Management 

(1) Management Structure

 

Names of Management or Controlling Persons

Board of Directors comprises

  ----- -------------------- ------------------- ---------------------------
  1.    Mr. Chirayu          Isarangkun Na       Chairman
                             Ayuthaya            

  2.    Air Chief Marshal    Sindhvananda        Independent Director
        Kamthon                                  

  3.    Mr. Snoh             Unakul              Director

  4.    Mr. Sumet            Tantivejkul         Independent Director

  5.    Mr. Pricha           Attavipach          Independent Director

  6.    Mr. Panas            Simasathien         Director

  7.    Mr. Yos              Euarchukiati        Director

  8.    Mr. Arsa             Sarasin             Independent Director

  9.    Mr. Chumpol          NaLamlieng          Director

  10.   Mr. Tarrin           Nimmanahaeminda     Independent Director

  11.   Mr. Pramon           Sutivong            Independent Director *

  12.   Mr. Kan              Trakulhoon          Director, President & CEO

        Mr. Worapol          Jennapar            Secretary to the Board

        * qualified as an                        
        independent director                     
        since June 1, 2011                       
  ----- -------------------- ------------------- ---------------------------

Top Executives of Siam Cement Group (SCG) comprises

+---+--------------------+-------------------+--------------------------+
| 1 | Mr. Kan            | Trakulhoon        | President & CEO, SCG     |
| . |                    |                   |                          |
+---+--------------------+-------------------+--------------------------+
| 2 | Mr. Chaovalit      | Ekabut            | Vice President – Finance |
| . |                    |                   | and Investment & CFO,    |
|   |                    |                   | SCG                      |
|   |                    |                   |                          |
|   |                    |                   | President, SCG           |
|   |                    |                   | Investment               |
+---+--------------------+-------------------+--------------------------+
| 3 | Mr. Aree           | C                 | Vice President –         |
| . |                    | havalitcheewingul | Corporate                |
|   |                    |                   | Administration, SCG      |
+---+--------------------+-------------------+--------------------------+
| 4 | Mr. Cholanat       | Yanaranop         | President, SCG Chemicals |
| . |                    |                   |                          |
+---+--------------------+-------------------+--------------------------+
| 5 | Mr. Somchai        | Wangwattanapanich | Vice President –         |
| . |                    |                   | Operation, SCG Chemcials |
+---+--------------------+-------------------+--------------------------+
| 6 | Mr. Roongrote      | Rangsiyopash      | President, SCG Paper     |
| . |                    |                   |                          |
+---+--------------------+-------------------+--------------------------+
| 7 | Mr. Pramote        | Techasupatkul     | President, SCG Cement    |
| . |                    |                   |                          |
+---+--------------------+-------------------+--------------------------+
| 8 | Mr. Pichit         | Maipoom           | President, SCG Building  |
| . |                    |                   | Materials                |
+---+--------------------+-------------------+--------------------------+
| 9 | Mr. Kajohndet      | Sangsuban         | President, SCG           |
| . |                    |                   | Distribution             |
+---+--------------------+-------------------+--------------------------+

The Attendance of the Directors in Relevant Committee Meetings in 2011
(number of times)

[TABLE]

Notes : 1.The six independent directors are number 2, 4, 5, 8, 10 and
11.

2. The four Audit Committee members are number 2, 4, 5 and 10.

3. The five Governance and Nomination Committee members are number
3,4,6,8 and 10.

4. The three Remuneration Committee members are number 7, 9 and 11.

5. * The five SCR Committee for Sustainable Development members are
number 1, 3, 4, 7 and 12

(Approved by the Board in May, 2011)

Independent Directors’ Training

Conducted by Thai Institute of Directors Association (IOD)

+-----------------------+--------------+--------------+---------------+
| Independent Dir       | Trai         |              |               |
| ectors of the company | ning Courses |              |               |
+-----------------------+--------------+--------------+---------------+
|                       | Directors    | Directors    | Audit         |
|                       | C            | A            |               |
|                       | ertification | ccreditation | Committee     |
|                       | Program      | Program      |               |
|                       |              |              | Program       |
|                       | (DCP)        | (DAP)        |               |
|                       |              |              | (ACP)         |
+-----------------------+--------------+--------------+---------------+
|                       |              |              |               |
+-----------------------+--------------+--------------+---------------+
| 1. ACM Kamthon        | -            | Class 18 /   | -             |
| Sindhavananda         |              | 2004         |               |
+-----------------------+--------------+--------------+---------------+
| 2. Mr. Sumet          | Class 30 /   | -            | Class 11 /    |
| Tantivejkul           | 2003         |              | 2006          |
+-----------------------+--------------+--------------+---------------+
| 3. Mr. Pricha         | Class 39 /   | -            | Class 11 /    |
| Attavipach            | 2004         |              | 2006          |
+-----------------------+--------------+--------------+---------------+
| 4. Mr. Arsa Sarasin   | -            | Class 5 /    | Class 11 /    |
|                       |              | 2003         | 2006          |
+-----------------------+--------------+--------------+---------------+
| 5. Mr. Tarrin         | -            | -            | -             |
| Nimmanahaeminda       |              |              |               |
+-----------------------+--------------+--------------+---------------+
| 6. Mr. Pramon         | -            | Class 6/2003 | -             |
| Sutivong              |              |              |               |
+-----------------------+--------------+--------------+---------------+

The Board of Directors and Top Executives of SCG

The Board of Directors

  Duly authorized directors

Among the Board directors, four have been appointed as authorized
directors, namely Mr. Snoh Unakul, Mr. Yos Euarchukiati, Mr. Panas
Simasathien, and Mr. Kan Trakulhoon. Any two of the authorized directors
are authorized to sign jointly on behalf of the Company.

  Directors' term of service on Board

Duration of each term

At the Annual General Meeting of Shareholders each year, one-third of the total directors must retire from office. If it is not possible to divide the total number of directors evenly by three, the number closest to one-third must retire from the office. In choosing those directors who retire, length of service on the board should be considered, so that those who have served longest are most eligible to retire. Nevertheless, a retiring director is eligible for re-election.

Number of consecutive terms a director is permitted to serve

The Company believes that each of its elected directors is a highly qualified individual who is respected for being knowledgeable, virtuous, moral and effective. If shareholders show confidence in a director by re-electing him or her, the Board of Directors will honor that decision. Therefore, the Company does not set a limit on consecutive terms of service by a director.

Further, in 2011, the Board of Directors resolved to limit the number of terms for which an individual may serve as an independent director to a maximum of three consecutive terms. The first term started from May 25, 2011.

  Scope of Authority of the Board of Directors

  The Board of Directors has the following authorities:

  1. Acting in a best interest of shareholders (Fiduciary Duty) by
  observing the following four main practices:

  1.1 Performing its duties with all due circumspection and caution
  (Duty of Care).

  1.2 Performing its duties with faithfulness and honesty (Duty of
  Loyalty).

  1.3 Performing its duties in compliance with laws, objectives,
  Articles of Association, and resolutions of shareholders’ meetings
  (Duty of Obedience).

  1.4 Disclosing information to shareholders accurately, completely, and
  transparently (Duty of Disclosure).

  2. Directing the vision, mission, and business policies of SCG for
  stability and the balanced and sustainable benefits of all
  stakeholders, while continuously adding value to shareholders.

  3. Reviewing the operating plan and developing the capabilities of SCG
  for competitiveness at the global level

  4. Assessing the operational results of SCG and the performances of
  senior executives.

  5. Overseeing and developing the risk management systems, and the
  corporate governance of SCG to reach the standard accepted
  internationally.

  6. Devoting their time and efforts to the Company without seeking
  benefits for themselves or others and not acting in conflict of
  interest or in competition with the Company or SCG.

  7. Directing the Company’s operation in compliance with the laws,
  objectives, Articles of Association, and resolutions of shareholders’
  meetings in good faith and with care to preserve the interests of the
  Company.

  8. Conducting their duties in line with SCG’s principles of corporate
  governance and the code of best practices for directors of listed
  companies as per the guidelines of the Stock Exchange of Thailand
  (SET) and the Securities Exchange Commission (SEC).

  9. Overseeing and monitoring of each business unit and SCG’s overall
  performance by requiring their performance reports periodically, and
  setting policies to improve the business operations and development of
  SCG’s employees.

  10. Encouraging staff at all levels to be conscious of ethics and
  morality by promoting awareness of the importance of internal control
  system and internal audits to reduce the risk of fraud and abuse of
  authority and prevent any illegal act.

  11. Protecting the fair rights and interests of both major and minor
  shareholders. Furthermore, shareholders are entitled to protect their
  own interests, and receive accurate, complete, transparent, open, and
  auditable information.

  12. Recognising the roles, duties, and responsibilities of the Board
  of Directors, paying respect to the rights of shareholders, treating
  shareholders and other stakeholders fairly and conducting the business
  transparently, and disclosing information accurately and adequately.

  13. Assessing the performance of the Board of Directors annually by
  performing two types of assessments, namely that of the Board and its
  Committees as a whole and each individual director as a
  self-assessment, of which the results will be jointly deliberated by
  the Board of Directors.

  14. Attending all meetings of the Board of Directors and shareholders’
  meetings, except in unavoidable circumstances the directors who are
  unable to attend a meeting must notify the Chairman or the Secretary
  to the Board in advance of the meeting.

Performing its duties, the Board of Directors may seek external
consultation from independent consultants or experts in various fields,
as deemed necessary and appropriate.

  Qualifications of Independent Directors of SCG

SCG’s qualifications for independent directors were revised on May 25,
2011, and are now more stringent than prescribed by the Office of
Securities and Exchange Commission. These qualifications are as follows:

  1. Shall not hold shares exceeding 0.5% of the total number of voting
  shares of the Company, its parent company, subsidiary, associate,
  major shareholder or controlling person, including shares held by
  related persons of such independent director.

  2. Shall neither be nor have ever been a director with management
  authority, employee, staff member, advisor who receives a salary or is
  a controlling person of the Company, its parent company, subsidiary,
  associate,same-tier subsidiary company, major shareholder or
  controlling person unless the foregoing status has ended not less than
  2 years prior to the date of becoming a director. Such prohibitions
  shall not, however, include cases where the independent director
  previously served as a government officer or an advisor to a
  government agency which is a major shareholder or controlling person
  of the Company.

  3. Shall not be a person related by blood or legal registration as
  father, mother, spouse, sibling, or child, including spouse of child,
  of an executive, major shareholder, controlling person, or person to
  be nominated as executive or controlling person of the Company or its
  subsidiary.

  4. Shall neither have nor have ever had a business relationship with
  the Company, its parent company, subsidiary, associate, major
  shareholder or controlling person, in a manner that may interfere with
  his/her independent judgement, and neither is nor has ever been a
  significant shareholder or controlling person of any person having a
  business relationship with the Company, its parent company,
  subsidiary, associate, major shareholder or controlling person, unless
  the foregoing relationship has ended not less than 2 years prior to
  the date of becoming an independent director.

