REPORT FOR THE PERIOD FROM 1 JANUARY 2019 TO 31 DECEMBER 2019
OUR GOVERNANCE FRAMEWORK
CapitaLand Limited (the Company and, together with its subsidiaries, the Group) embraces the tenets of good corporate governance including accountability, transparency and sustainability. It is committed to enhancing value over the longterm to its stakeholders with the appropriate people, processes and structure to direct and manage the business and affairs of the Company, achieve operational excellence and deliver the Group's long-term strategic objectives.
The policies, ethics and practices provide the foundation for a trusted and respected business enterprise.
The Board of Directors (Board) is responsible for the Company's corporate governance standards and policies. This sets the tone from the top and underscores its importance to the Group.
This corporate governance report (Report) sets out the corporate governance practices for financial year (FY) 2019 benchmarked against the Code of Corporate Governance 2018 (Code).
Throughout FY 2019, the Company's governance framework and processes are in compliance with the Code's principles of corporate governance and also substantially, with the provisions underlying the principles of the Code. Where there are deviations from the provisions of the Code, appropriate explanations are provided in this Report.
The Company has received accolades for excellence in corporate governance including the "Best Managed Board Award" in 2019. More details can be found in the Awards & Accolades section on pages 26 to 28 of this Annual Report.
(A) BOARD MATTERS
Principle 1 : The Board's Conduct of Affairs
Board's Duties and Responsibilities
The Board has the primary responsibility to foster the success of the Company so as to deliver sustainable value over the long term, and to engage stakeholders based on the principles of sustainability and sound governance. It oversees the strategic direction, performance and affairs of the Group and provides overall guidance to Management, led by the GCEO, who is appointed by the Board. The Board works with Management to achieve the Company's objectives and Management is accountable to the Board for its performance.
The Board conducts itself according to its Board Charter which sets out the Board's role, responsibilities, duties and powers. The duties and powers of the Board include:
- approving the strategies and objectives for the Company, and monitoring the progress in achieving them;
- approving the financial plan (including annual budgets and capital management plans) and monitoring the financial performance of the Company;
- approving share issuances, dividends and other returns to shareholders;
- approving corporate and financial restructuring, mergers, major acquisitions and divestments;
- approving the risk appetite of the Company, and reviewing the adequacy and effectiveness of the risk management and internal control systems;
- approving the overall remuneration policy and compensation framework, and the compensation package for the GCEO and other key management positions; and
- reviewing matters which involve a conflict of interest for a substantial shareholder or a Director.
The Board includes sustainability considerations as part of its strategic formulation.
The Board has established financial approval limits for capital expenditure, investments, divestments, bank borrowings and issuance of shares as well as debt and equity-linked instruments and this is communicated to Management in writing. The Board has reserved matters requiring its approval. Apart from matters that require the Board's approval, the Board delegates authority for transactions below those limits to Board Committees and Management to optimise operational efficiency.
Directors are fiduciaries and are collectively and individually obliged at all times to act objectively in the best interests of the Company. Consistent with this principle, the Board is committed to ethics and integrity of action and has adopted a Board Code of Business Conduct & Ethics which provides for every Director to, among other things, adhere to the highest standards of ethical conduct. All Directors are required to comply with the Board Code of Business Conduct & Ethics. This sets the appropriate tone from the top in respect of the desired organisational culture, and ensures proper accountability within the Company. In line with this, the Board has a standing policy which requires each Director to not allow himself/herself to get into a situation where there is a conflict between his/her duty to the Company and his/her own interests. Where a Director has a conflict of interest in a particular matter, he or she will be required to declare his/ her interest to the Board, recuse himself/herself from the deliberations and abstain from voting on the matter. Every Director has complied with this policy, and where relevant, such compliance has been duly recorded in the minutes of meeting or circular resolutions. The Company also has a policy that it does not provide loans to Directors. Further, Directors are required to act with due diligence in the discharge of their duties and they are responsible for ensuring that they have the relevant knowledge (including understanding the business of the Company and the environment in which it operates) to carry out and discharge their duties as Directors. They are also required to dedicate the necessary effort, commitment and time to their work, and are expected to attend all meetings of the Board, except if unusual circumstances make attendance impractical.
