ST Engineering Annual Report 2020

CORPORATE OVERVI EW PERFORMANCE REVI EW SUSTAINABI L ITY CORPORATE GOVERNANCE F INANCIAL REPORT new malus and clawback rights, a reduction in size limit (from 8% under the 2010 Share Plans to 5% under the 2020 Share Plans 1 ), amendments to take into account the changes to relevant legislation and the SGX Listing Manual, and changes to streamline and rationalise certain other provisions. The malus and clawback rights under the 2020 Share Plans allow the ERCC to cancel all or part of any award to the extent not yet released to the participant, and to exercise the right to clawback the monetary value of shares which have been released to the participant within a six-year clawback period, if certain exceptional circumstances occur in relation to that participant. Such exceptional circumstances include (but are not limited to): • the grant of the relevant award being based on inaccurate financial statements; • the participant having engaged in conduct which resulted in or contributed to any financial loss or reputational harm to the Company or the Group; and • the participant having engaged in misconduct or committed fraud or breach of trust or duty in relation to the Company or the Group. The Group also has clawback policies for the unvested shares granted under the 2010 Share Plans in the event of exceptional circumstances of restatement of the financial results of the Group subsequent to an earlier misstatement, or of misconduct or fraud resulting in any financial loss to the Group. With respect to financial year 2020, share awards granted before 20 April 2020 were made pursuant to the 2010 Share Plans while share awards granted after 15 May 2020 were made pursuant to the 2020 Share Plans. The grants made under both the 2010 Share Plans and the 2020 Share Plans during financial year 2020 did not exceed 0.5% of the total number of issued shares of the Company (excluding treasury shares and subsidiary holdings), which is the internal annual limit set by the ERCC for the 2020 Share Plans. The aggregate number of shares issued and/or to be issued and the aggregate number of existing shares (including treasury shares) delivered and/or to be delivered, pursuant to the 2010 Share Plans, does not exceed 5% of the issued share capital of the Company (excluding treasury shares), even though the limit under these share plans is 8%. Details of the abovementioned share plans and grants are set out in the Share Plans section of the Directors’ Statement from pages 133 to 136 of this Annual Report. PSP2010 / PSP2020 The objective of the PSP2020, like the PSP2010, is to motivate Senior Management Executives to strive for sustained growth and performance of the Group. Performance share awards are generally granted on an annual basis and are conditional on the Group meeting targets set for a three-year performance period. With effect from the financial year 2018, the performance measures used in performance share grants are: • Absolute Total Shareholder Return (TSR) against Cost of Equity hurdles (i.e. measure of absolute Wealth Added); and • Earnings Per Share (EPS) Growth against pre- determined EPS Growth targets over the relevant performance period. A minimum threshold performance is required for any shares to be released at the end of the applicable performance period. The actual number of performance shares released will depend on the achievement of predetermined targets over the applicable performance period, capped at 170% of the shares granted. The release of the shares is also conditional on satisfactory individual performance at the end of the performance period. For performance share awards granted during financial year 2018, the Group has partially met the predetermined target performance level set. These awards were conditional upon the performance of the Group from financial years 2018 to 2020. RSP2010 / RSP2020 The objective of the RSP2020, like the RSP2010, is to retain and motivate managers and above to strive for sustained long-term growth of the Group. The plans also aim to foster a share ownership culture among employees within the Group and to better align employees’ incentives with shareholders’ interests. The RSP2020, like the RSP2010, also allows for restricted share awards to be granted to non-executive Directors (“NED Awards”) as part of their remuneration in respect of their office as such in lieu of cash. Such awards, which are meant to align the interests of the Directors with those of shareholders, will consist of fully paid shares with no vesting periods or performance conditions imposed although the Directors will be required to hold the shares for certain moratorium periods. 11 3 ANNUAL REPORT 2 02 0 / 1 Percentages are of the total number of issued shares of the Company (excluding treasury shares and subsidiary holdings).