  The term ‘business relationship’ in the preceding paragraph shall
  include any normal business transaction, rental or lease of immovable
  property, transaction relating to assets or services or granting or
  receipt of financial assistance through receiving or extending loans,
  guarantees, providing assets as collateral, and any other similar
  actions, which result in the applicant or his/her counterparty being
  subject to indebtedness payable to the other party in the amount of 3%
  or more of the net tangible assets of the applicant or twenty million
  baht or more, whichever is lower. The amount of such indebtedness
  shall be calculated according to the method for calculation of value
  of connected transactions under the Notification of the Capital Market
  Supervisory Board governing rules on connected transactions. The
  consideration of such indebtedness shall include indebtedness incurred
  during the period of 1 year prior to the date on which the business
  relationship with the person commences.

  5. Shall not be nor have ever been an auditor of the Company, its
  parent company, subsidiary, associate, major shareholder or
  controlling person, and not be a significant shareholder, controlling
  person, or partner of an audit firm which employs auditors of the
  Company, its parent company, subsidiary, associate, major shareholder
  or controlling person, unless the foregoing relationship has ended not
  less than 2 years prior to the date of becoming an independent
  director.

  6. Shall not be nor have ever been a provider of any professional
  services including legal advisor or financial advisor who receives
  service fees exceeding 2 million baht per year from the Company, its
  parent company, subsidiary, associate, major shareholder or
  controlling person, and not be a significant shareholder, controlling
  person or partner of the provider of professional services, unless the
  foregoing relationship has ended not less than 2 years prior to the
  date of becoming an independent director.

  7. Shall not be a director appointed as representative of the Board of
  Directors, major shareholder or shareholder who is related to a major
  shareholder of the Company.

  8. Shall not undertake any business in the same nature and in
  competition with the business of the Company or its subsidiary, nor be
  a significant partner in a partnership or director with management
  authority, employee, staff member or advisor who receives salary or
  holds shares exceeding 1% of the total number of shares with voting
  rights of another company which undertakes business in the same nature
  and in competition with the business of the Company or its subsidiary.

  9. Shall be able to attend meetings of the Board of Directors and make
  independent judgment.

  10. Shall not have any other characteristic that limits his or her
  ability to express independent opinions regarding the Company’s
  operations.

  11. Shall be able to look after the interests of all shareholders
  equally.

  12. Shall be able to prevent conflicts of interest.

  13. Shall not have been convicted of violating security or stock
  exchange laws, financial institution laws, life insurance laws,
  general insurance laws, anti-money laundering laws or any other
  financial law of a similar nature, whether Thai or foreign, by an
  agency with authority under that certain law. Such wrongful acts
  include those involved with unfair trading in shares or perpetration
  of deception, fraud, or corruption.

  14. If qualified according to all items 1-13 specified above, the
  independent director may be assigned by the Board of Directors to make
  decisions relating to business operations of the Company, its parent
  company, subsidiary, associate, same-tier subsidiary or any juristic
  person with a conflict of interest on the basis of collective
  decision, whereby such actions of the independent director are not
  deemed partaking of management.

The Audit Committee

The Audit Committee comprises the following four members:

  ---- -------------------- ------------------- ---------------------------
  1.   ACM Kamthon          Sindhvananda        Chairman

  2.   Mr. Pricha           Attavipach          Member

  3.   Mr. Tarrin           Nimmanahaeminda     Member

  4.   Mr. Pramon           Sutivong *          Member

       * To be replacement                      
       for Mr. Sumet                            
       Tantivejkul who                          
       tendered this                            
       resignation from                         
       being a number of                        
       the Audit Committee                      
       since December 21,                       
       2011                                     
  ---- -------------------- ------------------- ---------------------------

The Audit Committee’s term on board

The Audit Committee is subject to a three-year term. Nevertheless, a
retiring director is eligible for re-election.

Scope of Authority of the Audit Committee

  The Audit Committee is authorized to fulfill the following duties:

  1. Check that the Company has an appropriate financial reporting
  system and disclosure of information in its financial statements in
  accordance with the legally defined accounting standard, with
  transparency, correctness, and adequacy.

  2. Promote the development of financial reporting systems in
  compliance with international accounting standard.

  3. Check that the Company has appropriate and effective internal
  control and internal audit systems according to internationally
  accepted approaches and standards.

  4. Check that the Company has in place preventive operation system to
  enhance operating effectiveness and efficiency.

  5. Check the corporate risk management system.

  6. Check that the Company is in full compliance with the Securities
  and the Stock Exchange Law and other laws relating to the Company’s
  business.

  7. Check the report on dishonesty and establish preventive measures.

  8. Check the correctness and effectiveness of the information
  technology system relating to internal control, financial reports, and
  risk management and suggest updates and improvements as needed.

  9. Consider connected transactions or those having possible conflict
  of interest to ensure compliance with all pertinent laws and
  requirements of the Stock Exchange of Thailand.

  10. Check that the performance assessment, both as a whole and self
  assessment, of the Audit Committee is made annually.

  11.Review and comment on operations of the Audit Office and coordinate
  with the Company’s auditor.

  12.Prepare the Audit Committee’s report to be disclosed in the
  Company’s Annual Report and duly signed by the Chairman of the Audit
  Committee and contains opinions on various matters as required by the
  Stock Exchange.

  13.Consider, select, propose the appointment and remuneration of, and
  assess the efficiency of the Company’s independent auditor.

  14.Organize meetings with the Company’s auditor, without the
  attendance of management, at least once a year.

  15.Check that performance assessment of the Audit Office is in
  compliance with international standards.

  16.Consider and approve the budget and manpower of the Audit Office.

  17.Provide comments on the appointment, removal, transfer, or
  dismissal of the Director of the Internal Audit Office.

  18.Consider the independence of the Audit Office based upon the scope
  of work, reports and line of command.

  19.Perform other actions as required by law or as assigned by the
  Board of Directors.

To fulfill its duties under its scope of authority, the Audit Committee
is authorized to call for and order management, heads of offices, or
employees concerned to present opinions, attend meetings, or submit
necessary documents. In addition, the Committee may seek independent
opinion from professional consultants as deemed appropriate, at the
Company’s expense.

The Audit Committee performs duties within its authority and
responsibilities under the order of the Board of Directors. The Board of
Directors is responsible for the Company’s operations and is directly
accountable to shareholders, stakeholders, and the public.

Responsibilities of the Audit Committee

1. Specify qualifications of any person to be nominated for directorship
and lay down the director nomination process to replace the retiring
director, considering diverse candidates with skills, experience, and
expertise.

2. Identify qualified candidates to replace directors retiring at the
end of their terms, or whatever the case may be and submit a list of
nominees to the Board of Directors and/or shareholders’ meeting for
resolution.

3. Recommend a plan for succession of the Company’s President & CEO and
the top executives to the Board of Directors for consideration.

4. Perform other duties as assigned by the Board of Directors.

To fulfill its duties under its scope of authority, the Governance and
Nomination Committee is authorized to call for and order the management,
heads of offices or employees concerned to give opinions, attend
meetings or submit necessary documents. In addition, the committee may
seek external consultation from independent consultants or experts in
various fields, as deemed necessary and appropriate, at the Company’s
expense.

The Governance and Nomination Committee

The Governance and Nomination Committee of the company comprises the
following five members:

  ---- -------------------- ------------------- ---------------------------
  1.   Mr. Sumet            Tantivejkul         Chairman

  2.   Mr. Snoh             Unakul              Member

  3.   Mr. Panas            Simasathien         Member

  4.   Mr. Arsa             Sarasin             Member

  5.   Mr. Tarrin           Nimmanahaeminda     Member
  ---- -------------------- ------------------- ---------------------------

The Governance and Nomination Committee’s term on board

  The Governance and Nomination Committee is subject to a three-year
  term. Nevertheless, a retiring director is eligible for re-election.

Scope of Authority of the Governance and Nomination Committee

The Governance and Nomination Committee is authorized to fulfill the
following duties:

  Corporate Governance

  1. Draw up the scope and policy of SCG’s corporate governance and
  present them to the Board of Directors.

  2. Make recommendations on the practice of SCG’s corporate governance
  and give advice on corporate governance to the Board of Directors.

  3. Oversee and monitor the performance of the Company’s Board of
  Directors and the management to ensure their compliance with SCG’s
  corporate governance policy.

  4. Review the practice of corporate governance within SCG by
  benchmarking to that of leading international companies and make
  recommendations to the Board of Directors for further improvement and
  keeping it up-todate.

  5. Review the independence of the Board of Directors, as well as any
  potential conflicts of interest in the performance of its duties.

  6. Review the appropriateness of retaining the directorship should
  there be any change in a director’s qualifications.

  7. Recommend a process of assessing the performance of the Board of
  Directors and the committees, and follow up and conclude the
  assessment results to the Board of Directors for acknowledgement and
  utilizing such information for improvement of work efficiency.

  8. Review the process of assessing the performance of the Board of
  Directors and the committees on a regular annual basis.

  9. Report regularly a progress and performance results to the Board of
  Directors after every meeting of the Corporate Governance and
  Nomination Committee.

  10. Review and give advice to the Board of Directors on the structure,
  roles and responsibilities, and practices of the Board of Directors
  and the committees. Should there be an alteration to the Charter of
  the Board of Directors and the committees, the Corporate Governance
  and Nomination Committee shall review and make appropriate
  recommendations in keeping it up-to-date.

  11. Perform other duties as assigned by the Board of Directors.

  Nomination of Directors and Top Executives

  1. Specify qualifications of any person to be nominated for
  directorship and lay down the director nomination process to replace
  the retiring director, considering diverse candidates with skills,
  experience, and expertise.

  2. Identify qualified candidates to replace directors retiring at the
  end of their terms, or whatever the case may be and submit a list of
  nominees to the Board of Directors and/or shareholders’ meeting for
  resolution.

  3. Recommend a plan for succession of the Company’s President & CEO
  and the top executives to the Board of Directors for consideration.

  4. Perform other duties as assigned by the Board of Directors.

To fulfill its duties under its scope of authority, the Governance and
Nomination Committee is authorized to call for and order the management,
heads of offices or employees concerned to give opinions, attend
meetings or submit necessary documents. In addition, the committee may
seek external consultation from independent consultants or experts in
various fields, as deemed necessary and appropriate, at the Company’s
expense.

The Remuneration Committee

The Remuneration Committee of the company comprises the following three
members:

  ---- -------------------- ------------------- ---------------------------
  1.   Mr. Chumpol          Na Lamlieng         Chairman

  2.   Mr. Yos              Euarchukiati        Member

  3.   Mr. Pramon           Sutivong            Member
  ---- -------------------- ------------------- ---------------------------

The Remuneration Committee’s term of office

  The Remuneration Committee is subject to a three-year term.
  Nevertheless, a retiring director is eligible for re-election.

Scope of Authority of the Remuneration Committee

The Remuneration Committee is authorized to fulfill the following
duties:

1. Propose guidelines and methods for remuneration to be paid to the
Board of Directors and the committees appointed by the Board of
Directors, including bonus and attendance fee.

