their specific roles. The respective role, responsibilities and activities of each board committee are set out below:

Executive Committee

The board has established an executive committee for communication of the direction and priorities of CITIC Pacific and sharing information with and amongst senior executives about CITIC Pacific's key development and business issues. This committee's activities include:

  • receiving guidance from the chairman and president on CITIC Pacific's strategic direction and priorities;
  • receiving and considering reports from group treasury and group financial control department on CITIC Pacific's results and forecasts;
  • receiving and considering reports from leaders of CITIC Pacific's major business on their results, activities and prospects of their respective business; and
  • receiving and considering reports from group internal auditor on internal controls of the Group, and reports from other corporate functional leaders

The executive committee is chaired by the president (an executive director) and its membership includes the chief financial officer (an executive director), one other executive director, two executive vice presidents, leaders of major businesses in the group and leaders of key head office functions. The chairman of the board has the right to attend any executive committee meetings. The executive committee met eleven times in 2013. The relevant executive directors as listed below together with the corporate functional leaders and leaders of major operating businesses attended the executive committee meetings. Full minutes of the meetings are kept by the company secretary, which were sent to the committee members after each meeting.

The meeting attendance of directors is as follows:

Remuneration Committee

The principal role of the remuneration committee is to determine and review the remuneration packages of individual executive directors and senior management, including salaries, bonuses, benefits in kind, share options and other plans. The remuneration committee reviews and approves the management’s remuneration proposals with reference to the board’s corporate goals and objectives and considers salaries paid by comparable companies, time commitment and responsibilities and employment conditions elsewhere at CITIC Pacific group, so as to align management incentives with shareholder interests.

The committee currently comprises three independent non-executive directors with Mr Francis Siu Wai Keung as the chairman. The executive vice president, Mr Kwok Man Leung, serves as the secretary of the committee. The secretary prepares full minutes of the meetings and sends to the committee members within a reasonable time after the meetings. The full terms of reference are available on CITIC Pacific's website (Remuneration Committee) and the Stock Exchange's website.

The composition of the remuneration committee during the year as well as the meeting attendance are as follows:

Membership and Attendance

Work Done in 2013

The remuneration committee completed the following in 2013:

  1. reviewed and approved the remuneration policy;
  2. approved the salaries and bonuses of the executive directors and senior executives; and
  3. recommended to the board revision of the fees for the non-executive directors serving on the audit committee.

During the review, no concerned individual took part in any discussion about his own remuneration.

During the year, the remuneration committee communicated with the chairman and/or the president about proposals relating to the remuneration packages of other executive directors and senior management.

Details of CITIC Pacific's remuneration policies are set out in the Human Resources section on page 136, and directors' emoluments and retirement benefits are disclosed on pages 193 to 194. Share options granted under the CITIC Pacific Share Incentive Plan 2000 which ended on 30 May 2010 are disclosed on pages 122 to 124.

The remuneration paid to the directors, by name, for the year ended 31 December 2013 is set out in Note 12 to the financial statements. The remuneration paid to the senior management, by band, for the year ended 31 December 2013 is set out below.

Remuneration of senior management other than directors for the full year of 2013

Audit committee

The audit committee acts on behalf of the board in providing oversight of CITIC Pacific’s financial reporting, annual audit and interim review, internal control as well as corporate governance. It consists of three non-executive directors: Mr Francis Siu Wai Keung (chairman), Mr Alexander Reid Hamilton and Mr Yin Ke. Mr Siu and Mr Hamilton are independent non-executive directors having the relevant professional qualification and expertise in financial reporting matters. The audit committee meets four times a year with CITIC Pacific’s external auditor, the chief financial officer, group financial controller and group internal auditor attending the meetings, taking part in the discussions and answering questions from the committee members. By invitation of the audit committee, other directors and senior executives may also attend the meetings. The audit committee chairman and other committee members also meet in separate private sessions with the external auditor and group internal auditor without the presence of management.

Duties of the audit committee

The authority, role and responsibilities of the audit committee are set out in written terms of reference which are available on CITIC Pacific's website (Audit Committee) and the Stock Exchange's website. The committee reviews its terms of reference at least once a year to ensure they remain in line with the requirements of the CG Code. Amendments to the terms of reference are submitted to the board for approval.

