ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) D. EMPLOYEE BENEFITS The Group uses the following programs to reward and recognise employees and key executives, including key management personnel. • Economic Value Added (EVA)-based Incentive Scheme • Defined contribution plans • Employee benefits • Share plans The Group believes that these programs reinforce the value of ownership and incentivise and drive performance both individually and collectively to maximise returns to the shareholders. D1 Economic Value Added (EVA)-based D3 Post-employment benefits Incentive Scheme D2 Personnel expenses D4 Share-based payment arrangements D1 Economic Value Added (EVA)-based Incentive Scheme The Group adopts an incentive compensation plan, which is tied to the creation of EVA, as well as attainment of individual and Group performance goals for its key executives. An EVA bank is used to hold incentive compensation credited in any year. Typically a portion of EVA-based bonus declared in the financial year is paid out in cash each year, with the balance being deferred for payment in the following years. Estimate and judgement: EVA-based Incentive Scheme (EBIS) Estimates of the Group’s obligations arising from the EBIS at the reporting date may be affected by future events, which cannot be predicated with any certainty. The assumptions and estimates are made based on management’s knowledge and experience and may vary from actual experience so that the actual liability may vary considerably from the best estimates. Negative EVA will result in a clawback of EVA bonus accumulated in previous years. 22 9 ANNUAL REPORT 2 0 2 0 / CORPORATE OVERVI EW PERFORMANCE REVI EW SUSTAINABI L ITY CORPORATE GOVERNANCE F INANCIAL REPORT