2. Recommend the policy on Management Incentives including salary and
annual bonus, in line with the Company’s operating results and the
performance of each top executive. Whenever it deems appropriate, the
Committee shall consider hiring of consulting firms to advise on project
implementation.

3. Assess the performance of the President & CEO on an annual basis in
order to determine his/her remuneration before proposing the Board of
Directors for approval.

4. Assess the performance of each top executive on an annual basis,
based on the recommendation of President & CEO, in order to determine
his/her remuneration before proposing the Board of Directors for
approval.

5. Consider the annual budget for the salary increase, changes of wage
and compensation, and bonus of top executives before proposing to the
Board of Directors.

6. Review, study, and track regularly the changes and trends in
remuneration for the Board of Directors and top executives in order to
propose for the approval of the Board of Directors.

7. Consider the remuneration of the Board of Directors and top
executives, as compared to the remuneration offered by other listed
companies operating in the same business, to ensure that SCG retains its
leadership in that industry and to motivate them to foster the Company’s
continuing development.

8. Report regularly a progress and performance results to the Board of
Directors after every meeting of the Remuneration Committee.

9. Assess the performance of the Remuneration Committee and report the
assessment results to the Board of Directors for acknowledgement.

10.Review and recommend for the Board of Directors’ approval if there
may be any alteration to the Charter of the Remuneration Committee in
keeping it applicable and up-to-date.

11.Perform other duties as assigned by the Board of Directors.

To fulfill its duties under its scope of authority, the Remuneration
Committee is authorized to call for and order the management, heads of
offices or employees concerned to give opinions, attend meetings or
submit necessary documents. In addition, the committee may seek external
consultation from independent consultants or experts in various fields,
as deemed necessary and appropriate, at the Company’s expense.

SCG Top Executives

SCG top executives are empowered with an authority to operate business
under the policy, strategies and goals directed by the Board of
Directors, which approves a clear and definite scope of responsibilities
to ensure transparency and flexibility of operation. The nine members of
top executives have no forbidden qualification as following:

  1. Never dishonestly committed an offence against property.

  2. Never entered into any transaction which may cause conflicts of
  interest against SCG during the year

(2) Election of Directors and Executives

Rules and Procedures for the Election of Directors are as follows:

  1. Prior to the Annual General Meeting of Shareholders, the Governance
  and Nomination Committee proposes to the Board the names of persons to
  replace directors who are retired by rotation. The nominees will then
  be listed for consideration for election during the Meeting. All
  shareholders have an equal right to propose other candidates.
  Authority to select directors rests with the shareholders.

  2. In case the number of candidates nominated for directors does not
  exceed the number of directors required for that election, the Meeting
  shall elect all of them as directors.

  3. In case the number of candidates nominated for directors exceeds
  the number of directors required for that election, it shall be
  decided by vote at the Meeting. Shareholders may elect the candidates
  nominated for director, but not exceeding the number of directors
  required for that election, and the directors shall be individually
  elected. In the directors’ election, each shareholder or proxy shall
  have one vote for each share he/she holds or represents. The
  candidates shall be ranked in descending order from the highest number
  of votes received to the lowest, and shall be appointed as directors
  in that order until all of the director positions are filled. If the
  votes cast for candidates in descending order are tied, which would
  cause the number of directors to be exceeded, the chairman of the
  Meeting shall cast the deciding vote.

  At the 2011 Annual General Meeting of the Shareholders, the four board
  members who were due to retire by rotation were 1) Mr. Sumet
  Tantivejkul, 2) Mr. Yos Euarchukiati, 3) Mr. Pricha Attavipach, and 4)
  Mr. Kan Trakulhoon. According to the Company’s Articles of
  Association, the one-third of directors who have served longest must
  retire from office. In the nomination process, each director proposes
  appropriate persons to the Governance and Nomination Committee. The
  Committee, which excluded Mr. Sumet Tantivejkul, who had a conflict of
  interest since he was due to retire by rotation in 2011, considered a
  total of five nominees, nominated by each director. Four of whom were
  retiring directors according to the Agenda, and one of whom was newly
  qualified nominees. The Committee then nominated four qualified
  nominees namely, 1) Mr. Sumet Tantivejkul, 2) Mr. Yos Euarchukiati, 3)
  Mr. Pricha Attavipach, and 4) Mr. Kan Trakulhoon, all of whom were
  elected by majority vote as per the resolution passed in the Annual
  General Meeting of Shareholders held on March 30, 2011.

Nomination and Succession Plan for High-level Executive Positions at SCG

  SCG has put in place a proper and transparent nomination process for
  key management positions at every level in order to ensure that all of
  our executives are professionals who perform their duties
  independently from the major shareholder and other shareholders. The
  succession plan for the president and high-level executives is carried
  out by the Governance and Nomination Committee and considered by the
  Board of Directors. SCG’s nomination process commences with the
  process of recruiting candidates who possess both talent and
  integrity. Young talents are the focus of recruitment, so that they
  can be groomed to become leaders in the future. Qualified employees
  will undergo a high potential assessment and pursue development
  courses following individual career development plan. These talents
  will be assigned challenging tasks, and their positions will be
  rotated periodically in order to further develop their leadership
  skills and all-round knowledge in every area of SCG’s business. The
  plan is implemented at every level of employment to ensure that staffs
  are ready to fill any positions that become vacant.

  Policy on High-level Executives Holding Directorship in Organizations
  Outside SCG

  The Board of Directors has set a policy that allows high-level
  executives to hold directorship in organizations outside SCG, and to
  spend company work hours carrying out the directorship duties, for
  organizations of certain types:

  1. Governmental organizations that are not established for the benefit
  of political parties, because the executives’ service represents their
  cooperation with the authorities and contribution to the general
  public.

  2. Private organizations that are established for the benefit of the
  general public such as the Federation of Thai Industries, Thai Chamber
  of Commerce, Thailand Management Association, and so on.

  3. Private organizations that are established for trading purposes;
  present no conflicts with SCG and; do not consume time to the extent
  that it is disadvantageous for the Company. (Subject to approval)

  (Source: Resolution No. 5.2 of the Board of Directors Meeting of SCG
  No. 206 (1/2536): RE: Policy of the Board of Directors regarding
  employees spending company work hours to work for non-SCG
  organizations)

(3) Director and Executive Remuneration

  Director Remuneration

  In the 11th Annual General Meeting of Shareholders held on March 24,
  2004, a resolution passed concerning the remuneration and bonuses of
  directors. Monthly remuneration for all directors was set at 1,800,000
  Baht, to be distributed among the directors in such manner that they
  themselves may consider appropriate. Regarding bonuses, permission was
  granted for the Board itself to determine the appropriate amount, but
  the amount cannot exceed 0.5% of total dividends paid to shareholders,
  and should be apportioned among the directors in such manner they
  themselves may consider appropriate. This took effect from the day the
  resolution was passed by a vote of the shareholders and remained in
  effect until the Shareholders’ Meeting determined otherwise.

  The Apportionment of Board Remuneration and Bonuses

  Monthly Remuneration

  The Board of Directors passed a resolution to pay the chairman a 1.5
  portion, or 216,000 Baht per month, and the other 11 Board members one
  portion, or 144,000 Baht per month.

Director Bonuses

The Board of Directors passed a resolution to pay the chairman a bonus of 1.5 portion and each of the other 11 Board members bonuses of one portion of total bonuses as approved in the Shareholders’ Meeting.

Remuneration for the Committees

The Board of Directors passed a resolution to remunerate members of the committees on the basis of a fixed fee and attendance fee, as follows:

  Unit: Baht

+-------------------------------+-----------------+-------------------+
|                               | Annual fixed    | Attendance fee    |
|                               | fee             |                   |
+-------------------------------+-----------------+-------------------+
| The Audit Committee           | 180,000         | 45,000            |
|                               |                 |                   |
|   Chairman                    | 120,000         | 30,000            |
|                               |                 |                   |
|   Director                    |                 |                   |
+-------------------------------+-----------------+-------------------+
| The Governance and Nomination | 150,000         | 37,500            |
| Committee                     |                 |                   |
|                               | 100,000         | 25,000            |
|   Chairman                    |                 |                   |
|                               |                 |                   |
|   Director                    |                 |                   |
+-------------------------------+-----------------+-------------------+
| The Remuneration Committee    | 150,000         | 37,500            |
|                               |                 |                   |
|   Chairman                    | 100,000         | 25,000            |
|                               |                 |                   |
|   Director                    |                 |                   |
+-------------------------------+-----------------+-------------------+

The Chairman of the committees’ remuneration gets 1.5 portion while each
member of the committees get 1 portion.

The Remuneration for the Board of Directors and the Committees paid in
2011

Unit: Baht

  ----------- ----------------- -------------- ----------- ------------ -------------- ------------ ------------
  Directors                     Remuneration                                           Directors’   Total
                                                                                       bonus paid   
                                                                                       in 2011      

                                The Board of   The Audit   The          The                         
                                Directors      Committee   Governance   Remuneration                
                                                           and          Committee                   
                                                           Nomination                               
                                                           Committee                                

  1.          Mr. Chirayu       2,592,000      -           -            -              7,560,000    10,152,000
              Isarangkun Na                                                                         
              Ayuthaya ¹                                                                            

  2.          ACM Kamthon       1,728,000      498,467     -            -              5,040,000    7,266,467
              Sindhvananda ²                                                                        

  3.          Mr. Snoh Unakul   1,728,000      -           187,289      -              5,040,000    6,955,289

  4.          Mr. Sumet         1,728,000      269,051     280,934      -              5,040,000    7,317,985
              Tantivejkul ³                                                                         

  5.          Mr. Pricha        1,728,000      332,312     -            -              5,040,000    7,100,312
              Attavipach                                                                            

  6.          Mr. Panas         1,728,000      -           187,289      -              5,040,000    6,955,289
              Simasathien                                                                           

  7.          Mr. Yos           1,728,000      -           -            224,289        5,040,000    6,992,289
              Euarchukiati                                                                          

  8.          Mr. Arsa Sarasin  1,728,000      -           187,289      -              5,040,000    6,955,289

  9.          Mr. Chumpol       1,728,000      -           -            373,934        5,040,000    7,141,934
              NaLamlieng ⁴                                                                          

  10.         Mr. Tarrin        1,728,000      302,311     137,289      -              5,040,000    7,207,600
              Nimmanahaeminda                                                                       

  11.         Mr. Pramon        1,728,000      3,261 **    -            249,289        5,040,000    7,020,550
              Sutivong ⁵                                                                            

  12.         Mr. Kan           1,728,000      -           -            -              5,040,000    6,768,000
              Trakulhoon                                                                            

              Total             21,600,000     1,405,402   980,090      847,512        63,000,000   87,833,004
  ----------- ----------------- -------------- ----------- ------------ -------------- ------------ ------------

Remark: 1. Chairman of the Board of Directors

2. Chairman of the Audit Committee

3. Chairman of the Governance and Nomination Committee

4. Chairman of the Committee Remuneration Committee

* The directors’ bonus paid in 2011 consisted of the bonus payment based
on the final dividend of the year 2010 paid to shareholders on April 27,
2011 and the interim dividend of the year 2011 paid to shareholders on
August 25, 2011 as represented in the item of “Administrative expenses”
on the consolidated income statement.

