GOVERNANCE → Corporate Governance Report An annual Pay-for-Performance Alignment study is conducted by the Remuneration Consultant and reviewed by the ERCC. The findings indicate strong 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. Having considered this, the ERCC has incorporated the following risk adjustments in the remuneration structure: a. Setting a prudent funding mechanism of annual bonus; b. Subjecting and deferring the vesting of 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 financial year 2021, 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 2021, except for Quek Gim Chuah, the brother of Quek Gim Pew, who retired as a Director of the Company on 1 August 2021. Quek Gim Chuah has been with ST Engineering for 34 years since April 1987 and is currently the Vice President of Technical Training for the Commercial Aerospace’s MRO business. He reports to the EVP & Head, Aerospace MRO, who functionally reports to President of the Commercial Aerospace business. In this role, he has no dealings with ST Engineering’s Board of Directors. Like all other non-executive Directors, Quek Gim Pew was 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 2021, 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 2022. 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 Group worth the lower of: (a) the total number of shares in the Group granted to such NED as payment of the shares’ component of the NEDs’ fees for financial year 2011 and onwards; or (b) the number of shares of equivalent value to the prevailing annual basic retainer fee for a director of the Group. An NED can sell all his/ her shares in the Group a year after the end of his/her Board tenure. 107 CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 66 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
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