Under its terms of reference, the audit committee shall:

  • Review and monitor the integrity of financial information of CITIC Pacific and provide oversight of the financial reporting process;
  • Monitor the effectiveness of external audit and oversee the appointment, remuneration and terms of engagement of CITIC Pacific's external auditor, as well as his independence;
  • Oversee the system of internal control and risk management, including the Group's internal audit function as well as arrangements for concerns raised by staff on financial reporting and other matters ("whistleblowing");
  • Undertake corporate governance functions delegated from the board, including:
    1. reviewing CITIC Pacific's policies and practices on corporate governance and making recommendations to the board as well as CITIC Pacific's compliance with the CG Code and disclosures in the corporate governance report;
    2. reviewing and monitoring:
      1. the training and continuous professional development of directors and senior management;
      2. CITIC Pacific's policies and practices on compliance with legal and regulatory requirements, and the Group's code of conduct; and
      3. the Group's whistle-blowing policy and system.

Committee composition and meeting attendance

The composition of the audit committee during the year as well as the meeting attendance are as follows:

Membership and Attendance

The company secretary acts as secretary to the committee. Sufficient resources are made available to the committee when required. An agenda and accompanying committee papers are sent to the committee members at least three days prior to each meeting. The company secretary prepares full minutes of the audit committee meetings with details of the matters considered by the committee members. The draft minutes are sent to all committee members for comment after each meeting and the final version of the minutes is sent to the committee members for their records within a reasonable time after the meeting.

The chairman of the committee summarises the activities of the committee and highlights issues arising and reports to the board after each audit committee meeting.

Work done in 2013

The audit committee performed the following in 2013:

In the audit committee meeting of February 2014, the audit committee reviewed and approved CITIC Pacific's annual financial statements and annual report for the year ended 31 December 2013, and considered reports from the external and internal auditors. The audit committee recommended that the board approves the 2013 annual report.

Nomination committee

The nomination committee was established by the board with written terms of reference in compliance with the CG Code. Following the adoption of the board diversity policy on 14 August 2013, the terms of reference of the nomination committee were revised in line with the new CG Code requirements which took effect from 1 September 2013. The revised full terms of reference are available on CITIC Pacific's website (Nomination Committee website.

The nomination committee reports directly to the board and its primary functions are:

  • to determine the policy for the nomination of directors and set out the nomination procedures and the process and criteria adopted to select and recommend candidates for directorship;
  • to review the structure, size, composition and diversity of the board at least annually and make recommendations on any proposed changes to the board;
  • to assess the independence of independent non-executive directors; and
  • to make recommendations to the board on the appointment or re-appointment of directors.

Starting from August 2013, the nomination committee undertakes an additional function delegated from the board to review the board diversity policy adopted in August 2013, and makes recommendations on any required changes to the board. This policy sets out the approach to achieve diversity on the board which will include and make good use of the difference in skills, experience and background, geographical and industry experience, ethnicity, gender, knowledge and length of service and other qualities of the members of the board. These differences will be considered in determining the optimum composition of the board and all board appointments will be based on merit, having due regard to the overall effective function of the board as a whole. CITIC Pacific believes that diversity can strengthen the performance of the board, promote effective decision-making and better corporate governance and monitoring. The nomination committee discusses and agrees annually the relevant measurable objectives that the board has set for implementing this policy and makes recommendations to the board for adoption. It also monitors the implementation of this policy and reports to the board on the achievement of the measurable objectives for achieving diversity under this policy.

The nomination committee comprises three members, two of whom are independent non-executive directors, and is chaired by the chairman of the board. The nomination committee meets at least annually and at such other times as it shall require. The company secretary acts as the secretary to the committee. The committee is provided with sufficient resources enabling it to perform its duties, and it can seek independent professional advice at CITIC Pacific’s expense if necessary.

During the year, one nomination committee meeting was held with full attendance by the committee members in person or by video conference. The company secretary prepared full minutes of the nomination committee meetings, and the draft minutes were sent to all committee members. One set of resolutions was passed by circular by all the committee members during 2013.