  Executive Remuneration

  The total remuneration for nine executives in the form of salaries,
  bonuses, variable pay and others amounted to 176,230,000 Baht. For
  2011, the Company made contributions of 9,530,000 Baht to the
  provident fund for the executives, because they are employees of the
  Company.

1. The Remuneration for the Directors and Executives of Subsidiaries,
which are SCG’s Core Businesses (As at the Year Ended December 31, 2011)

1.  Director Remuneration listed according to the core business

  Directors of the core businesses, which encompass SCG Chemicals, SCG
  Paper, SCG Cement, SCG Building Materials, and SCG Distribution, are
  the executives who are not subject to remuneration paid for being the
  directors. Names of the directors as of December 31, 2011 in each
  business are listed here:

  ----------- ---------------------------- -------- -------------- ---------------------------
  SCG                                               SCG Building   
  Chemicals                                         Materials Co., 
  Co., Ltd.                                         Ltd.           

  1)          Mr. Kan Trakulhoon *                  1)             Mr. Kan Trakulhoon *

  2)          Mr. Chaovalit Ekabut                  2)             Mr. Kajohndet Sangsuban

  3)          Mr. Aree Chavalitcheewingul           3)             Mr. Pramote Techasupatkul

  4)          Mr. Somchai Wangwatanapanich          4)             Mr. Chaovalit Ekabut

  5)          Mr. Cholanat Yanaranop **             5)             Mr. Pichit Maipoom **

                                                                   

  SCG Paper                                         SCG            
  Public                                            Distribution   
  Company                                           Co., Ltd.      
  Limited                                                          

  1)          Mr. Kan Trakulhoon *                  1)             Mr. Kan Trakulhoon *

  2)          Mr. Kajohndet Sangsuban               2)             Mr. Pramote Techasupatkul

  3)          Mr. Pramote Techasupatkul             3)             Mr. Pichit Maipoom

  4)          Mr. Chaovalit Ekabut                  4)             Mr. Aree Chavalitcheewingul

  5)          Mr. Aree Chavalitcheewingul           5)             Mr. Kajohndet Sangsuban **

  6)          Mr. Roongrote Rangsiyopash                           
              **                                                   

                                                                   

  SCG Cement                                                       
  Co., Ltd.                                                        

  1)          Mr. Kan Trakulhoon *                                 

  2)          Mr. Kajohndet Sangsuban                              

  3)          Mr. Chaovalit Ekabut                                 

  4)          Mr. Pichit Maipoom                                   

  5)          Mr. Roongrote Rangsiyopash                           

  6)          Mr. Aree Chavalitcheewingul                          Remark * Chairman

  7)          Mr. Pramote Techasupatkul **                         ** President
  ----------- ---------------------------- -------- -------------- ---------------------------

2.  The total remuneration for executives of subsidiaries which are
    SCG’s core business

  1) Remuneration paid as money, such as monthly salary, bonus, and
  variable pay.

  2) Other compensation such as provident fund contributions.

  Details of compensation are as follows:

+---+------------------------+----------+-----------------+-----------+
|   | Subsidiaries that are  | Number   | Total           | Other     |
|   | core businesses        | of       | Remuneration in | com       |
|   |                        | ex       | the form of     | pensation |
|   |                        | ecutives | money (Baht)    |           |
|   |                        |          |                 | (Baht)    |
+---+------------------------+----------+-----------------+-----------+
| 1 | SCG Chemicals Co.,     | 9        | 36,357,396      | 2,421,600 |
| . | Ltd.                   |          |                 |           |
+---+------------------------+----------+-----------------+-----------+
| 2 | SCG Paper PLC.         | 7        | 28,623,700      | 1,928,760 |
| . |                        |          |                 |           |
+---+------------------------+----------+-----------------+-----------+
| 3 | SCG Cement Co., Ltd.   | 7        | 43,053,300      | 2,718,000 |
| . |                        |          |                 |           |
+---+------------------------+----------+-----------------+-----------+
| 4 | SCG Building Materials | 8        | 32,022,275      | 2,132,640 |
| . | Co., Ltd.              |          |                 |           |
+---+------------------------+----------+-----------------+-----------+
| 5 | SCG Distribution Co.,  | 6        | 20,701,600      | 1,425,000 |
| . | Ltd.                   |          |                 |           |
+---+------------------------+----------+-----------------+-----------+

 Therefore, the number of executives, and the remuneration for the above-mentioned executives, excluding the presidents of subsidiaries that are SCG’s core businesses, included the number and remuneration of the top executives of the Siam Cement Public Company Limited, which are listed on page 96.

(4) Principles of Corporate Governance

SCG conducts business with responsibility and fairness, adhering to
principles it has long practiced. SCG’s business principles are defined
by its ethical framework and constantly improved in view of economic and
social changes. These principles call for balancing both sustainable
benefits and respectful treatment of all stakeholders.

SCG considers corporate governance to be a part of its business policy,
which the Board of Directors has agreed to review and evaluate on an
annual basis. In addition, the Company makes improvements, amendments
and changes in corporate governance in line with the changing economic
and social situation. The Board of Directors has assigned the Governance
and Nomination Committee to take charge of corporate governance matters
as well as to consider trends and new developments at the international
level. For example, the Committee considers the rules and practices of
the world’s leading companies and stock exchanges with those of SCG in
order to find areas for improvement. The Board of Directors, moreover,
specifies corporate governance to be one of the main items on the agenda
at the Board of Directors’ meeting. The Company published booklets on
SCG’s corporate governance policy and Code of Conduct and distributed
them to employees. To ensure that employees understand these policies
clearly and put them into practice effectively, the Company conducts
related informational events. SCG expects all employees to adhere
strictly to the SCG Code of Conduct, which is a prime factor considered
in the annual evaluation of employees at the supervisory level and
above. Employees and the public are welcome to study the content and
details of these policies as described on SCG’s website, www.scg.co.th.

In 2007, SCG updated the SCG Code of Conduct by adding guidelines for
each business, illustrative examples, clearer practices, and a
whistleblower policy that protects any employee who files a complaint or
reports on improprieties or suspected violations of laws, SCG rules,
regulations, or the SCG Code of Conduct. Moreover, the Company has
formed a working team responsible for devising the policies and
providing consultancy regarding the SCG Code of Conduct. This team
comprises top management from functions responsible for ensuring
compliance with the SCG Code of Conduct and from the business units.
This working team will monitor performance and give advice on relevant
issues. Moreover, the Audit Office is also responsible for maintaining
communication channels to receive complaints and implementing the
whistleblower policy.

Throughout 2011, the Corporate Governance Development Unit devoted its
effort to monitoring adherence to the principles of corporate governance
while sharing knowledge and promoting the SCG Code of Conduct to
employees at all levels. The focus of this work was on raising
employees’ awareness, starting from the very first days of their
employment. To that effect, the team distributed the SCG Code of Conduct
handbook to all new SCG employees. In addition, the Company provided
consultative systems related to the Code via the SCG Code of Conduct
website, SCG Code of Conduct guidance system and whistleblower policy
system. At the same time, the Audit Office continuously carried out
workshops on topics related to good corporate governance and the code of
conduct. The record showed that in 2011, there were 27 complaints via
the whistleblower system. Investigations of all these complaints have
been concluded, six of which are regarded as instances of fraud with
immaterial economic value. However, these too were taken into
consideration for fine-tuning the Company’s system to prevent fraud in
the future.

SCG sees its corporate governance policy and Code of Conduct as
essential guidelines for the organization; therefore, it puts strong
emphasis on principles and practices concerning responsibility and
fairness towards all stakeholders. The principles include a clear
outline of the structure, components, duties, independence and
performance of the Board of Directors; transparency of information
disclosure; a strict auditing system; and strict risk management
policies. These build trust among shareholders and create additional
value for them. SCG has disclosed related information through a growing
variety of media to give stakeholders easier access to the information.
Among these media and information channels are the Annual Report, 56-1
Form, website of the Stock Exchange of Thailand (SET), and SCG website
to provide diverse access to information.

In addition, stakeholders have the opportunity to participate in
improving the Company’s operating results through communications with
the Investor Relations Department via e-mail at invest@scg.co.th. All
suggestions will be considered carefully prior to reporting to SCG’s top
executives and the Board of Directors for acknowledgement and
consideration.

In 2011, SCG won four awards from FinanceAsia magazine in its latest
annual ranking, Asia’s Top Companies 2010 as follows:

• Best Managed Company Award

• Best Corporate Governance Award

• Best Corporate Social Responsibility Award

• Most Committed to a Strong Dividend Policy

In addition, SCG won a rating of ‘Excellent’ in the Thai Investors
Association’s 2011 Annual General Meeting Checklist (AGM Checklist)
survey. The Thai Institute of Directors gave SCG an ‘Excellent CG
Scoring’ in the 2011 Corporate Governance Report on Thai Listed
Companies. The Stock Exchange of Thailand has given the Company its
Award of Honor in two categories: Best Corporate Social Responsibility
Awards and Best Investor Relations Awards.

Guidelines to SCG Corporate Governance

The Rights of Shareholders

SCG ensures that shareholders, both as investors and owners of the
Company, are entitled to all basic rights meeting widely accepted and
reliable standards, which include the right to freely trade or transfer
their own shares, the right to receive dividends from the Company, the
right to attend shareholders’ meetings, the right to propose in advance
the meeting agenda, the right to nominate a person to be a director, the
right to express opinions independently, and the right to make decisions
on important affairs of the Company, e.g., the election of directors,
approval of significant transactions influencing the Company’s
direction, amendment of Memorandum of Association and Articles of
Association of the Company, etc. Each shareholder has the right to vote
at meetings according to the number of shares owned whereby one share is
entitled to one vote, and no particular share allows privilege over the
rights of other shareholders.

Apart from the abovementioned rights of the shareholders, SCG has made
additional efforts to encourage and facilitate shareholders to exercise
their rights as follows:

  1. SCG provides essential, clear, and up-to-date information for
  shareholders regarding the Company’s business. Even though some
  information is not required to be disclosed by law, if SCG considers
  that it is of significance to shareholders, the Company will notify
  shareholders of the information through SCG’s website and the SET.

  2. SCG sends all shareholders significant and sufficiently detailed
  information concerning the Shareholders’ Meeting date and the Meeting
  agenda prior to the date of the Meeting. Such information will be
  posted on SCG’s website around two months before the related documents
  are submitted to shareholders, and not less than 20 days prior to the
  Meeting. The shareholders’ right to attend the Meeting and the right
  to vote on resolutions will be clearly stated in the Meeting notice
  submitted by the Company.

