SDGNC Committee Charter

Sustainable Development, GCG, Nomination & Compensation (SDGNC) Committee Charter

 

CHAPTER 1

INTRODUCTION

 

A.Background

PT Indo Tambangraya Megah Tbk (ITM) is a publicly listed company at the Indonesia Stock Exchange (IDX ) has committed to do business with ethics and beyond compliance. As to the above, the Board have to drive the company’s strategic intent to be a good corporate citizen by consistently driving the company strategy based on the sustainable development and implementing best practices and good corporate governance principles and manage its operation in compliance with all related rules and regulations in a professional, transparent, accountable and fair basis.

As to the supervisory role of the Board of Commissioners (BOC) towards the Company management and operations, and in addition to its role as stated in the Company’s Articles of Association, the responsibility of ITM BOC shall also extend to aspects of Good Corporate Governance (GCG), Nomination & Compensation to ensure that the Company is managed and operated in the best interest of the Company. To fulfil such role, the BOC shall be assisted by a committee, named as GCG, Nomination and Compensation Committee (GCGNCC).

Following the prominence occupied by sustainable development issues in corporate agenda worldwide, the Company’s BOC needs to extend its responsibilities to the issues of sustainable development. Therefore the Company revises the name of the GCGNCC into Sustainable Development, GCG, Nomination and Compensation (SDGNC) Committee.

 

B. Vision and Mission

Vision

To have a credible, competent and professional SD, GCG, Nomination & Compensation Committee in performing its role and responsibility.

Mission

To assist Board of Commissioners in executing its supervisory role in particular to ensure that the company operate and manage its operation in accordance with the Sustainable Development and Good Corporate Governance principles.

 

C. Objective

This SDGNC Charter is established as a guideline for the Sustainable Development, Good Corporate Governance, Nomination & Compensation Committee member to perform its role and responsibility in ensuring a consistent implementation of the SD and GCG principles and practices in operating and managing the Company and its human capital.

 

CHAPTER 2

ESTABLISHMENT, ORGANIZATION, TERM OF OFFICE

A. Establishment

In establishing SDGNC Committee, a reference is made to the following :

In reference to above, the appointment and termination of ITM SDGNC Committee members is based on the Decision of the Board of Commissioners

 

B. Organization

  1. Membership Structure
  2. 1. SDGNC Committee shall be chaired by an Independent Commissioner
  3. 2. SDGNC Committee shall consist of at least 3 (three) members and its members might come from Commissioners or other professional experts from outside the Company.
  4. 3. That professional member from outside the Company shall not have affiliated relationship with the Company, BOD and BOC members and the controlling shareholders.
  5. 4. Members of the SDGNC Committee shall be appointed and terminated by the Board of Commissioners.
  6. 5. Members of the SDGNC Committee shall not hold any other committee position in the Company.
  7. Membership Requirements
  8. 1. Possess high integrity, adequate skill, knowledge and experience in accordance with his/her educational background and excellence in communication skill.
  9. 2.Possess adequate knowledge in the field of GCG, sustainable development, human resources management.
  10. 3.Possess sufficient know-how and understanding on the company law, capital market rule and regulation, labor law, all relevant rules and regulations related with the company’s business.
  11. 4.Not being affiliated to the company BOD, BOC and /or major shareholders.
  12. 5. Not having a direct or indirect business relationship with ITM business operation.
  13. 6. No company stock ownership in cases of committee members who serve as independent commissioner.

C. Term of Office

  1. The term of office of Commissioner concurrently serving as SDGNC Committee member shall be equal to his / her term of office as Commissioner as ruled in the ITM Articles of Association and General Meeting of Shareholders.
  2. The term of office of SDGNC Committee members who do not serve as Commissioner shall be determined by the Board of Commissioners and may be renewed for a another period.
  3. In cases of Committee members who are not Commissioners of the Company, vacant committee membership position has to be filled in within 90 days

CHAPTER 3

DUTY & RESPONSIBILITY, AUTHORITY, PERFORMANCE EVALUATION

SDGNC Committee shall have the main duty of and be responsible for the following major tasks, they are:

1. Duties and Responsibilities

The SDGNC Committee shall discharge their duties and responsibilities in assisting the BOC in fulfilling its responsibilities in respect of the following 

1. 1. Duties & Responsibilities with regard to Sustainability Development

  1. To review and make recommendations on risk mitigation related to Company’s reputation, social and sustainability issues;
  2. to review and make recommendations on the planning, implementation and monitoring of company’s sustainability policies;
  3. to review the company goals, policies and programs relative to exploration, development and operational matters with particular focus on the assessment and mitigation of organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, community involvement and development;
  4. to review the company’s performance on issues of organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, community involvement and development based on sustainability development initiatives;

1.2. Duties and Responsibilities with regard to Good Corporate Governance

  1. To consider and review whether ITM Corporate Governance policy and its Code of Conduct are appropriate and considered adequate and to regularly update the governance policy
  2. To monitor and supervise directors and staff’s compliance with the Corporate Governance Policy and the Code of Conduct so that it is in line with those determined by the Board of Commissioners and to arrange a system where ITM can receive grievance with regard to the Corporate Governance Policy and Code of Conduct from stakeholders
  3. To invite management to attend SDGNC meeting for clarification purpose or to submit relevant documents within the scopes of Committee;
  4. To submit an operation report to the BOC at least once a year;
  5. To review the adequacy of appropriate policies, systems, standards and procedures for all technical matters, development and operating activities and compliance with applicable laws, rules, regulations and standards of corporate conduct as the Committee determines appropriate

1.3. Duties and Responsibilities with regard to Nomination

The Committee responsibilities in the area of nomination shall at least cover the following :