The composition of the nomination committee during the year as well as the meeting attendance are as follows:

Membership and Attendance

The nomination committee completed the following work in 2013:

  1. reviewed the structure, size, composition and diversity of the board;
  2. considered the proposed amendments to its terms of reference to take into account the new CG Code requirements for board diversity policy and recommended their adoption by the board;
  3. reviewed the board diversity policy and discussed the measurable objectives, including knowledge and experience, skills, independence, age and gender and nationality, and agreed that these measurable objectives were achieved for the diversity of the board which contributed to the corporate strategy and the business development of CITIC Pacific; and
  4. recommended to the board the re-election of the retiring directors at the forthcoming annual general meeting.

In February 2014, a meeting was held at which the nomination committee recommended to the board the appointment of Mr Zeng Chen as an executive director of CITIC Pacific. The nomination committee members also noted the retirement of Mr André Desmarais.

Investment committee

The investment committee was set up in May 2009 to provide advice to the chairman, the president and the board on:

  • investment plans, feasibility studies and proposed disposals or divestments initiated by the businesses in the Group or the committee itself;
  • the strategy and planning of CITIC Pacific; and
  • the annual operating and capital expenditure budgets and business plans of CITIC Pacific and businesses in the Group, amendments to approved budgets and unbudgeted capital expenditure.

The committee is chaired by the chairman of the board. The other members are the president (an executive director), chief financial officer (an executive director) and two executive vice presidents. Prior to the committee meetings, business proposals and feasibility studies are prepared by the proposing business, and the Group's business development department provides analysis to facilitate discussions. Depending on the availability of members, discussions are made either in physical meetings or in writing. Discussion results will be notified to people concerned with implementation for information and follow up.

The committee meets on an “as required” basis. In 2013, there were eleven discussions of the committee covering 18 topics.

Membership and Participation

Asset and liability management committee

  • review regularly the asset and liability balances of CITIC Pacific in aggregate and at subsidiary level;
  • review and set limits on exposure at Group, subsidiary or business unit levels in relation to
    • asset and liability structure
    • counterparties
    • counterparties
    • commitments and contingent liabilities;
    • counterparties
  • review and approve financing plans;
  • approve the use of new financial products; and
  • establish hedging policies.

The committee is chaired by the chief financial officer (an executive director). Other members include two executive vice presidents, the group financial controller, the group treasurer, and the executives with responsibility for treasury, treasury risk management and financial control.

The chief financial officers of major business units may be invited to attend and report at the meetings of the asset and liability management committee from time to time. The committee met eleven times during 2013 to consider the matters within its terms of reference. All the meetings were chaired by Mr Vernon Francis Moore.

Special committee to deal with matters relating to investigations of CITIC Pacific

A special committee to deal with matters relating to the investigations of CITIC Pacific was established in April 2009 to

  • approve communications between CITIC Pacific and any relevant authorities or third parties in relation to the investigations by the Securities and Futures Commission and the Commercial Crime Bureau of the Hong Kong Police Force;
  • consider the issue of legal professional privilege and to make decisions on behalf of CITIC Pacific in connection therewith; and
  • seek legal and professional advice on behalf of CITIC Pacific as well as approve their fees.

The committee comprises three members, namely, Mr Zhang Jijing (executive director), Mr Ju Weimin (nonexecutive director) and Mr Francis Siu Wai Keung (independent non-executive director). No physical committee meetings were held during the year, and the committee members reviewed the matters concerning the protection of legal professional privilege by way of circulation and received written independent legal advice.

On 28 March 2012, the Court of Appeal handed down judgment, overturning the Court of First Instance's judgment of 18 March 2011, ruling that the six documents voluntarily handed to the Securities and Futures Commission were protected by legal professional privilege. The Court of Appeal's judgment is final and conclusive as no appeal has been made to the Court of Final Appeal, and CITIC Pacific is in the process of recovering its legal costs of this part of the proceedings and seeking return of the relevant privileged documents.

CITIC Pacific filed a notice of appeal on 9 January 2012 against the judgment in relation to approximately 1,600 further items handed down by the Court of First Instance on 19 December 2011. The hearing dates of this part of the proceedings remain to be fixed.

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