  3. Any shareholder who is unable to attend a Meeting is entitled to
  appoint a representative, e.g., an independent director or other
  person, to act as proxy, using the proxy form attached to the notice
  of the Meeting. The Company has prepared the proxy forms in compliance
  with the specifications defined by the Ministry of Commerce whereby
  the shareholders can exercise their voting rights as wished. The proxy
  forms can also be downloaded from SCG’s website. For shareholders’
  convenience, SCG provides the duty stamp to be sealed on the proxy
  form. Shareholders who arrive after the Meeting has commenced are able
  to vote on the agenda item being considered provided that a resolution
  is not yet made. Late-arriving shareholders shall constitute part of
  the quorum starting from the agenda item for which they are in
  attendance and can exercise their voting rights unless the Meeting
  states otherwise.

  4. Prior to the Meeting, one or several shareholders holding in
  aggregate at least 5% of all issued shares of the Company have the
  right to suggest issues to be included in the agenda of the Annual
  General Meeting of Shareholders for 2012. Shareholders were allowed to
  exercise this right three months in advance between September 1 – 30
  November, 2011 so that the Governance and Nomination Committee could
  screen the issues before presenting them to the Board of Directors for
  consideration. Should the proposed issue be included on the Meeting
  agenda, the Company shall specify in the notice of the Meeting that
  the agenda item was proposed by a shareholder. However, in case the
  proposed agenda item is rejected, the Company shall inform
  shareholders of the reasons at the Annual General Meeting of
  Shareholders. Moreover, any shareholder is entitled to nominate in
  advance any qualified candidates for the election of Board members in
  the same period. The Governance and Nomination Committee shall
  consider the proposed nominees together with other nominated persons
  according to the Company’s criteria for the nomination of directors.
  The Committee then presents the nominees to the Board for
  consideration before proposing them to the Shareholders’ Meeting for
  approval. The Company made available a form for advance proposals for
  the Meeting agenda and director candidates, for the convenience of
  shareholders. However, no shareholder proposed any agenda item or
  candidate prior to the Meeting.

  5. In 2011, the SCG Annual General Meeting of Shareholders was held on
  March 30, 2011, whereby all 12 directors attended the Meeting. The
  Company deemed it appropriate to organize the Meeting at Athenee
  Crystal Hall on the 3rd floor of Plaza Athenee Bangkok, a Royal
  Meridien Hotel, as was previously done in 2010. The change was made in
  2010 in consideration of the increasing numbers of shareholders
  attending the Meeting each year, because SCG would like to make it
  easier for them to attend, raise questions, and express opinions all
  in the same room in order to ensure a smooth and effective meeting. In
  addition, an exhibition was organized to keep shareholders abreast of
  SCG’s business operations and product innovations.

  6. On the date of the Meeting, the Company uses a barcode system for
  registration to ensure convenience for shareholders based on the
  reference number already included in the registration form and proxy
  form. In addition, for each agenda item, the Company will collect the
  ballot papers from shareholders who vote ‘disapprove’ or ‘abstain’ in
  order to deduct the votes from the total entitled voting rights. The
  Company applies the e-voting system to perform the calculation using
  electronic PDA (Personal Digital Assistant) and socket scanners in
  order to ensure immediate voting results in time for announcement
  right after the end of each agenda item. Shareholders are entitled to
  verify each voting result after the Meeting.

  7. One-third of the directors must retire from office on a rotational
  basis in each Annual General Meeting of Shareholders, and the election
  of directors to replace the retired directors takes place during the
  Meeting. Shareholders will be informed that if the number of nominated
  persons does not exceed the number of directors required for that
  election, all of them shall be elected as directors. However, if the
  number of candidates exceeds the number of directors required, each
  candidate is then elected individually. During the Meeting,
  shareholders are entitled to freely propose names of individuals for
  directorship of the Company. In order to comply with the criteria of
  the Thai Institute of Directors and AGM Checklist concerning good
  corporate governance, listed companies are recommended to allow
  shareholders to elect each director individually. Therefore, in 2011,
  the Governance and Nomination Committee proposed the Board of
  Directors to amend Articles of Association to allow shareholders to
  elect each director individually. The Board of Directors resolved to
  propose to the 2012 Annual General Meeting of Shareholders to approve
  the amendment of the Articles of Association, which will take effect
  at the 2013 Annual General Meeting of Shareholders for election of
  directors.

  8. At the Meetings, shareholders are allowed to freely express their
  opinions, give suggestions and raise questions on any agenda item
  before casting votes, so that shareholders can obtain sufficiently
  detailed information on the matter in question. Should shareholders
  have questions or inquiries, specialists in specific fields are
  available to answer queries under the authority of the Board.

  9. For any item on the agenda at the Shareholders’ Meeting, the
  shareholders can call for a casting of votes by secret ballot if five
  shareholders make such request. The Shareholders’ Meeting shall
  resolve to approve the casting of votes by secret ballot upon a
  majority of votes.

  10.An agenda item regarding the Board’s remuneration is included to
  inform shareholders of the amount and type of remuneration received by
  each director including meeting allowance and bonus. Full details can
  be found in the Company’s Annual Report on page 80.

  11.The agenda of the 2011 Annual General Meeting of Shareholders was
  considered chronologically as it appeared in the invitation letter
  submitted to shareholders prior to the Meeting, without any changes in
  order or request for the Meeting to consider any agenda item other
  than those specified in the invitation letter.

The Equitable Treatment of Shareholders

SCG shall provide equitable treatment to every individual shareholder,
major or minor, as well as institutional or foreign investors. To that
effect, the Company strives to find tools to ensure equality, especially
for minor shareholders, which include:

Assigning Independent Directors to Take Care of Minor Shareholders

Minor shareholders can contact the independent directors directly to
give suggestions, express opinions or file complaints, via e-mail at
ind_dir@scg.co.th. The independent directors are responsible for
handling each matter appropriately. For example, in case of a complaint,
the independent directors will investigate and seek a proper solution.
On the other hand, if there is a suggestion that is considered to affect
the stakeholders or the business, the independent director will report
it to a Board of Directors’ meeting for consideration and include it in
the agenda of the Shareholders’ Meeting.

Establishing Sound Relationships with Shareholders

In 2011, SCG invited interested shareholders to participate in the
Company’s CSR activities alongside our directors and employees, which
helped promote good relations with shareholders while contributing to
the betterment of society and the environment. In this regard, SCG
provided equal rights for both major and minor shareholders. Two such
CSR activities were held during the year. On May 21, 2011, the Company
organized the ‘Building Check Dams with SCG to Restore Balance to Khao
Yai Da’ program at Khao Yai Da, Amphoe Muang, Rayong province and on
August 2-3, 9, 2011, and the ‘Cherish the National Heritage at
Rattanakosin Exhibition’ program at Rattanakosin Exhibition Hall in
Bangkok. Both programs were well received by shareholders.

SCG has also planned to organize two other CSR activities: the ‘SCG
Conserves Mae Ramphung Beach’ program in Rayong province and the
‘Building Check Dams with Kaeng Khoi Plant’ program in Saraburi province
in November and December, 2011. A large number of shareholders expressed
great interest in participating in both activities. Unfortunately,
Thailand’s worst flooding in decades that spread across several
provinces from October through December prompted the programs to be
postponed for the sake of shareholders’ safety. However, the Company
plans to hold more activities to maintain and grow relationships with
shareholders.

Internal Information Control

The Board of Directors has established measures to control the use, and
prevent misuse of internal information, especially as regards Insider
Trading for the personal benefit of concerned persons, namely the Board
of Directors, SCG’s top executives and related employees, including
their spouses and children who are minors. They are as follows:

  • All concerned persons are prohibited from trading Company shares for
  a two-week period prior to release of the Company’s quarterly and
  annual financial statements, and for 24 hours after the release
  (Blackout Period).

  • Should they have knowledge of confidential information that could
  have any impact on the Company’s share price, they are prohibited from
  trading Company shares until 24 hours after the public disclosure.

  • The secretary to the Board and the corporate secretary will inform
  the directors, SCG top executives and related employees of the
  prohibition period not less than one week prior to such period.

  • In addition, the Board of Directors will monitor all required
  actions in accordance with the related measures. Any changes in a
  director’s or top executive’s shareholding must be reported in the
  Board of Directors’ meeting.

Preventing Conflicts of Interest

The Board has established policies and measures regarding conflicts of
interest, as follows:

  • SCG has a clear and transparent shareholder structure. There is no
  cross-holding among major shareholders, thereby preventing any
  conflict of interest or transfer of benefits from one party to
  another. The shareholder structure of SCG and its subsidiaries is
  published in the Company’s annual report, as are each Board member’s
  holdings of ordinary shares and debentures.

  • There is a clear separation of duties and responsibilities among the
  Board, management, and shareholders, thereby ensuring no overlap of
  duty or responsibility. Any director or executive who may have a
  vested interest in any agenda item under consideration must not attend
  the meeting or must abstain from voting on such agenda item. This is
  to ensure that the Board and executives make decisions in a fair
  manner for the utmost benefit of shareholders.

  • The Company has an established policy governing the use of internal
  information and has incorporated the power of authorities and employee
  regulations in writing, with penalties for the executives or employees
  in the event the internal information is disclosed to the public or
  used for personal benefit.

  • Directors, top executives, employees responsible for related
  functions as well as their spouses and children who are minors are
  prohibited from trading stock futures linked to SCG ordinary shares in
  order to ensure compliance with SCG’s Corporate Governance Policy.

  • The SCG Code of Conduct includes additional guidelines that prohibit
  employees from using the Company’s assets or spending working hours to
  search, contact or conduct activities related to share-trading on a
  regular basis for personal gain or on behalf of others without
  justifiable reason and not for SCG’s interests.

The Role of Stakeholders in Corporate Governance

SCG conducts business with the highest awareness of its responsibility
to ensure sustainable and mutual benefits to all related parties. The
Board of Directors oversees our management system to ensure that the
Company acknowledges the rights of stakeholders, both as stated by law
and as clearly written in the SCG Corporate Governance, the SCG Code of
Conduct, and Policies and Practices toward Stakeholders. The Company
guarantees that those rights are protected and the shareholders,
employees, customers and business partners are treated equally.

Shareholders: Besides the basic rights of shareholders and the rights
stipulated by law and the Company’s Articles of Association; such as the
right to request a verification of the number of shares; the right to
receive share certificates; the right to attend the shareholders’
meetings; the right to vote at the meetings; the right to freely express
opinions at the shareholders’ meetings; and the right to receive a fair
return; SCG also gives shareholders the right, as the owners of the
Company, to make suggestions and comments on the Company’s affairs to
the independent directors. Each comment and suggestion will be carefully
considered and presented to the Board of Directors.

Employees: SCG truly believes that its employees are the most valuable
assets and is determined to ensure that every employee is proud of and
confident in the organization. During the previous year, the Company
organized activities to promote a collaborative working environment to
drive innovation and enhance the competence of employees, readying them
to work overseas and to cope with the volatile economic situation.
Furthermore, we focused on promoting employees’ health and safety,
excellent working conditions, and competitive remuneration. Moreover,
during the flood situation, SCG opened The Assistance Coordination
Center for SCG Employees to help the flood victims.

Customers: SCG puts great importance on providing customers with maximum
benefits in terms of the quality and price of its products and services.
Likewise, the Company is determined to develop and maintain sustainable
relationships with customers. It has set up a support office to provide
product information, solve problems and receive complaints in order to
ensure customers’ total satisfaction with SCG’s products and services.

