CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2021 CORPORATE GOVERNANCE 42 43 (b) any competing time commitments if the candidate has multiple listed company board representations and/ or other principal commitments; (c) the candidate’s independence, in the case of the appointment of an independent NED; and (d) the composition requirements for the Board and Committees after matching the candidate’s skill set to the requirement of the relevant Committees ( i f the candidate is proposed to be appointed to any of the Committees). Key Information on Directors (Provision 4.5) Please refer to the ‘Board of Directors’ section in the AR for key information on the Directors, including their date of first appointment and latest re-election to the Board, their academic/professional qual ifications, major appointments/ principal commitments, directorships held in listed companies both currently and in the preceding five years, and other relevant information; ‘Additional Informat i on on Di rectors seek i ng election/re-election at the 2022 AGM’; and the Notice of AGM for information on Directors proposed for election/reelection at the 2022 AGM. Succession Planning for the Board, the Board Chairman and the KMP (Provision 4.1) The Board bel ieves in carrying out succession planning for i tsel f, the Board Chairman and the KMP to ensure continuity of leadership. Board renewal is a continuous process and in this regard, the NC reviews annually the composition of the Board and Committees, which includes size andmix, and recommends to the Board the selection and appointment of new Directors, whether in addition to the existing Board members or as replacement of retiring Board members, with a view to identifying any gaps in the Board’s skill sets taking into account the Group’s strategy and business operations. The Board will be able to function smoothly notwithstanding any resignation or retirement of any Director CORPORATE GOVERNANCE given the present number of members and mix of competencies on the Board. Board Development (Provision 4.5) The NC rev i ews the t r a i n i ng and development of the Directors to ensure that Di rectors receive appropr iate development on a continuing basis, to performtheir roles on the Board andwhere applicable, the Committees. The Directors are provided with updates and/or briefings to assist them to properly discharge their duties. The briefings are conducted either internally with invited speakers, or externally, at the Company’s expense. A separate programme is established for new Directors, details of which together with details of the internal briefing and updates provided to the Directors in 2021 are set out in the paragraph under the subject heading ‘Board Orientation and Training’ in this report. The Board is kept apprised twice yearly on the list of training programmes attended by the Directors during the year. Principle 5: Board Performance Board Evaluation Process (Provision 5.1) The Company has in place a formal process for assessment of the effectiveness of the Board as a whole, the various Committees and the contribution by each Director towards the effectiveness of the Board and the Committees. No external facilitator has been used. The NC assesses the Board’s performance as a whole annually, using objective and appropriate criteria which were recommended by the NC and approved by the Board. When assessing the overall Board performance, the NC takes into consideration the feedback from individual Directors on areas relating to the Board’s role on strategy and performance, the Board’s process and governance (including oversight on internal controls and risk management), the Board’s competencies and effectiveness and the effectiveness of the Board Chairman. The results of the overall evaluation of the Board by the NC, including its recommendation, if any, for improvements, are presented to the Board. The NC also undertook an evaluation of the performance of the Committees with the assistance of self-assessment c h e c k l i s t s c omp l e t e d b y t h e s e Committees. The annual evaluation process for the Board Chairman’s and the individual Di rector ’s per formance compr i ses two parts: (a) review of background information concerning the Director including his attendance records at Board, Committee and IDs’ (where applicable) meetings; and (b) NC’s evaluation based on certain assessment parameters, which were recommended by the NC and approved by the Board. When deliberating on the performance of a particular Director who is also a member of the NC, that member abstains from the discussions in order to avoid any conflict of interests. The results of the individual evaluation of the Directors are also used by the NC, in its consultation with the Board Chairman (who is also a member of the NC), to review, where appropriate, the composi t ion of the Board and Committees, and to support its proposals, if any, for appointment of new members and its recommendations for the reelection of retiring Directors. The Board Chairman, as a member of the NC, is fully apprised of the results of the performance evaluation for the individual Directors and would take into consideration such evaluation and act as appropriate on the recommendations of the NC. Comments from the Directors, if any, concerning the Board as a whole and the general performance of the Directors, are also presented to the Board. Board Evaluation Criteria (Provision 5.2) The qualitative criteria used by the NC to evaluate the Board covers six key areas relating