SABIC Board Committees

SABIC Board is supported by four (4) committees, which are: the Audit Committee, Remuneration & Nomination Committee, Risk & Sustainability Committee, and Investment Committee. Committees’ performance is periodically assessed by the Board, who is ultimately responsible of their acts.

BOARD AUDIT COMMITTEE

According to its charter, the Board Audit Committee (BAC) shall be formed by the Ordinary AGM, based the Board of Directors proposal, from members other than the Board executive members, whether shareholders or others. It shall comprise three (3) to five (5) members provided at least one is an independent director.

The current Board Audit Committee, which was re-formed for a new term along with the Board, comprises five (5) members of whom two (2) are independent directors and three (3) are non-director (outside) members. The Committee is chaired by an independent director.

A non-director (outside) member on BAC, has all the membership’s rights and authorities, including voting, and is independent of SABIC management.

This composition underpins a strong independence for SABIC Audit Committee and ensures independent and effective audit oversight.

As on 31 December 2022, the BAC is composed of the following members:

^{(1) Mr. Nader Al-Wehibi is also a member of the Risk & Sustainability Committee}

^{(2) Mr. Calum MacLean , Mr. Wilhelmus Jansen, and Mr. Stephan Santbrink joined the BAC on 10 Apr 2022}

^{(3) Mr. Abdulaziz Al-Habdan, Dr. Khalid Al-Faddagh and Eng.Abdullah Al-Issa left the BAC on 09 Apr 2022}

BAC MEETING ATTENDANCE:

^{(1) Mr. Calum MacLean , Mr. Wilhelmus Jansen , and Mr. Stephan Santbrink joined the BAC on 10 Apr 2022}

^{(2) Mr. Abdulaziz Al-Habdan, Dr. Khalid Al-Faddagh and Eng. Abdullah Al-Issa left the BAC on 09 Apr 2022}

BAC RESPONSIBILITIES:

– Oversight of financial reporting, including: (i) reviewing the Group's financial statements; (ii) providing technical opinion(s) as to the Board report and financial statements being in compliance with regulatory requirements; (iii) examining unusual transactions in the financial statements; (iv) verifying accounting estimates; and (v) reviewing financial and accounting policies of the Group;

– Oversight of internal control systems, including: (i) reviewing internal and financial controls and risk management systems and ensuring their effectiveness through regular reports prepared by the Internal Audit Department (or external auditors) and following up on the execution of actions; and (ii) reporting to the Board on the adequacy of internal control systems;

– Oversight of internal audit, including: (i) supervising the Internal Audit Department and verifying its effectiveness in carrying out its roles and responsibilities; (ii) reviewing and approving the annual audit plan; (iii) reviewing reports prepared by the Internal Audit Department and following up on the execution of actions; (iv) ensuring the independence of the Internal Audit Department; and (v) evaluating the performance of the head of the Internal Audit Department;

– Oversight of the external auditor, including: (i) recommending the appointment or dismissal of the external auditor and determining their fee after assessing their performance, independence, scope of work and terms of engagement; (ii) verifying the independence of the external auditor; (iii) reviewing the external audit plan and verifying its compliance with applicable regulations; (iv) answering external auditor's queries and providing requisite support for the performance of an external audit; and (v) reviewing reports prepared by the external auditor and following up on the implementation of recommended action;

– Oversight of compliance, including: (i) reviewing reports prepared by regulatory bodies in respect of compliance with applicable regulations and following up on the implementation of recommended action; (ii) ensuring SABIC's compliance with relevant regulations, by-laws and policies; (iii) reviewing proposed related party transactions; (iv) establishing appropriate procedures for internal reporting of violations of internal control systems; and (v) establishing appropriate procedures for following up on any such reports of violation (including ensuring independence of such procedures); and where relevant, making recommendations to the Board in respect of the foregoing.