Suppliers: SCG operates its business within a competitive context by
strictly upholding its promises, the SCG Code of Conduct, and
commitments to suppliers.

Contractors: SCG has a policy of taking good care of its contractors
regarding the environment, work safety and remuneration. Further, the
Company is resolved to develop the capabilities and knowledge of
contractors both at work and beyond to enable them to work more
efficiently.

Joint Venture Partners: SCG respects the rights of joint venture
partners and treats every partner equitably and fairly. The Company
works collaboratively with joint venture partners to ensure that the
joint ventures achieve the shared goals.

Competitors: SCG operates its business within a competitive context by
being fair and strictly following the law and the SCG Code of Conduct.
During the year, there was no dispute with competitors.

Creditors: SCG complies with the terms of loans and obligations to its
creditors such as business creditors and depositors. The Company,
moreover, organizes various projects in order to keep good relations
with creditors such as activities for debenture holders. Government
Agencies: SCG attaches significance to government agencies as
stakeholders of the Company. Guidelines for engaging in transactions
with government agencies are defined in the SCG Code of Conduct to allow
employees to proceed accurately and appropriately. The Company also
cooperates with government agencies, providing technical assistance and
support for various activities.

The Media: SCG stresses the importance of disclosing information to the
media so that they can communicate the information to the public
accurately and rapidly. To establish good relationships with the media,
the Company organizes various activities such as plant visits and
meetings to exchange views. Society and Community: SCG conducts business
with fairness to all related parties and with concern for social
responsibility. In addition to full and accurate disclosure of
information, the Company is open to comments and suggestions from every
part of civil society to ensure a shared approach to operating business
sustainably alongside social and community development. The Company
supports activities that promote quality of life and create happiness
for communities and the public wherever we operate, both in Thailand and
in other ASEAN countries. We organize various activities for the benefit
of society, especially projects to develop the potential of young people
in different fields, namely, science, technology, sports, and arts. In
addition, we provide emergency relief at times of disaster, especially
in the latest flood situation.

Furthermore, SCG encourages its employees and related parties to take
part in activities that benefit local communities and the general public
in achieving sustainable growth. Even amid the economic downturn, the
Company continues to devote its creativity, knowledge, and capabilities
to enhance the efficiency of these projects in order to maximize
benefits for local communities and the public.

Environment: SCG sets guidelines for sustainable development in respect
of environmental management and conservation under the concept of ‘The
3Rs,’ which are to Reduce, Reuse/Recycle and Replenish. This concept is
applied to operations in all of SCG’s businesses. The guidelines shape
the design of our plants, help us develop and improve production
processes, and lead us to utilize eco-friendly technology. The Company
ensures that systematic management is in place for its production
processes, products and services as well as for the restoration and
improvement of natural resources. In addition, the Company constantly
promotes awareness regarding environmental conservation and encourages
its employees and related parties to participate in protecting the
environment.

Reflecting our concern for the environment and society, the Company has
introduced the SCG eco value label for eco-friendly products and
services that are produced by using special processes that minimize
environmental impacts, based on the ISO 14021 standards. In 2011, 47
products received the SCG eco value label. Revenue from sales of SCG eco
value products currently account for 13% of total revenue from sales. By
2015, the number is expected to increase to one-third of total sales.

SCG has set its sights on achieving ‘zero waste to landfill’ by 2012.
The efforts include reducing waste at its source and selecting raw
materials that produce the least waste. At the same time, waste will be
separated or recycled for reuse as alternative fuels or materials in
cement kilns. In addition, the Company has a policy of purchasing
products from suppliers that recycle or reuse their used products to
maximum benefit or purchasing products with a longer service life.

In addition, SCG, in cooperation with other businesses in the Map Ta
Phut Industrial Estate, established the ‘Community Partnership
Initiative’, which subsequently became ‘Community Partnership
Association’, and reached a mutual agreement on the development of a
prototype factory having higher environmental standards than the legal
requirements. The association was also aimed at working with the
community to solve problems together. In 2011, SCG joined forces with
cement manufacturers in Saraburi including SCG Cement, Siam City Cement
and the Thai Cement Manufacturers Association to set up a Cement
Partnership Initiative, the first of its kind in Thailand. The
objectives were to drive good practices in developing the cement
industry into an eco-friendly industry while taking care of the
community and supporting the development of quality of life earnestly
and sincerely. This is intended to enable industry and the local
community to coexist symbiotically and sustainably.

SCG continues its focus on water conservation. The ‘SCG Conserving Water
for Tomorrow’ project has made progress in providing support to
communities for the building of check dams, which restore the balance of
nature and lead to the sustainable growth of the community. Through the
end of 2011, SCG, together with communities and networks, have built
more than 30,000 check dams. The Company plans to build a total of
50,000 check dams by 2013 to celebrate 100 years of SCG. Moreover, SCG
strives to raise awareness among the public and communities about
conservation of water and the environment in order to achieve
sustainable growth. Details of SCG’s environmental and social activities
are available in our annual Sustainability Report, which has been
published each year since 2001, at www.scg.co.th.

SCG published a written ‘SCG Stakeholder Engagement Policy’ in 2010 in
order to adhere to its responsibility to stakeholders and respond to
changing social, environmental and business trends and the fact that
stakeholders nowadays are more sophisticated with higher expectations
regarding treatment, the expression of opinion, and decisions and
actions taken on matters affecting them. The Policy gives employees
clear guidelines on how to do business by adding value to shareholders
in the long run while at the same time always considering the impacts on
other stakeholders. The Company upholds its commitment to being a good
citizen in society, especially in communities where its operations are
located, by doing business with a sense of respect to the rights of
stakeholders and ensuring that they are given fair treatment. The
Company listens to opinions and concerns, promotes understanding among
stakeholders, supports creative cooperation on matters of interest to
stakeholders, and assists in the development of society and the
environment, all of which are intended to ensure that SCG conducts
business on the basis of fairness to all involved parties. The policy,
which is published on the SCG website, covers four main areas:

  • Definition of stakeholders.

  • Policy on treatment of stakeholders.

  • Guidelines on treatment of stakeholders.

  • Management duties.

In 2011, SCG compiled the existing policies and practices toward various
groups of stakeholders as well as additional policies and practices and
put them together in writing to provide employees with clear guidelines.
Having been approved by the Board of Directors, ‘SCG Policies and
Practices Toward Stakeholders’ have already been introduced. They
encompassed 12 groups of stakeholders as follows:

1) Shareholders 2) Customers

3) Employees 4) Suppliers

5) Business partners 6) Joint venture partners

7) Creditors 8) The community

9) Government agencies

10) The Civil society sector, academia, and opinion leaders

11) The media 12) Competitors

SCG Policies and Practices Toward Stakeholders are detailed on
www.scg.co.th.

Disclosure and Transparency

SCG recognizes the importance of information disclosure because it
greatly affects decision-making by investors and stakeholders. It is
necessary, therefore, to define and administer measures concerning the
disclosure of information, both financial and non-financial. Information
disclosed via the SET Community Portal and SCG’s website shall be
complete, sufficient, reliable and up-to-date, written in both Thai and
English. SCG is committed to obeying the law, and the regulations and
obligations mandated by the Securities and Exchange Commission (SEC),
the SET and other relevant government bodies. Regular amendment takes
place to ensure that SCG is up-to-date in its adherence to laws,
regulations and obligations, and to guarantee SCG’s transparency in
conducting business. For example, we:

  1. Disclose accurate, complete and timely financial information and
  non-financial information.

  2. Prepare a report on the Board’s responsibility for financial
  statements and present it along with the Audit Committee’s report in
  the Annual Report.

  3. Establish a policy that requires the Company’s directors and
  executives to report their own interests, and those of any related
  persons, which are vested interests relating to the management of the
  Company or its subsidiaries. The criteria and reporting procedures are
  as follows:

  • Report when first taking office as a director or executive.

  • Report every time there is a change in a director’s or executive’s
  vested interests.

  • Report at every year end.

  • A director retiring on rotation and being re-elected is not required
  to report his/her own interests again should there be no change in the
  information.

  • A director or executive shall submit the report via the corporate
  secretary who will gather and store the documents and submit them to
  the chairman of the Board of Directors and the chairman of the Audit
  Committee for acknowledgement within seven days after the Company
  receives the documents.

  4. Announced a policy in 2010 requiring all directors to disclose
  and/or report their securities trading and holdings to Board of
  Directors’ meeting.

  5. Disclose procedures about Board member selection and the Board’s
  performance assessment.

  6. Disclose the performance and attendance record of each member of
  the Committee.

  7. Disclose detailed information on the operations and investment
  structure of subsidiaries and associate companies.

  8. Disclose information on the remuneration each director receives as
  a member of the Committee.

  9. Disclose the policy on the remuneration of directors and top
  executives, including forms, types and amount of remuneration for each
  committee member.

  10.Disclose policy on environmental and social responsibility and
  related performance.

  11.Report on corporate governance policies and related performance.

  12.Reveal significant investment projects and relevant impacts of the
  projects via the SET Community Portal of the Stock Exchange of
  Thailand and SCG website. In 2011, the Company disclosed its
  investment projects in the corrugated container business in Vietnam as
  well as in ceramic and distribution businesses and petrochemical
  business in Indonesia.

  Moreover, in 2011, the Board of Directors still upheld information
  disclosure guidelines related to SCG so as to systematize the
  Company’s information disclosure and avert any damage caused by
  improper disclosure. This reassured shareholders, investors, the
  general public and all stakeholders that SCG is committed to
  disclosing information clearly, equitably and in compliance with the
  law. To that effect, the existing practices have been compiled and
  formulated in SCG’s Disclosure Policy set forth in 2008. The Company
  has designated the persons responsible for disclosing non-public
  information as well as establishing guidelines on the disclosure of
  different types of information to the public and setting up critical
  periods in which extreme caution should be taken prior to the
  disclosure of information to the public. Details of the guidelines are
  available for stakeholders and the general public on SCG’s website.

  The Investor Relations Department of SCG is responsible for
  communications with institutional investors, retail investors,
  shareholders, analysts and relevant government bodies on an equal and
  fair basis. Should the shareholders require additional information,
  they can contact the Investor Relations Department directly via
  invest@scg.co.th. In 2011, SCG arranged activities for the president &
  CEO and the vice president to meet retail investors, institutional
  investors and analysts on a regular basis, whereby the operating
  results, financial statements and position, management discussion and
  analysis, and industry trends were presented. During the year these
  activities included:

  • Newly introduced domestic roadshows, whereby SCG visited
  institutional investors whose offices are in Bangkok in order to
  provide clarification and summary of SCG’s general information.

  • Investor meetings for the president & CEO as well as vice president
  to meet with domestic institutional investors at the SCG Headquarters
  in Bangsue, where clarifications and summary of general information
  were provided.

  • Analyst conferences held on a quarterly basis.

  • A total of 12 overseas roadshows.

  • Various company visits as well as direct replies to inquiries from
  investors via telephone and emails on a regular basis.

