Vtech 2016 Annual Report Download - page 39

35VTech Holdings Limited Annual Report 2016
Board Committees (Continued)
Nomination Committee (Continued)
Board Diversity
The Company sees increasing diversity at the Board level as an
essential element to complement the Company’s corporate
strategy and has adopted a Board Diversity Policy which sets out
the approach to achieve diversity on the Board.
The Nomination Committee monitors the implementation of the
Board Diversity Policy and has responsibility in leading the progress
for Board appointments. In designing the Board’s composition,
Board diversity has been considered from a number of aspects,
including but not limited to gender, age, cultural and educational
background, skills, knowledge, industry and professional
experience, business perspectives and the legitimate interests of
the Company’s principal shareholders.
Selection of candidates for Board appointments will be considered
taking into account a range of aspects described above. The
ultimate decision will be based on merit and contribution that the
selected candidates will bring to the Board.
Remuneration Committee
The Remuneration Committee is chaired by Mr. Michael TIEN Puk
Sun with Dr. William FUNG Kwok Lun and Mr. WONG Kai Man as
members. All of the members are independent non-executive
Directors. It is responsible for reviewing and recommending all
elements of the executive Directors’ and senior management’s
remunerations to the Board.
The emoluments of Directors are based on skills, knowledge
and performance, together with reference to the pro tability
of the Company, and prevailing market conditions. In addition,
the Company has established a share option scheme to provide
incentives and rewards to eligible participants, and a share
purchase scheme to motivate employees and attract suitable
personnel for continuous development of the Group.
The Remuneration Committee has held two meetings during
the  nancial year. The Remuneration Committee discussed and
reviewed the policy for the remuneration of executive Directors
and senior management, and the annual salaries increment
and remuneration packages for executive Directors and senior
management, including the share option scheme for executive
Directors and senior management before recommending them
to the Board for consideration and approval. It also reviewed and
approved the shares to be awarded under the share purchase
scheme.
Risk Management and Sustainability Committee
The Risk Management and Sustainability Committee is chaired by
Dr. Allan WONG Chi Yun with Dr. PANG King Fai, Mr. Andy LEUNG
Hon Kwong, Mr. WONG Kai Man, Ms. Shereen TONG Ka Hung and
Mr. CHANG Yu Wai as members. It comprises executive Directors,
independent non-executive Director, the Group Chief Financial
O cer and the Company Secretary and Group Chief Compliance
O cer. It is responsible for monitoring and reviewing the risk
management and sustainability strategies of the Group.
The Risk Management and Sustainability Committee has held
two meetings during the  nancial year to review the Group’s
risk management and internal control system, and sustainability
strategies, policies and improvement activities.
The Risk Management and Sustainability Committee has
developed a framework for the management and control of
risks in the Group. Risks are being more formally identi ed and
recorded in a risk register (the “Risk Register”) for key operations.
This Risk Register is updated regularly and the major risks are
being reviewed from time to time by the Risk Management and
Sustainability Committee. The major risks in this Risk Register
include:
– sta and supplier integrity;
– product design, quality and safety;
– sales and receivable management, and marketing and
promotion;
– procurement and supplier management;
– compliance with patents and intellectual property rights
requirements;
– cybersecurity and information technology risks;
– physical security and risk of  re;
– human resources, employee compensation and safety; and
– compliance with the relevant laws and regulations that have a
signi cant impact on the Group.
In addition, the Risk Management and Sustainability Committee
also reviewed the  nancial risks of the Group, the details of which
are set out in note 20 to the  nancial statements.
The Risk Management and Sustainability Committee ensures that
any new and emerging risks are promptly identi ed, evaluated and
appropriate actions are taken by the management. This requires
the active and frequent participation by the process owner
of each function in identifying risks a ecting its business and
implementing measures to reduce such risks, as well as the active
monitoring on the progress of the improvement in internal control
procedures.
During the  nancial year, the Company experienced a cyber attack
in which an intruder gained unauthorised access to some of our
databases and servers, and stole certain personal data of our
customers around the world in November 2015. Upon discovering
the incident, the management immediately conducted a thorough
investigation to identify the causes of such incident and engaged
outside counsel to assist in the response to the cyber attack, and
the counsel in turn engaged an expert forensic investigative  rm to
investigate the cyber attack.
The Company also carried out a thorough review of its plans,
policies and procedures, and technological security measures to
determine what changes and additions are necessary to prevent
the recurrence of the hack and to provide adequate security to
customer data. As a result, a comprehensive Data Security Policy
(the “Data Security Policy”) consolidating a number of existing
IT policies was issued and became e ective on 22 January 2016.
The Data Security Policy applies to the Company and all of its
subsidiary companies worldwide. A Data Security Governance
Board (“Data Security Governance Board”) was formed pursuant to
the Data Security Policy on the same date.
The Data Security Governance Board was established with
de ned terms of reference reporting to the Risk Management
and Sustainability Committee. The Data Security Governance
Board is chaired by the Group Chairman and comprises the Group
President, CMS Chief Executive O cer, TEL President, Group Chief
Financial O cer, Company Secretary and Group Chief Compliance
O cer, and Group Chief Information O cer. It is responsible
for decision-making, implementation, enforcement, oversight,
compliance and periodic review of the Data Security Policy.