CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2022 CORPORATE GOVERNANCE 44 45 The key responsibilities of the RC, as set out in its written terms of reference approved by the Board, are to review and recommend for endorsement by 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 fees payable to the Directors for the Board’s consideration before approval is sought from the shareholders at the AGM. The RC also reviews and recommends annually specific remuneration packages for the EDs and the KMP, including the annual increments, short-term and long-term incentives, 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 2022, 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 relationship with the appointed remuneration consultants other than their engagement in providing such benchmark data, which could affect the said consultants’ independence. The Company Secretaries maintain records of all RC meetings including CORPORATE GOVERNANCE records of discussions on key deliberations and decisions taken. The RC held three meetings in 2022. 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 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. In reviewing the remuneration packages of the EDs and the KMP, 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 performancebased 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 EDs and KMP comprise the following components: Total Remuneration Fixed Compensation Variable Compensation Base salary Short-term incentive (STI) in the form of cash-based annual variable bonus Annual wage supplement (“AWS”) *Long-term incentive (LTI) in the form of cash awards Fixed Allowances Benefits-inkind * Applicable only to the KMP The total salary, including AWS, STI and LTI, is benchmarked to the market, to ensure that the remuneration commensurates with the position and responsibilities of the EDs and KMP. The STI in the form of annual variable bonus and the LTI in the form of cash awards, reward achievement of the Group, business units and individual performance based on key performance indicators (involving financial and nonfinancial indicators) determined annually. The RC approves the Company’s balanced scorecard and the performance targets set out in the GET (Growth, Enhancement and Transformation) strategy to be achieved by the Company based on its short and long-term objectives, which are cascaded down to the various business units. The LTI in the form of cash awards, has a three-year performance period, and aligns Management with long-term shareholder value creation. LTI payments are not guaranteed and are subject to Management achieving the performance conditions based on Board-approved budget and strategy. LTI payment will be made at the end of a 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 EDs and KMP in exceptional circumstances such as misstatement of financial results or of misconduct resulting in financial loss to the Group. The overall level of remuneration of the EDs and KMP 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 revision 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. Approval of the shareholders will be sought at the 2023 AGM for the payment of an aggregate sum of $1,512,000 as Directors’ fees and meeting attendance fees for FY 2022. The Company is also seeking the approval of shareholders at the 2023 AGM for a total of up to $2,000,000 as Directors’ fees and meeting attendance fees for the current financial year, for payment on a quarterly basis in arrears. 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. The structure of the fees payable to Directors of the Company for FY 2022 is as follows: Appointment Per annum Board of Directors – Base fee $75,000 Audit & Risk Committee – ARC Chairman’s fee $105,000 – ARC Member’s fee $80,000 Nominating Committee – NC Chairman’s fee $30,000 – NC Member’s fee $18,000 Remuneration Committee – RC Chairman’s fee $30,000 – RC Member’s fee $18,000 Appointment Per annum Board Sustainability Committee – BSC Chairman’s fee $17,000 – BSC Member’s fee $10,000 Lead Independent Director’s fee $15,000 Attendance fee Per meeting $4,000* * Payable in consultation with the RC and the respective Committee chairmen.
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