Annual Report 2011 - Mandarin Oriental Hotel Group

Corporate Governance
Annual Report 2011 77
Mandarin Oriental International Limited is incorporated in Bermuda. The Company was established as an Asian-based
hotel group and has since extended its operations to key locations around the world. The Company’s equity shares have
a premium listing on the London Stock Exchange, and secondary listings in Bermuda and Singapore. The Company
attaches importance to the corporate stability that is fundamental to the Group’s ability to pursue its long-term
development strategy. It is committed to high standards of governance. Its approach, however, developed over many
years, differs from that envisaged by the UK Corporate Governance Code (the ‘UK Code’), which was originally
introduced as a guide for United Kingdom incorporated companies listed on the London Stock Exchange. As provided
in the Listing Rules issued by the Financial Services Authority in the United Kingdom, the Company’s premium listed
status requires that this Report address how the main principles of the UK Code have been applied by the Company,
and explain the reasons for the different approach adopted by the Company as compared to the UK Code’s provisions.
The Company’s governance differs from that contemplated by provisions of the UK Code on board balance and
refreshment, director independence, board evaluation procedures, nomination and remuneration committees and
the appointment of a senior independent director.
The Management of the Group
The Company has its dedicated executive management under the Group Chief Executive. The Memorandum of
Association of the Company, however, provides for the chairman of Jardine Matheson Holdings Limited (‘Jardine
Matheson’) to be, or to appoint, the Managing Director of the Company. The managing director of Jardine Matheson
has been so appointed. Reflecting this, and the 74% interest of the Jardine Matheson group in the Company’s share
capital, the Group Chief Executive and the Managing Director meet regularly. Similarly, the board of the Hong Kongbased
Group management company, Mandarin Oriental Hotel Group International Limited (‘MOHG’), and its finance
committee are chaired by the Managing Director and include Group executives as well as the deputy managing director,
the group finance director, the group strategy director and the group general counsel of Jardine Matheson.
The Board
The Company currently has a Board of 17 Directors: the Group Chief Executive and Chief Financial Officer; seven
executives of Jardine Matheson; and eight non-executive Directors. Their names and brief biographies appear on
pages 24 and 25 of this Report. The Chairman has been appointed in accordance with the provisions of the Bye-laws
of the Company, which provide that the chairman of Jardine Matheson, or any Director nominated by him, shall be
the Chairman of the Company. The composition and operation of the Board reflect the Company’s commitment to its
long-term strategy, shareholding structure and tiered approach to oversight and management as described in this Report.
These factors explain the balance on the Board between executive and non-executive Directors, the stability of the Board,
the absence of nomination and remuneration committees and the conduct of Board evaluation procedures. The Board
regards relevant business experience and relationships as more valuable attributes of its non-executive Directors than
formal independence criteria. Accordingly the Board has not designated a ‘senior independent director’ as set out in
the UK Code. Recommendations and decisions on remuneration result from consultations between the Chairman
and the Managing Director and other Directors as they consider appropriate.
Among the matters which the Board of the Company decides are the Group’s business strategy, its annual budget,
dividends and major corporate activities. Responsibility for implementing the Group’s strategy is delegated to the
Company’s executive management, with decision-making authority within designated financial parameters delegated
to the MOHG finance committee. In addition, as part of the Company’s tiered approach to oversight and management,
certain Directors of the Company who do not serve on the board of MOHG and who are based outside Asia make
regular visits to Asia and Bermuda where they participate in four annual strategic reviews. All of these reviews precede
the Board meetings. These Directors are not directly involved in the operational management of the Group’s business
activities, but their knowledge and close oversight of the Group’s affairs reinforces the process by which business is
reviewed before consideration by the Board.