  1. To recommend to the BOC in the development of policies and criteria required in the nomination process of candidates for members of the Board of Directors ( BOD ) and /or the BOC as well as policy for their performance evaluation;
  2. To assist the BOC in carrying out the performance evaluation of the members of the Board of Directors and the BOC based on the set assessment system;
  3. To assist the BOC in the preparation of succession plan for the BOD and the BOC as well as the monitoring of the implementation of such plan;
  4. To assist the BOC in the formulation of the capacity building programs for the members of the BOD and the BOC;
  5. To assess and propose candidates who meet the criteria and requirements to be appointed as member of the BOD and or the BOC for the approval of the General Meeting of Shareholders;
  6. To review and recommend to the BOC on the structure and composition of the BOD and BOC;
  7. To review and propose recommendations to amend scopes of work, duties and responsibilities of the SDGNC to respond to the changing circumstances;
  8. To invite management or expert to attend the Committee meeting for clarification purpose or to submit relevant documents within the scopes of Committee;
  9. The SDGNC Committee in discharging its roles in this area, shall comply with the following procedures :

a. set up the composition and nomination process of the members of the BOD and BOC;

b. set up a policy and criteria for the nomination process of candidates for the member of the BOD and BOC;

c. carry out performance evaluation for the members of the BOD and BOC;

d. set up competency development program for member of the BOD and BOC;

e. SDGNC Committee shall review general and specific qualifications of independent commissioner and add new qualifications deemed suitable for circumstances at the time, the Company’s requirements and the capital market regulators terms and conditions. The SDGNC will then submit its nomination to the BOC, who will further propose it to the General Meeting of Shareholders for approval and appointment

1.4. Duties & Responsibilities with regard to Compensation

  1. To recommend policy, remuneration structure and the amount of remuneration to the BOC, whereby BOC remuneration shall not link to the company’s performance to avoid of potential conflict of interest with the BOC role in supervising the BOD;
  2. to review and recommend to the BOC on the BOC remuneration positioning with market condition;
  3. To assist BOC in carrying out performance evaluation of the member of BOD and BOC with due observance of their remuneration;
  4. To recommend guidelines on compensation payment and how to pay compensations and other benefits to the member of BOD, BOC and other committees appointed thereby;
  5. To consider and recommend amount of payment of compensations and other benefits by taking duties and responsibilities of the Directors and Commissioners into considerations and by reviewing evaluation criteria to determine the right annual remuneration;
  6. To suit the person’s duties and responsibilities, ITM’s operations result and market conditions;
  7. To review the overall budget for salary increase, annual bonus payment and provision of other staff’s fringe benefits;
  8. In fulfilling its role on issues of compensation, the Committee shall carry out the following procedures
  9. set up the compensation policy and structure for the member of the BOD and BOC;
  10. review annually the amount of compensation for the member of the BOD and BOC to align with the market conditions, the performance of the member of the BOD with reference to their target and performance;
  11. consider the balance of allowance between the fixed and the variable

1.5. To do any other tasks as designated by the Board of Commissioners

 

2. Authority

SDGNC Committee shall have a full authority to access to all the Company policies, data and information in executing its duties.

  1. 1. Depending on needs, SDGNC Committee may recruit or hire an expert or consultant to assist the committee at the Company’s expense;
  2. 2. To spend money in any other ways relating to SDGNC Committee’s job and the Company shall be responsible for the expenses;
  3. 3. the SDGNC Committee may investigate as tasked by the BOC any matter brought to its attention and will have access to all facilities, may conduct meetings or interview the Company's legal counsel, internal or external auditors and consultants, and may invite any such persons to attend any part of any meeting of the Committee with or without the presence of management.

3. Performance Evaluation

Performance of SDGNC Committee shall be evaluated collectively every year based on the self-assessment principle and the result shall be reported to the BOC. The assessment shall cover among others :

  1. composition and qualification of the committee,
  2. members’ activities,
  3. meetings
  4. reporting
  5. role in GCG and Nomination of Directors and Commissioners
  6. role in Compensation
  7.  role in CSR/SD

CHAPTER 4

MEETING, REPORTING AND BUDGETING

1. Meeting

  1. 1.SDGNC Committee shall meet every two months or as deemed necessary;
  2. 2. SDGNC Committee can make decision in the meeting if it is attended by at least 2/3 (two-third) of the entire members;
  3. 3. Decisions of the SDGNC Committee shall be deemed valid if it is approved by more than ½ (one-half) of the entire members of the SDGNC Committee present in the meeting;
  4. 4. Meeting of SDGNC Committee shall be chaired by the Chairman of the SDGNC Committee or by an alternate chair appointed by the Chairman;
  5. 5. If deemed necessary, SDGNC Committee may invite other parties related with the material of the meeting to attend a SDGNC Committee meeting;
  6. 6. Each SDGNC Committee meeting shall be reflected in the minutes of meeting.

2. Reporting

  1. 1. SDGNC Committee reports to the BOC on a regular basis on its activities, problems encountered and recommendations;
  2. 2. Each year, SDGNC Committee submits through the BOC reports on its responsibilities and other material information as regards SDGNC Committee to be included in the Company’s Annual Report and to the General Meeting of Shareholders;

3. Budgeting

  1. 1.Before ending of each fiscal year, SDGNC Committee shall develop and submit its budget plan to execute and support its role and responsibilities;
  2. 2. That budget shall be proposed to and approved by the BOC;
  3. 3. That budget shall be part of the BOC’s budget and its utilization thereof shall not require the Management’s approval to maintain its independency

CHAPTER 5

CLOSING

1. Validity and Evaluation

Approved by Board of Commissioners of PT Indo Tambangraya Megah Tbk on 27 August 2015