NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2022 (CURRENCY - SINGAPORE DOLLARS UNLESS OTHERWISE STATED) D3 Post-employment benefits (continued) (b) Sensitivity analysis (continued) Recognition and measurement A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The Group determines the net interest expense/(income) on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(asset). D4 Share-based payment arrangements PSP2010 and PSP2020 (PSP) The PSP is established with the objective of motivating Senior Management Executives to strive for sustained long-term growth and performance in ST Engineering and its subsidiaries (ST Engineering Group or the Group). Awards of performance shares are granted conditional on performance targets set based on the ST Engineering Group corporate objectives. The performance measures used in PSP grants are Absolute Total Shareholder Return (TSR) taking reference to the Group’s Cost of Equity and Earnings Per Share (EPS) Growth against pre-determined targets. In addition to the PSP performance targets being met, final award for PSP is conditional upon satisfactory performance of the recipient. RSP2010 and RSP2020 (RSP) The RSP is established with the objective of motivating managers and above to strive for sustained long-term growth of ST Engineering Group. It also aims to foster a share ownership culture among employees within the ST Engineering Group and to better align employees’ incentive scheme with shareholders’ interest. A minimum threshold performance is required for any shares to be released to the recipients at the end of the performance period. The shares will vest equally over a four-year performance period, subject to continued employment with the Group and maintaining a satisfactory performance rating for the financial year preceding each tranche of vesting. Movement in the number of shares under the PSP and RSP are as follows: Group 2022 2021 PSP RSP PSP RSP Outstanding awards Balance at 1 January 5,139,347 13,324,714 5,546,244 13,262,039 Granted 1,621,823 7,209,787 935,496 6,918,603 Lapsed (1,546) (800,133) (645,280) (915,380) Released (690,408) (5,523,440) (697,113) (5,940,548) Balance at 31 December 6,069,216 14,210,928 5,139,347 13,324,714 These shares were awarded by reissuance of treasury shares. 222 ST ENGINEERING ANNUAL REPORT 2022
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