BOARD REMUNERATION & NOMINATION COMMITTEE

According to its charter, the Board Remuneration & Nomination Committee (BRNC) shall be formed by the Board, according to the rules approved by the AGM for its formation, term, working procedure and remuneration of its members. The BRNC is formed from Board members whether or not are shareholders. It shall comprise three (3) to five (5) members provided at least one (1) is an independent director and none is an executive director.

As on 31 December 2022, the BRNC comprises the following four (4) members, of whom one (1) is independent and three (3) are non-executive directors of the Board and chaired by an independent director. With this composition, the BRNC is fully independent and capable of operating effectively. The following table shows the BRNC composition and meetings:

BRNC Meetings

^{(1) Mr. Calum MacLean and Dr. Mohammed Al-Qahtani joined the BRNC on 10 Apr 2022}

^{(2) Dr. Khaled Nahas left the BRNC on 09 Apr 2022}

BRNC RESPONSIBILITIES

– Oversight of remuneration, including: (i) developing remuneration policies for the members of the Board, Board committee and Executive Management and recommending them to the Board for approval by the Annual General Meeting of SABIC's shareholders; (ii) reviewing remuneration policies regularly to ensure keeping up with changes in relevant legislation and regulations, SABIC's strategic objectives and the skills and qualifications required, and recommending proposed changes to the Board; (iii) recommending to the Board the remuneration of the members of the Board, Board committee and Executive Management in accordance with the policy approved by the Annual General Meeting of SABIC's shareholders; (iv) preparing an annual report on remunerations paid to the members of the Board, Board committee and Executive Management; and (v) specifying and recommending types of incentives for employees;

– Oversight of appointments of Board members, including: (i) developing a Board membership policy and recommending it to the Board for approval by the Annual General Meeting of SABIC's shareholders; (ii) reviewing such policy regularly to ensure that it complies with the changes in the relevant legislation and regulations, SABIC's strategic objectives, skills and qualifications required, and recommending proposed changes to the Board; (iii) conducting an annual review of the required skills for Board membership and preparing a description of the required capabilities and qualifications; (iv) recommending nominated individuals for Board membership in accordance with the Board membership policy; (v) verifying conflicts of interest for Board nominees, and making appropriate recommendations to the Board; (vi) reviewing the Board structure and recommending changes, if required or appropriate; (vii) reviewing the charters of the Board and the Board committees and updating them in accordance with the regulatory requirements and best practices; (viii) keeping Board members always informed of latest developments in the field of corporate governance and best practices; (ix) establishing processes for addressing vacancies in the Board or Board committees; and (x) recommending measures to evaluate the performance of the Board and the Board committees;

– Oversight of Board functioning, including: (i) ensuring independence of the independent directors; (ii) recommending re-nominations/ dismissals of members of the Board and Board committee; (iii) verifying whether a Board member is engaged in any business that competes with the Company’s businesses, or competes in any activity or a branch of an activity carried out by the Company and making necessary recommendations to the Board; (iv) Reviewing status of the member’s competition against the Company’s businesses (approved by the Annual General Meeting) on an annual basis; basis; and (v) overseeing the implementation of an orientation programme for new Board members;

– Oversight of appointments of Executive Management members, including: (i) recommending to the Board appropriate policies and standards for the appointment of Executive Management members and identifying the required capabilities and skills; (ii) reviewing such policies and standards regularly to ensure their consistency with changes in SABIC's strategic objectives, and identifying the skills and qualifications required to achieve such objectives; (iii) preparing job descriptions for Executive Management appointments; and (iv) developing succession planning processes for cases of vacancy of the position of any member of the Executives Committee and making the required recommendations.

BOARD RISK & SUSTAINABILITY COMMITTEE

According to its charter, the Board Risk & Sustainability Committee (BRSC) shall be formed by a Board resolution setting out its formation, term, working procedure and remuneration of its members. The BRSC is formed from three (3) to five (5) members.