The Board of Directors: Its Responsibilities, Structure, and Committees

The Structure of the Board of Directors

The Board of Directors comprises nationally respected, knowledgeable and
competent persons who are responsible for drawing up corporate policy
and collaborating with the top executives in making operating plans,
both short-term and long-term, including financial policy, risk
management policy, and organizational overview. The Board plays an
important role in overseeing, monitoring and assessing the performance
of the Company and top executives on an independent basis.

The number of directors is currently limited to 12, comprising 11
non-executive directors and one executive director, who is the company’s
president & CEO. The six independent directors, namely, ACM Kamthon
Sindhvananda, Mr. Sumet Tantivejkul, Mr. Pricha Attavipach, Mr. Arsa
Sarasin, Mr. Tarrin Nimmanahaeminda, and Mr. Pramon Suthiwong (who has
been qualified as an independent director since June 1, 2011). The
qualifications of independent directors are in accordance with the
criteria (as reported in the 2011 Annual Report, pages 58-59) that the
Board of Directors on May 25, 2011 resolved to revise, making them
stricter than the requirements of the Capital Market Supervisory Board.
Further, in 2011, the Board of Directors resolved to limit the number of
terms for which an individual may serve as an independent director to a
maximum of three consecutive terms. The first term started from May 25,
2011.

The Board has further established the Audit Committee, Governance and
Nomination Committee, and Remuneration Committee to be responsible for
their specific areas and report directly to the Board for its
consideration or reference. The Board of Directors is entitled to form
other sub-committees to handle any specific situations as seen
appropriate. In this regard, SCG put in place its Committee Charter
specifying rights and duties, which is published on the Company’s
website. Moreover, an evaluation of the committees’ performance and
review of their operational results are conducted at least once a year.
In 2011, a slight modification was made to the evaluation form of the
committees and sub-committees to facilitate the evaluations by the Board
of Directors.

The Board of Directors’ meeting on May 25, 2011 also resolved to approve
the establishment of the CSR Committee for Sustainable Development
dedicated to supervising policies on CSR activities and sustainable
development.

Non-executive directors hold a meeting among themselves to discuss the
succession plan for top executives and to evaluate the performance of
the President. So as to ensure that the non-executive directors can
express their opinions independently, the President is excluded from
attending a meeting held to evaluate his performance and other related
issues.

In addition, for the months in which the Board of Directors meeting is
not held, all directors are continuously informed of the operating
results. The Company submits to the directors relevant documents,
together with information about any significant developments that
occurred during the month, in order to keep them informed.

The Audit Committee

Comprises four independent directors, all of whom are well accepted and
have a full understanding of, and experience in, accounting or finance.
Mr. Tarrin Nimmanahaeminda, with his extensive knowledge and experience,
is responsible for reviewing the reliability of the financial
statements. The Audit Committee members’ duties include a review to
ensure that operations have been carried out in accordance with the
Company’s Articles of Association as well as the laws and regulations of
compliance-related agencies. Moreover, the Committee is committed to
promoting the advancement of SCG’s financial and accounting report
system to meet international standards and to ensure that the Company
has an appropriate, modern and efficient internal control system,
internal audit system and risk management system. The Audit Committee
acts and expresses opinions independently, with the Audit Office acting
as an operations unit reporting directly to the Audit Committee. The
Audit Committee also works regularly with external auditors, consultants
and specialists in the areas of law and accounting. The Audit Committee
must set up meetings with the Company’s external auditor, which exclude
the management, at least once a year in order to hear their comments. In
addition, the Committee may seek external consultation and professional
advice from independent consultants or specialists, as deemed
appropriate, at the Company’s expense.

The Governance and Nomination Committee

Comprises five of the company’s directors, all of whom are non-executive
directors. The chairman of the Governance and Nomination Committee is an
independent director. The Committee is responsible for proposing,
revising and supervising the Company’s corporate governance matters. The
Committee is also in charge of the nomination of persons qualified to
become directors to replace those who are retired by rotation, or as the
case may be. In addition, the Committee reviews the performance
evaluation system of the Board of Directors and other committees, as
well as the succession plan for the position of president.

The Remuneration Committee

Comprises three of the Company’s directors. The Committee is responsible
for monitoring and studying changes and trends in the remuneration of
the Board of Directors and SCG top executives to suggest remuneration
policies that can motivate these executives to lead the Company toward
success as well as to retain smart and ethical employees within the
organization.

The CSR Committee for Sustainable Development

Comprises three of the Company’s directors. The Committee is responsible
for monitoring and studying changes and trends in the remuneration of
the Board of Directors and SCG top executives to suggest remuneration
policies that can motivate these executives to lead the Company toward
success as well as to retain smart and ethical employees within the
organization.

Limitation of Numbers of Listed Companies in which a Director May Hold
Directorship

The Board of Directors has set a policy to limit the number of listed
companies in which each director may hold a directorship. This policy
aims to protect the Company’s best interests because it helps ensure
that directors have time sufficient to handle thier duties. The Board of
Directors has agreed that each director should hold directorship for a
maximum of five listed companies, unless otherwise assigned by the
Company. In addition, SCG has a guideline in case the President & CEO is
appointed as director of another company. The matter will be proposed to
the Board of Directors for approval.

Separation of the Roles of the Board of Directors and the Management

The Company defines clear roles and responsibilities regarding the Board
of Directors and the management. The Board shall be responsible for
establishing the policies and overseeing the management’s implementation
of those policies. The top executives, on the other hand, shall be
responsible for implementing the policies formulated by the Board, and
ensuring that these are carried out as planned. Therefore, the Chairman
and the President & CEO of the Company shall not be the same person, and
each must be nominated and elected by the Board in order to ensure their
appropriateness. Furthermore, the Board is responsible for establishing
a succession plan covering the top executives, which is subject to
annual review.

The Chairman shall not be a member of the management and shall not
participate in the management of SCG’s business; nor shall the Chairman
be authorized to sign binding agreements on behalf of the Company. This
is to clearly define separate roles between supervision of the Company’s
overall policy, and management of the business.

In 2011, SCG’s top executives comprised nine executives including the
President & CEO, Vice President – Finance and Investment & CFO, and Vice
President – Corporate Administration as well as the Presidents of the
five core businesses – SCG Chemicals, SCG Paper, SCG Cement, SCG
Building Materials, SCG Distribution, and Vice President-Operations, SCG
Chemicals. The nine executives are authorized to manage the Company’s
operations in accordance with the policies set by the Board; take
responsibility for the Company’s operating results; control expenses and
capital expenditures within the limits approved by the Board in the
annual operating plan; manage human resources in line with the
prescribed policy; resolve problems or conflicts that affect the
Company; and maintain effective communication with the stakeholders.

Board of Directors’ Meetings

It is the duty of each member of the Board to consistently attend the
Board’s meetings to stay informed of SCG’s operations and make decisions
regarding them. The Board holds at least eight scheduled meetings per
year, making sure that the agendas are set forth clearly prior to each
meeting. In addition, the Board may organize special meetings to
consider and decide urgent matters.

At the meetings, the Chairman and the President & CEO of the Company
jointly determine which agenda items are relevant to the meetings. Every
individual member of the Board is entitled to propose agenda items.

In 2011, the Board held 11 meetings, eight scheduled meetings and three
special meetings. Prior to each meeting, all members received the agenda
and supporting documents well in advance to allow adequate time for
preparation.

When considering the matters presented to the Board, the Chairman of the
Board presides over and duly conducts the meetings. All members of the
Board are allowed to express their opinions independently. Resolutions
are passed with a majority vote, whereby one director is eligible for
one vote. A director with a vested interest in the issue under
consideration or a director ineligible to vote shall be excused and/or
abstain from voting. In case of a tied vote, the chairman of the meeting
will cast his vote to reach a resolution.

SCG executives are allowed to attend the Board’s meetings to provide
useful information to the Board, and to learn directly about the Board’s
initiatives and policies for effective implementation. However, the
executives are not allowed to attend the meeting for certain agenda
items which are reserved only for the Board of Directors or for
non-executive directors in order to ensure independence of
consideration.

In addition, the Board attaches significance to managing the conflicts
of interest of the concerned parties with prudence, fairness and
transparency. The information shall be fully disclosed. Any director
with a vested interest in the matter under consideration must not be
involved in the decision process.

After the Meeting, the corporate secretary is responsible for preparing
the minutes for all directors. The minutes must then be approved as the
first agenda item of the following meeting of the Board, which is duly
signed by the chairman. Directors may make comments, corrections or
additions to ensure maximum accuracy and completeness. After approval,
minutes of the meeting are stored securely in the corporate secretary’s
office together with all related documents, which are backed up
electronically to facilitate data searches.

The Secretary to the Board of Directors and the Corporate Secretary

The Secretary to the Board

The Board appointed Mr. Worapol Jannapar as the secretary to the Board
of Directors responsible for providing advice to the Board regarding the
performance of duties in compliance with the law, preparing the minutes
of the Board’s meetings, and attending every Board meeting. He is deemed
by the Board to be highly knowledgeable and experienced, especially in
legal matters, allowing him to provide appropriate advice to the Board
regarding laws, rules, regulations and the SCG Corporate Governance
Policy.

The Corporate Secretary

The Board appointed Ms. Pornpen Namwong as the corporate secretary
responsible for organizing the meetings of the Board, committees and
shareholders. The corporate secretary is also in charge of preparing the
minutes of the Board’s meetings, the minutes of shareholders’ meetings,
and Annual Report as well as filing documents as stipulated by law. She
is deemed by the Board to be appropriate because she is knowledgeable in
managing corporate secretarial work, having served as director of the
corporate secretary office, which supports the corporate secretarial
work involving compliance with laws, rules, regulations and the SCG
Corporate Governance Policy.

Remuneration for the Board and the Top Executives

SCG sets appropriate remuneration for members of the Board and the top
executives at rates comparable to those of leading companies listed in
the SET, and other top companies in the same industries. Remuneration
for the Board is also considered based on SCG’s operating results,
before being proposed for approval in the Shareholders’ Meeting.
Remuneration for the top executives is set by the Board of Directors,
based on their responsibilities and performance, and the operating
results of each business.

Apart from ordinary remuneration, the Shareholder’s Meeting on March 24,
2004 passed a resolution approving the Company to pay a bonus to the
Board of Directors in an amount not exceeding 0.5% of total dividends
paid to shareholders. The Board of Directors is responsible for
consideration of the appropriate amount of bonus and the amount to be
paid to each director. The resolution is effective from the date of
approval until any subsequent resolution. The bonus for directors will
be considered based on the growth of profits of the Company, while the
bonus of top executives is considered based on the performance of each
business as well as individual performance.

As for remuneration for the committees, the Board of Directors is
entitled to set the remuneration for each committee according to Clause
40 of the Company’s Article of Association. However, to ensure
transparency in tune with good corporate governance, the Board found it
appropriate to seek from the Shareholders’ Meeting the approval of the
remuneration for three committees, namely the Audit Committee, the
Governance and Nomination Committee, and the Remuneration Committee. In
2006, the 13th Annual General Meeting of Shareholders on March 22, 2006
passed a resolution approving the remuneration for the committees at the
same rates as proposed by the Board. Later in 2011, the 18th Annual
General Meeting of Shareholders on March 30, 2011 approved new
remuneration rates for the three committees.

