ST Engineering Annual Report 2020

CORPORATE GOVERNANCE Restricted share awards are generally granted on an annual basis. Save for NED Awards, restricted share awards are generally conditional on the Group meeting a target set for a one-year performance period. With effect from the financial year 2020, the performance measure used in such restricted share grants is: • Return on Capital Employed (ROCE) Under such awards, a minimum threshold performance is required for any shares to be released after the end of the applicable performance period. The shares will vest equally over a four-year period, subject to continued employment with the Group and maintaining a satisfactory performance rating for the nancial year preceding each tranche of vesting. For restricted share awards granted during financial year 2020 which were subject to performance measures, the Group has met the predetermined performance threshold level set. These awards were conditional upon the performance of the Group in financial year 2020. D. Market-related Benefits: The benefits provided are comparable with local market practices. The Code requires a company to disclose the names and remuneration of the CEO and at least the top five key management personnel (who are not also directors or the CEO). Details of the remuneration package for the Group President & CEO are provided in the Summary Remuneration Table for directors on page 116. Details of the remuneration packages for the Key Management Executives are provided in the Summary Remuneration Table for Key Management Executives on page 117. In performing the duties as required under its Terms of Reference, the ERCC ensures that remuneration paid to the Senior Management Executives are strongly linked to the achievement of business and individual performance targets. The performance targets as determined by the ERCC are set at realistic yet stretched levels each year to motivate a high degree of business performance with emphasis on both short and long- term quantifiable objectives. Pay-for-Performance Alignment study was conducted periodically by the Remuneration Consultant and reviewed by the ERCC for sufficient evidence indicating Pay-for-Performance alignment for the Group in terms of both absolute and relative performance. Under the Code, the compensation system shall take into account the risk policies of the Group, be symmetric with risk outcomes and be sensitive to the time horizon of risks. The ERCC will undertake periodic reviews of the compensation-related risks. During financial year 2020, there were no termination, retirement and post-employment benefits granted to directors, Group President & CEO and Key Management Executives other than in accordance with the standard contractual agreement. There were no employees who were immediate family members of a director or the Group President & CEO and whose remuneration exceeded S$100,000 during the financial year 2020, except for Quek Gim Chuah, the brother of Quek Gim Pew, Director of the Company. Quek Gim Chuah has been with ST Engineering for 33 years since April 1987 and is currently the Vice President of Quality and Safety at VT Mobile Aerospace Engineering. He reports to the President, ST Engineering Aerospace America, who functionally reports to President of the Aerospace sector. In this role, he has no dealings with ST Engineering’s Board of Directors. Like all other non- executive Directors, Quek Gim Pew is not involved in operational matters and the hiring, appraisal and remuneration of middle management, including that of his brother Quek Gim Chuah. For these reasons, we decided to respect Quek Gim Chuah’s confidentiality by not disclosing his remuneration band. Non-Executive Director Remuneration Non-executive directors (NEDs) have remuneration packages consisting of directors’ fees and attendance fees, which are approved in arrears by shareholders for services rendered in the previous year. The Directors’ Remuneration Framework comprises a basic retainer, attendance and additional fees for serving on Board committees. For services rendered in financial year 2020, eligible NEDs will receive 70% of the total directors’ fees in cash and 30% of the total directors’ fees in the form of restricted shares which are governed by the terms of RSP2020, subject to shareholders’ approval at its AGM in April 2021. As the restricted shares are granted in lieu of directors’ remuneration in cash, the shares will be granted outright as fully paid shares with no performance conditions / ST ENG I NEER I NG 114