As on 31 December 2022, the BRSC comprises the following three (3) members, of whom one (2) are independent and one (1) is non-executive directors. The following table shows the BRSC composition and meetings:

BRSC Meetings

^{(1) Eng.Yousef Al-Zamel joined the BRSC on 10 Apr 2022}

^{(2) Mr. Calum MacLean left the BRSC on 09 Apr 2022}

BRSC RESPONSIBILITIES

– Risk management functions, including: (i) working with the Executive Management to develop a corporate risk management policy in accordance with SABIC's business and activities and pursuant to SABIC's objectives and strategy, and recommending such policy to the Board; (ii) reviewing the corporate risk management policy periodically to ensure consistency with changes that may occur in the internal or external environments in which SABIC operates, the legislation governing its business or strategic objectives, or otherwise, and recommending proposed changes to the Board; (iii) recommending to the Board an acceptable level of risk to SABIC and how to maintain it, and monitoring that this level is not exceeded; (iv) verifying business continuity and identifying risks facing SABIC annually; (v) overseeing the risk management systems and assessing their effectiveness and mechanisms of identifying, measuring and monitoring risks; (vi) re-evaluating the ability to take, or be exposed to risks regularly (for example through stress testing); (vii) preparing a report to the Board containing detailed risk exposure and proposed steps to manage these risks; (viii) providing recommendations to the Board on risk management issues; (ix) verifying the independence of risk management personnel; (x) ensuring that risk management personnel understand the risks facing SABIC, and working to increase awareness of the risk culture; and (xi) reviewing any issues raised by the Audit Committee that may affect SABIC's risk management;

– Sustainability management functions, including: (i) working with the Executive Management to develop a corporate sustainability strategy and policies that are commensurate with the nature of SABIC's activities and business; (ii) reviewing the sustainability strategy and policies periodically to ensure their consistency with changes in the internal or external environments in which SABIC operates, the legislation regulating its business or strategic objectives, or otherwise, and recommending proposed changes to the Board; and (iii) overseeing SABIC's EHSS systems and ensuring they are in compliance with relevant legislation and regulations, and the availability of the skills and expertise necessary for their management.

BRSC PRIORITIES FOR RISK MANAGEMENT AND SUSTAINABILITY ASSURANCE:

BOARD INVESTMENT COMMITTEE

According to its charter, the Board Investment Committee (BIC) shall be formed by a Board resolution setting out its formation, term, working procedure and remuneration of its members. The committee is formed from three (3) to five (5) members.

As on 31 December 2022. The table below shows the committee composition and meetings:

BIC Meetings

^{(1) Dr. Mohammed Al-Qahtani, Eng.Yousef Al-Zamel and Mr. Calum MacLean joined the BIC on 10 Apr 2022}

^{(2) Eng. Khalid Al-Dabbagh, Dr. Khaled Nahas, and Eng. Abdullah Al-Issa left the BIC on 09 Apr 2022}

^{(3) Mr. Yousef Al-Benyan resigned on 28 Sept 2022}

BIC RESPONSIBILITIES:

– Working with the Executive Management to develop an investment strategy and policy commensurate with the nature of SABIC's business, activities and risks;

– Reviewing the investment strategy and policy regularly to ensure consistency with changes that may occur in the external environment in which SABIC operates, the legislation regulating the business, or the strategic objectives or otherwise, and recommending proposed changes to the Board;

– Overseeing investment activities and establishing appropriate processes for measuring and assessing investment performance;

– Evaluating the investment opportunities proposed by the Executive Management (such as mergers or acquisitions of companies, businesses or assets; divestiture, sale, or transfer of ownership, exit or disposition of an existing investment; and joint venture partnerships);

– Examining financing prospects for such investment opportunities;

– Ensuring that the proposed investment opportunities comply with relevant regulations and instructions;

– Prioritizing investment proposals;

– Reviewing the Executive Management's interim progress reports on approved investment opportunities.

^{(1) Eng. Yousef Al-Zamel, Dr. Mohammed Al-Qahtani joined on 10 Apr 2022}

^{(2) Dr. Khaled Nahas, Eng. Abdullah Al-Issa term expired on 09 Apr 2022}

^{(3) Mr. Yousef Al-Benyan resigned on 28 Sept 2022}