Details of remuneration for the Board of Directors, both monthly
payments and annual bonuses, as approved by the Shareholders’ Meeting,
including the remuneration for members of committees in 2011, are
reported for each individual on pages 80 of the Annual Report.

Performance Appraisal and Knowledge Enhancement

Performance Appraisal of the Board

SCG makes available the performance evaluation form of the Chairman. The
directors are required to appraise the Chairman’s performance, since his
role in defining policy and ensuring good corporate governance is
essential to the Company. In addition, the performance appraisal of the
Board consists of group assessment (as a whole) and self-assessment. The
assessment results are reviewed in order to find ways to continue to
improve the Board’s performance.

The performance appraisal of the Board both as a whole and
self-assessment comprises eight major topics as follows:

  1. Knowledge and understanding about the role and responsibilities of
  a director in accordance with the laws, rules, and regulations
  stipulated by various agencies or institutions such as SEC, SET, or
  Federation of Accounting Professions.

  2. Strategy setting and policy making.

  3. Performance of duties as director /committee.

  4. Monitoring financial performance and reporting.

  5. Board of Directors’ meetings.

  6. Nomination of the Company’s directors and President & CEO.

  7. Setting remuneration for the directors and top executives.

  8. Performance appraisal of the President.

In 2011, the assessment result of the Board as a whole was 95% and the
result of self-assessment was 92%. Moreover, the Board of Directors
added comments on the evaluation forms that the duties and
responsibilities as prescribed by the laws of a director of a listed
company were important. Currently, the criteria and regulations have
undergone changes and become stricter. Thus, the Board found it
appropriate for the management to organize a discussion on ‘Laws, Rules
and Regulations Related to Listed Companies That the Board of Directors
Should be Informed of, and Suggestions to Prevent Mistakes’ between the
Board and top executives of the Stock Exchange of Thailand and the
Office of the Securities and Exchange Commission on Wednesday, July 6,
2011. The objective was to exchange ideas and suggestions to improve the
corporate governance practices of Thai listed companies.

SCG prepared a handbook for directors, which includes the summary of
laws, rules and regulations related to the directors as well as
practices to keep directors informed of roles, duties, principles and
practices for a director. The handbook is distributed to all directors
for use as reference regarding basic information. In addition, directors
are also kept abreast of laws related to or promoting good corporate
governance such as anti-corruption legislation.

For new directors, SCG established a Director Induction Program to
facilitate their prompt performance of duties. SCG has commissioned the
corporate secretary to coordinate the work in three areas:

  1. To compile the necessary information for directors to ensure their
  compliance with laws, rules, and regulations related to the directors.

  2. To provide important information essential for the directors’
  performance of duty such as the Articles of Association, SCG’s
  director handbook, the handbook for directors of listed companies, and
  summary of operating results, for use as quick reference.

  3. To arrange for a meeting with the Chairman and directors and the
  executives or head of each functions to stay informed and make queries
  about SCG’s business in depth.

Moreover, SCG encourages all members of the Board and the top executives
to attend various seminars and courses beneficial to their
responsibilities, allowing them to constantly meet and exchange opinions
with directors and top executives of different organizations. Some of
these courses are organized by SCG Human Capital Institute, and some by
governmental agencies or independent organizations, such as the Thai
Institute of Directors Association. The SEC requires directors of all
listed companies to complete at least one of the following training
courses: Directors Certification Program (DCP), Directors Accreditation
Program (DAP) or Audit Committee Program (ACP). Experience gained from
these courses is useful to SCG’s development.

To support the Board’s responsibilities, SCG has assigned the secretary
to the Board and corporate secretary to work in coordination with the
Board and the top executives. In addition, the Corporate Secretary
Office is responsible for overseeing the legal matters, relevant
standard practices and activities of the Board to ensure implementation
of the Board’s resolutions.

Performance Assessment of SCG President and Top Executives

The Board and the Remuneration Committee assess the performance of the
President & CEO based on the Company’s operating results, implementation
of the Board’s policies, and the overall socio-economic circumstances.
The Remuneration Committee will then consider the appropriate
remuneration for the President & CEO and top executives of SCG and
propose such amount to the Board for approval, taking into account the
following information regarding the current and previous years:

  1. The business unit’s operating results based on percentage of EBITDA
  on operating assets. The target EBITDA percentage for each business
  unit of SCG shall be set forth each year for assessment and comparison
  purposes.

  2. The operating results of the business unit compared to those of
  other companies in the same industry, both locally and
  internationally.

  3. The executive’s capability to develop the business unit and improve
  operational efficiency for each business unit each year.

In addition, a survey on manager-level employees’ opinions regarding the
President & CEO and the top executives is included in the Remuneration
Committee’s consideration each year.

Nomination of Board Members

The Governance and Nomination Committee is responsible for selecting
qualified candidates to replace the directors who are retiring on
rotation at the end of their terms, or whatever the case may be, and
proposing a list of nominees to the Board for resolution at the
Shareholders’ Meeting. The Governance and Nomination Committee selects
the candidates with credentials in a wide range of professions,
excellent leadership, breadth of vision, a proven record of ethics and
integrity, and who are able to share their opinions independently.

Furthermore, the Governance and Nomination Committee shall consider the
personal qualities of the candidates proposed for selection as Board
members, as regards:

• Integrity and accountability.

• Informed judgment.

• Maturity and stability, being a good listener, and the ability to
express individual, independent opinion.

• Commitment to work principles and professionalism.

Special expertise and certain knowledge required for the Board are also
taken into consideration, so that the Board can formulate strategies and
policies and oversee implementation of the strategies effectively.

(5) Internal Information Controls (page 116)

(6) Human Resource

At SCG, “Belief in the value of the individual” is one of philosophy.
Therefore, employees are the most valuable asset. We devoted to develop
their skills, capability, and quality of life with the appropriated
remuneration. Therefore, SCG has improved the human resource management
in correspondence with the business strategy. The Company draws up
tactics to foster the success by planning for the next 5 years as
following:

  1. Human resource preparedness to support the future investment

1.  Arrange manpower to serve an expansion

  Other than the readiness in the terms of International staffs and SCG
  staff in Overseas Operations to support the oversea business’s
  expansion, SCG also builds the brand to be recognized as employer of
  choice by generating the campus recruitment in leading education
  institutions, offering scholarships to students and local staffs for
  graduate to doctorial degree, and building strong relationship with
  the government, private sector, community, and leading corporate of
  the invested countries. Moreover, SCG arranges quarterly meeting with
  SCG coordinator of each country to make sure that the company’s policy
  on human resource management has been applying accordingly. Such
  meeting opens up additional information exchange channel in terms of
  business and human resource as a way of employee’s care of both local
  and international staffs.

2.  Employee capability development

  SCG focuses on creating atmosphere that allows employees to be
  inspired and learned through training sessions, knowledge sharing
  activities, knowledge improvement programs, and in-work experience.
  Employees would have attitude and behavior that suits the company as
  well as broaden their knowledge, skills and visions that enable them
  to adapt to constant changing environment both local and oversea. As a
  preparation for oversea expansion, SCG improves staff’s ability in
  working at international stage by teaching them language, culture, and
  business norms of each country through Cross-Cultural Exclusive
  Development programs and international business practice program.
  Furthermore, SCG has developed SCG Orientation International Program
  for local staffs to understand the SCG’s business strategy and
  promoting the proud of being SCG employees and building working
  network.

3.  Modification on human resource management to encourage for working
    overseas

  Aims to have same standard of human resource management with SCG and
  also suitable for different cultures, the overseas companies have
  implemented e-HR management software. SCG brings best practices, such
  as introducing SCG Career Camp projects, monitoring employees through
  HR committee, and applying HR development methods e.g. TQM, TPM,
  Safety to the overseas companies in order to illustrate its intention
  of sustainable and long-term investment and boost working
  effectiveness. Also, the intentioned programs allow local staffs to
  have career growth opportunity in the same playing field with others
  throughout SCG. The HR system platform is a key that allows HR system
  to be applied in foreign countries much more effectively. For top
  managements, SCG has a policy that requires them to have working
  experience in foreign countries.

  2. Encourage new culture lead to innovative organization

  2.1 Change the culture into innovative organization

  Through diverse activities, SCG aims to promote and alter working
  culture to be known as innovative organization as well as changing its
  employee’s working behavior. Every employees is required to adhere to
  SCG Business Philosophy and Code of Conduct which are guidelines for
  practices and also courageous to think and talk as well as having
  opened-mind and ability to change in order to create Innovative
  Workplace environment. SCG also initiated various activities such as
  Inno Award, Inno Idea Tank, Book Brief, and Eager to Learn. In
  addition, SCG sees the importance of adding number of researchers in
  subjects which are related to business direction because these staffs
  are the critical mass in driving innovation policy to be in effect
  rapidly.

2.  Develop employees’ competency who support innovative culture

  To develop employees’ competency in supporting innovative culture, SCG
  has arranged number of programs to develop them in each level. These
  programs are, for instance, Thinking Skills for Innovation, Coaching
  for Innovation, Leadership Development Program, and Inno Executive
  Coaching. In the mean time, SCG has developed SCG Inno Facilitators in
  every business to act as promoters of innovative culture within the
  organization.

3.  Modify human resource management to enhance innovative organization

  Human resource management is an importance tool in sustainability
  achieving innovation goal. The HR systems that support the mentioned
  policy are listed below:

-   Improve Recruitment Process by developing internal recruiting
    procedure to serve career part of employees via SCG Career Click.

-   Review Performance Management System to motivate employees and teams
    both output and working procedures in driving innovation

-   Define wage management and career development for researchers and
    specialists in each business.

-   Cooperate with external institutions for R&D such as AIT,
    Chulalongkorn University as well as develop skills for technicians
    in mechanical technology by cooperating with King Mongkut’s
    University of Technology North Bangkok and Model School Project , in
    cooperation with Vocational Education Committee to support SCG’ s
    future technology improvement.

    SCG believes that its focus on HR development in knowledge, skill,
    and ethic will allow the Company to achieve the goal of becoming
    international company of innovation. Such adherence will lead the
    Company to experience sustainable growth both local and in Southeast
    Asia.

    As at December 31, 2011, The Siam Cement Public Company Limited had
    542 employees with a compensation of Baht 931 million. Total
    employees of the Group were 34,725 with a compensation of Baht
    23,997 million. (Compensation includes salary, bonuses, provident
    fund, and welfare)

    Number of Employees in Each Business of the Siam Cement Group

    As at December 31, 2011

  -------------------------------------------- --------------------------
  Company / Business Unit                      Number of Employees

  The Siam Cement Public Company Limited       542

  SCG Chemicals                                4,775

  SCG Paper                                    8,905

  SCG Cement                                   5,228

  SCG Building Materials                       11,795

  SCG Distribution                             2,586

  Others                                       894

  Total                                        34,725
  -------------------------------------------- --------------------------