CORPORATE GOVERNANCE REPORT Under the Practice Guidance accompanying the Code, the compensation system should take into account the risk policies of the Group, be symmetric with risk outcomes and be sensitive to the time horizon of risks. Having considered this, the ERCC has incorporated the following risk adjustments in the remuneration structure: a. Setting a prudent funding mechanism for annual bonus; b. Subjecting the vesting of awards granted under the 2020 Share Plans to pre-determined performance conditions and potential forfeiture under malus and clawback rights; c. Requiring the executive Director and key management personnel to hold a minimum number of shares under the share ownership guidelines; and d. Applying discretion, whenever necessary, to ensure that remuneration outcomes align with the long-term interests and performance of the Group and discourage excessive risk-taking. The ERCC undertakes periodic reviews of the compensation system to identify potential compensation-related risks and consider policies and processes to manage risk exposures identified. The ERCC is of the view that the level and structure of remuneration align with the long-term interests and risk management policies of the Group. During FY2024, there were no termination, retirement and postemployment 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 $100,000 during FY2024. Non-Executive Director Remuneration The Non-Executive Director (NED) Remuneration Framework comprises a basic retainer, attendance and additional fees for serving on Board Committees. The ERCC, in consultation with Aon, conducted a review of the Directors’ Remuneration Framework in FY2024. The review took into account a variety of factors, including prevailing market practices and referencing Directors’ fees against comparable benchmarks, as well as the roles and responsibilities of the Board and Board Committees. Following the review, a revised Directors’ remuneration structure was developed in order to ensure a competitive level of Director’s remuneration as the Group strives for sustainable growth and value creation. The scale of fees payable to the NEDs has not been revised since FY2018. The revised Directors’ remuneration structure will take effect from FY2025 onwards (unless and until further revised) and is set out in the table on page 91. For services rendered in FY2024, eligible NEDs received 70% of the total Directors’ fees in cash (paid half-yearly in arrears) and 30% of the total Directors’ fees will be paid in the form of restricted shares which are governed by the terms of RSP2020. The share component of the Directors’ fees for FY2024 is intended to be paid after the 2025 AGM. 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 attached and no vesting periods imposed. To encourage the alignment of interests of the NEDs with the interests of shareholders, the share grant has a moratorium on selling. Each eligible NED is required to hold shares in the Company worth the lower of: (a) the total number of shares in the Company granted to such NED as payment of the shares component of the NEDs’ fees; or (b) the number of shares of equivalent value to the prevailing annual basic retainer fee for an NED. A NED can sell all granted shares one year after the end of his/her Board tenure (see additional moratorium requirements for the Chairman described on page 91). 90 ST ENGINEERING | ANNUAL REPORT 2024
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