Remuneration and Nomination Committee

THE IMPLEMENTATION GUIDELINES OF THE NOMINATION AND REMUNERATION COMMITTEE

CHAPTER I

RULES OF ESTABLISHMENT

  1. PT Industri Jamu dan Farmasi Sido Muncul, Tbk (hereinafter is referred to as “Sido Muncul” or “the Company”) as a company listed in the Indonesia Stock Exchange (IDX), has to comply with capital market regulations and with all laws and regulations related to the Company’s operations.
  2. The Board of Commissioners of the Company needs to form a Nominations and Remunerations Committee (hereinafter is referred to as the “Committee”) to assist the Board of Commissioners of the Company in accomplishing its role and function, so that the Company operates according to the Good Corporate Governance (“GCG”) principles.
  3. In relations to the above, the Committee shall define the Nominations and Remuneration Charter (hereinafter is referred to as “Charter”) which will bind all Committee members in performing their roles and responsibilities, which will be defined by the Board of Commissioners of the Company.
  4. The basis for this Charter are:
    1. Law number 8 of 1995 on Capital Market;
    2. Law number 40 of 2007 on Limited Liability Company;
    3. Financial Services Authority of Indonesia Regulation Number 34/POJK/2015 about Nominations and Remuneration Committee of an Issuer or a Public Company; and
    4. The Company’s Article of Association based on Act No. 53 dated May 13, 2015.

CHAPTER II

STRUCTURE AND TENURE

  1. Structure and Membership
    1. The Committee shall consist a minimum of 3 (three) members, with the following composition:
      1. (a) A chairperson, who is concurrently the Independent Commissioner of the Company
      2. (b) Other members, who can either be (i) a member of the Board of Commissioners of the Company; (ii) an external party, who does not have any affiliation with the Company, has experience related to Nominations and/or Remuneration, and does not serve as a member of other committees in the Company; or (iii) an internal party supporting the Board of Directors of the Company who has knowledge in human resources.
    2. Most of the Committee members should not be from the internal party.
    3. Members of the Board of Directors of the Company cannot be members of the Committee.
  2. Tenure
    1. A Committee member shall be appointed and terminated by the Board of Commissioners of the Company.
    2. Committee member’s tenure shall not exceed the Board of Commissioner’s member’s tenure.
    3. Committee member can be reappointed at the end of his/her tenure.
    4. Replacement of a Committee member who does not serve in the Board of the Commissioners of the Company shall be done within 60 days after the said Committee member is not able to conduct his/her function.

CHAPTER III

ROLES AND RESPONSIBILITIES

  1. The Committee must be independent in conducting its responsibilities and must be responsible to the Board of Commissioners of the Company.
  2. Regarding Nomination function:
    1. To provide recommendation to the Board of Commissioners of the Company related to:
      1. (a) The composition of the Board of Directors and the Board of Commissioners’ function;
      2. (b) The policy and standards of the nomination process; and
      3. (c) The policy on performance evaluation for the Board of Directors and the Board of Commissioners of the Company;
    2. To assist the Board of Commissioners of the Company in evaluating the Board of Directors and the Board of Commissioners’ performance based on the agreed standard of evaluation;
    3. To provide recommendation to the Board of Commissioners of the Company on Capability development programs for the Board of Directors and/or Board of Commissioners of the Company;
    4. To recommend candidates who fulfill the requirements as members of the Board of Directors and/or Board of Commissioners to the Board of Commissioners of the Company to be presented to the General Shareholders Meeting.
  3. Regarding Remuneration Function:
    1. To provide recommendation to the Board of Commissioners of the Company on the remuneration structure, policy and the amount for the Directors and the Board of the Commissioners of the Company;
    2. To assist the Board of Commissioners of the Company in evaluating the alignment of performance and remuneration received by each Director and Commissioner member.

CHAPTER IV

WORK PROCEDURES

  1. Regarding Nomination Function:
    1. To define the composition and the nomination process for Directors and members of the Board of Commissioners of the Company.
    2. To define the policy and standards required for the nomination process of Directors and members of the Board of Commissioners of the Company.
    3. To assist in the performance evaluation of the Directors and members of the Board of Commissioners of the Company.
    4. To define capability development program for the Directors and members of the Board of Commissioners of the Company.
    5. To review and recommend candidates who fulfill the requirements as members of the Board of Directors and/or the Board of Commissioners to the Board of Commissioners of the Company to be submitted to the General Shareholders Meeting.
  2. Regarding Remuneration Function:
    1. To define the remuneration structure, policy and amount for Directors and members of the Board of Commissioners of the Company, with the following considerations:
      1. (a) Remuneration practice in similar industry and size of business;
      2. (b) Role, responsibilities and authority of the Directors and members of the Board of Commissioners of the Company, in alignment with the achievement of the Company’s objectives and performance;
      3. (c) Performance goal or performance of each Director and member of the Board of Commissioners of the Company;
      4. (d) Balance between fixed and variable allowances.
    2. Remuneration structure can consist of salary, honorarium, incentive, and/or Fixed and/or variable allowance
    3. Remuneration structure, policy and the amount shall be evaluated annually by the Committee./li>

CHAPTER V

MEETINGS

  1. Meeting Mechanism and Decision Making:
    1. Committee meetings must be held periodically, at a minimum 1 (one) time in every 4 (four) months.
    2. Committee meeting can only be held if:
      1. (a) it is attended by the majority of the Committee’s members, and
      2. (b) one of the majority of the Committee’s Members mentioned in (a) is the Chairperson of the Committee.
    3. Decision is made based on mutual consensus and agreement. In the case that there is no mutual consensus and agreement then the decision will be based on the majority vote.
  2. Minutes of Meeting:
    1. Meeting results should be recorded in Minutes of Meeting and should be submitted in writing to the Board of Commissioners of the Company and documented by the Company.
    2. Minutes of Meeting should record dissenting opinions (if any) from Committee members, and the reason for the dissenting opinions.

CHAPTER VI

REPORTING AND DISCLOSURE

  1. Reporting:
    1. The Committee shall report the implementation of the assignment, responsibility and procedures for Nominations and Remuneration to the Board of Commissioners of the Company.
    2. The implementation report of the Committee is a part of the Board of Commissioners’ implementation report and shall be submitted to the General Shareholders Meeting.
  2. Disclosure:
    1. Implementation of the nominations and remuneration function shall be disclosed in the Company’s annual report and website

CHAPTER VII

BUDGET

  1. The Committee shall submit budget to support its activities at the beginning of every financial year.
  2. The Committee’s budget shall be submitted to the Board of Commissioners of the Company for approval.
  3. The Committee’s budget is part of the Board of Commissioner’s budget and the utilization of the budget shall be audited by a party appointed by the Board of Commisioners.