to Board composition, Board independence, Board’s review o f t h e Comp a ny ’ s s t r a t e g y a nd performance, Board’s oversight on the Company’s governance, including risk management and internal controls, and the effectiveness of the Board Chairman and Board processes. The quantitative criteria used to evaluate the overall Board performance comprises performance indicators which include a comparison of the Group’s performance ( including segmental performance) for the financial period under review against the Group’s performance for the corresponding period in previous years, and other indicators such as the Company’s share price performance over a historical period. Individual Director Evaluation Criteria (Provision 5.2) Factors taken into account in the assessment of a Director’s performance include their abilities and competencies, the i r ob j ec t i v i ty and the l eve l of participation at Board and Committee meetings including their knowledge and contribution to Board processes and the business strategies and performance of the Group. The performance evaluation of each Director is taken into account in the NC’s consideration with regard to their re-election as Director. REMUNERATION MATTERS Principle 6: Procedures for Developing Remuneration Policies RC Composition and Role (Provisions 6.1, 6.2, 6.3 and 6.4) The RC comprises four NEDs, al l of whom including the chairman of the RC, are independent. The RC’s principal responsibilities, as set out in its written terms of reference approved by the Board, are to review and recommend for the endorsement of the Board a framework of remuneration for the Directors, including the specific remuneration packages of the Executive Directors (“EDs”) and the KMP. Further, in consultation with the NC and the Management, the RC also considers the talent management framework so as to align with its review of the overall remuneration framework. The Company has in place a remuneration framework (which covers all aspects of remuneration) for the NEDs, EDs and KMP. On an annual basis, the RC reviews and recommends the specific remuneration packages for the EDs and the KMP, including the annual increments and year-end variable bonuses, for approval by the Board. The RC also considers the termination terms in the contracts of employment of the KMP to ensure that they are not unfair or unreasonable. In 2021, Willis Towers Watson, external remuneration consultants, provided benchmark data on the remuneration for top executives in regional listed real estate companies of comparable size to the Company as well as the benchmark data for top listed companies in Singapore across all industries to help the RC in its consideration and proposal of the appropriate level of remuneration for the Company’s KMP to attract, retain and motivate for sustained performance and value creation. The Company has no relat ionship wi th the appointed remuneration consultants other than thei r engagement to provide such benchmark data, which could affect the said consultants’ independence. The Company Secretariesmaintain records of all RC meetings including records of discussions on key deliberations and decisions taken. Three meetings of the RC were held in 2021. For the financial year under review, the RC conducted a self-assessment of its own effectiveness in the discharge of its roles and responsibilities, which was facilitated through the use of a self-assessment checklist (“RC SelfAssessment Checklist”). The RC SelfAssessment Checklist covered, inter alia, the responsibilities of the RC under its terms of reference and considered also the contribution of RC members to the deliberation and decision-making process at RC meetings. Based on the self-assessment, the RC is of the view that it has fulfilled its responsibilities and discharged its duties as set out in its terms of reference. Principle 7: Level and Mix of Remuneration of Directors and KMP (Provisions 7.1, 7.2 and 7.3) The Company’s remuneration pol icy for Directors comprises the following distinct objectives: • to ensure that the procedure for determining remuneration for Directors is formal and transparent; • to ensure that the level of remuneration is sufficient (without being excessive) to attract and retain Directors to exercise oversight responsibility over the Company; and • to ensure that no Director is involved in deciding on his own remuneration. In reviewing the remuneration packages of the EDs and the KMP, the RC, with the assistance of external remuneration consul tants, considers the level of remuneration based on the Company’s remuneration policy which comprises the following distinct objectives: • to reward employees for achieving corporate and individual performance targets in a fair and equitable way; and • to ensure that the remuneration reflects employees’ duties and responsibilities. The Company advocates a performancebased remuneration system that is flexible and responsive to the market, and the performance of the Group’s business uni ts and individual employees. In designing the compensation structure, the Company seeks to ensure that the level and mix of remuneration is competitive, relevant and appropriate in finding a balance between the current and longterm objectives of the Company. In its review of the KMP’s remuneration, the RC links the KMP’s incentive plans against the key performance indicators as measured by the pre-set targets of the GET (Growth, Enhancement and Transformation) strategy.
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