The Company Secretaries maintain records of all RC meetings including records of discussions on key deliberations and decisions taken. The RC held two meetings in 2023. 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 Self-Assessment Checklist”). The RC Self-Assessment Checklist covered, inter alia, the responsibilities of the RC under its terms of reference and also considered 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 policy 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/ her own remuneration. CORPORATE GOVERNANCE Total Remuneration Fixed Compensation: (i) Base salary (ii) Annual Wage Supplement (AWS), fixed allowances and benefits-in-kind This is benchmarked to market to ensure that the remuneration commensurate with the position and responsibilities of the Executive Chairman and the ExCo members. This is aligned with market practices and legislative requirements, and not linked directly to performance. Fixed allowances and benefits-in-kind are also linked to the position and responsibilities of the Executive Chairman and the ExCo members. Variable Compensation: (i) Short-term incentive (STI) (ii) Long-term incentive (LTI) Variable compensation is linked to performance and comprises Short and LongTerm Incentives. In determining the variable compensation, the RC considers the achievement of the Group, business units and individual performance based on key performance indicators (involving financial and non-financial indicators) which are determined annually. This is in the form of cash-based annual variable bonus. The LTI is applicable to the ExCo members and is in the form of cash awards. Further details on the LTI are provided in the following paragraph. In reviewing the remuneration packages of the Executive Chairman and the ExCo members, the RC, with the assistance of external remuneration consultants, 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 performance-based remuneration system that is flexible and responsive to the market, and the performance of the Group’s business units 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 long-term objectives of the Company. The remuneration packages for the Executive Chairman and the ExCo members comprise the following components: The LTI in the form of cash awards, has a three-year performance period, and aligns Management with longterm shareholder value creation. LTI payments are not guaranteed and are subject to Management achieving the performance conditions based on Board-approved targets and strategy. LTI payment will be made at the end of the three-year assessment period if performance conditions are met. Being a cash-based award, the LTI is not dilutive to current shareholders. Claw-back provisions are included within the LTI which would give the right to the Company to reclaim incentive components from the ExCo members in exceptional circumstances such as misstatement of financial results or of misconduct resulting in financial loss to the Group. The total remuneration, including AWS, STI and LTI, is benchmarked to the market, to ensure that it is commensurate with the position and responsibilities of the Executive Chairman and the ExCo members. The RC also reviews and approves the Company’s balanced scorecard which includes the performance targets set out in the GET (Growth, Enhancement and Transformation) strategy to be achieved by the Company based on its short and longterm objectives, and includes non-financial measures on environmental, social and governance issues which are similarly cascaded down to the employees of various business units. The overall level of remuneration of the Executive Chairman and the ExCo members is not considered to be at a level which is likely to promote behaviour contrary to the Group’s risk profile. The RC and the Board believe that the executive compensation framework is aligned with the short-term and long-term interests of the shareholders and stakeholders, and that it promotes the long-term success of the Company. When reviewing the structure and level of Directors’ fees, which comprise the base director fee and additional fees for services rendered on Committees and fee for the Lead ID, the RC takes into consideration the Directors’ respective roles and responsibilities on the Board and Committees and the changes in the business, corporate governance practices and regulatory rules. The RC also compares the Company’s fee structure against industry practices annually. Other factors taken into consideration in the fee review include the frequency of Board and Committee meetings and the interval since the last fee revision. The RC is mindful that the remuneration for IDs should not be excessive so as to compromise or reasonably be perceived to compromise their independence. No Director is involved in deciding his/ her own remuneration. Each of the Directors receives a base Director’s fee. The Lead ID also receives an additional fee to reflect his expanded responsibility. Directors who serve on the various Committees also receive additional fees in respect of each Committee that they serve on, with the chairmen of the Committees receiving a higher fee in respect of their service as chairmen of the respective Committees. Attendance fee is payable for attendance in person or via teleconference or video conference at each meeting of the Board or Committee in consultation with the RC and the respective Committee chairman. At the 2023 AGM, shareholders had approved the payment of up to $2,000,000 as Directors’ fees and meeting attendance fees for FY 2023. The aggregate amount paid quarterly in arrears for FY 2023 was $1,709,723. Approval of the shareholders will be sought at the 2024 AGM for an aggregate sum of up to $2,000,000 as Directors’ fees and meeting attendance fees for FY 2024, for payment on a quarterly basis in arrears. The quantum of the proposed Directors’ fees for FY 2024 is calculated based on the number of expected Board and Committee meetings and the number of Directors expected to hold office during the year. The Company currently does not discourage Directors from holding shares in the Company but notes that there is no requirement under the Company’s Constitution for Directors to hold shares in order to be qualified to act as a Director. Directors’ fee structure for FY 2023 and the proposed structure for FY 2024 Appointment FY 2023 Per Annum FY 2024 (Proposed) Board of Directors – Base fee $75,000 $75,000 Audit & Risk Committee – ARC Chairman’s fee $105,000 $105,000 – ARC Member’s fee $80,000 $80,000 Nominating Committee – NC Chairman’s fee $30,000 $30,000 – NC Member’s fee $18,000 $18,000 Remuneration Committee – RC Chairman’s fee $30,000 $30,000 – RC Member’s fee $18,000 $18,000 Board Sustainability Committee – BSC Chairman’s fee – BSC Member’s fee $17,000 $17,000 $10,000 $10,000 Lead Independent Director’s fee $15,000 $15,000 Attendance fee Per meeting $4,000* Per meeting $4,000* * Payable in consultation with the RC and the respective Committee chairmen. Principle 8: Disclosure of Remuneration Disclosure of Remuneration (Provisions 8.1(a) and 8.3) The compensation packages for employees including the Executive Chairman and the ExCo members, based on the Company’s Remuneration Framework, also take into account amongst other factors, the individual’s performance, the performance of the Group and industry practices. During the year, there were no termination, retirement or post-employment benefits (other than CPF contributions) granted to any Director or any ExCo member. CORPORATE GOVERNANCE 49 48 CORPORATE GOVERNANCE ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED
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