GOVERNANCE → Corporate Governance Report The ERCC performs the following duties and responsibilities: Executive Remuneration General Framework • Reviews and recommends to the Board the Group’s general framework for determining executive remuneration including the remuneration of the Group President & CEO , key management executives of the Group (EXCO) and other senior management executives (collectively referred to as “Senior Management Executives”). Executive Director and Senior Management Executives • Reviews and recommends to the Board the entire specific remuneration package and service contract terms for the Group President & CEO, who is also the executive Director. • Considers, reviews, approves and/or varies (if necessary) the entire specific remuneration packages and service contract terms for the Senior Management Executives of the Group. For FY2021, the Board reviewed and approved the specific remuneration packages and service contract terms for the key management executives. Non-Executive Director Remuneration • Reviews and recommends to the Board the remuneration framework (including directors’ fees) for non-executive Directors. Equity-based Plans • Approves the design of equity-based plans and reviews and administers such plans. Executive and Leadership Development • Oversees the development of management with the aim of a continual build up of talent and renewal of strong and sound leadership to ensure the continued success of the Group and its businesses. • Approves appointments to Senior Management Executive positions within the Group. For financial year 2021, Aon was engaged as remuneration consultant (Remuneration Consultant) to provide professional advice on Board and executive remuneration matters. Aon and its principal consultant are independent and are not related to the Group or any of its Directors. Executive Remuneration Structure Remuneration for the Senior Management Executives comprises a fixed compensation, variable cash- based incentives, share-based incentives and market-related benefits. In 2020, as part of cost saving measures to mitigate COVID-19 impact, the Group implemented fee and salary reductions for the Board and senior management team ranging between 5% and 20%. Effective July 2021, the Group restored all fees and salary reductions. A. Fixed Compensation: The fixed compensation comprises the base salary and compulsory employer’s Central Provident Fund (CPF) contributions. B. Variable Cash-based Incentives: The variable cash-based incentives include the Performance Target Bonus (PTB) and EVA-based Incentive Scheme. Performance Target Bonus The PTB is a cash-based incentive for Senior Management Executives which is linked to the achievement of annual performance targets that will vary depending on their job requirements. Individual performance objectives are set at the beginning of each financial year. The performance targets are in financial, people, operational, customer and sustainability areas aligned to the business’ strategic goals. These objectives are cascaded down to a select group of key executives creating alignment between the performance of the Group, Company and the individual. The individual PTB payouts for the Group President & CEO and key management executives are determined by the ERCC based on the Group’s, Company’s and individual performance at the end of the financial year. EVA-based Incentive Scheme The EVA-based Incentive Scheme (EBIS), which is linked to the Company’s economic value-add and financial performance forms part of the short-term incentives for the Senior Management Executives. Under the plan, a portion of EBIS bonus declared for the financial year will be paid out annually, while the remaining portions will be deferred in an EVA bank. Amounts in the EVA bank are at risk because negative EVA will result in a clawback of EVA accumulated in the bank. This mechanism encourages the Senior Management Executives to work for sustained EVA generation and to adopt strategies that are aligned with the long-term interests of the Group. CORPORATE GOVERNANCE REPORT 104 ST ENGINEERING ANNUAL REPORT 2021 63 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
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