The Company ensures that its Directors and executive officers have appropriate experience and expertise to manage the Group's business. In view of the increasingly demanding, complex and multi-dimensional role of a Director, the Board recognises the importance of continual training and development for its Directors so as to equip them to discharge the duties and responsibilities of their office as Directors of the Company to the best of their abilities. The Company has in place a training framework to guide and support the Company towards meeting the objective of having a Board which comprises individuals who are competent and possess up-to-date knowledge and skills necessary to discharge their duties and responsibilities. The costs of training are borne by the Company.
Upon appointment, each Director is provided with a formal letter of appointment and a copy of the Director's Manual (which includes information on a broad range of matters relating to the role, duties and responsibilities of a Director). All Directors upon appointment also undergo an induction programme which focuses on orientating the Director to the Company's business, operations, strategies, organisation structure, responsibilities of key management personnel, and financial and governance practices. The induction programme also includes visits to the Group's properties. Through the induction programme, the new Director also gets acquainted with members of Senior Management which facilitates their interaction at Board meetings.
Following their appointment, Directors are provided with opportunities for continuing education in areas such as directors' duties and responsibilities, and changes to regulations and accounting standards, so as to be updated on matters that affect or go towards enhancing their performance as Directors or Board Committee members. Directors may also contribute by recommending suitable training and development programmes to the Board.
The Company also believes in keeping Board members updated and externally focused. Therefore, training and professional development programmes for Directors include forums and dialogues with experts and senior business leaders on issues facing boards and board practices. In FY 2019, sharing and information sessions were arranged as part of pre-Board dinners and Board meetings, where guest speakers and Management team members presented on key topics to the Board. These included updates on business strategies and key industry developments and trends. The Board and Management have access to CapitaLand Technology Council (CTC) and China Advisory Panel (CAP) for their inputs on matters relating to technology, and economic and real estate industry developments and trends in China. Directors may also receive on a regular basis reading materials on topical matters or subjects and their implications for the business.
The Board has established various Board Committees to assist it in the discharge of its functions. These Board Committees are the Audit Committee (AC), the Executive Resource and Compensation Committee (ERCC), the Nominating Committee (NC), the Risk Committee (RC) and the Strategy, Investment and Finance Committee (SIFC).
The SIFC assists the Board in its review of investment, credit and funding proposals, as well as the long-term strategy of the Company. Its remit also includes the review of the strategic talent pipeline in relation to the strategic plan of the Company. The SIFC carries out this responsibility within the authorities/limits approved by the Board.
Each of these Board Committees is formed with clear written terms of reference (setting out its composition, authorities and duties, including reporting back to the Board) and operates under delegated authority from the Board with the Board retaining overall oversight. The chairpersons of these Board Committees report on the decisions and significant matters discussed at the respective Board Committees to the Board on a quarterly basis. The minutes of the Board Committee meetings which record the deliberations and decisions taken during these meetings are also circulated to all Board members for their information. The duties and responsibilities of the Board Committees are set out in this Report.
The Board may form other Board Committees from time to time. The Board undertakes a review of its Board Committee structure, as well as the terms of reference of the respective Board Committees regularly, to ensure that they remain relevant and effective in fulfilling the objectives and responsibilities of the respective Board Committees. The respective Board Committees also review their terms of reference and effectiveness and recommend necessary changes to the Board.
Board Committee memberships are also reviewed regularly, and as and when there are changes to Board composition. Where appropriate, changes to Board Committee memberships are made. Considerations include diversity of skills and experience, an equitable and balanced distribution of duties among Board members and the memberships are such that they foster active participation and contributions from Board members. Following a review in February 2020, so as to achieve a better balance in the distribution of workload and demand of time on Directors, the following changes were made to the composition of the Board Committees:
- Mr Kee Teck Koon joined the RC and stepped down from the ERCC;
- Mr Miguel Ko joined the ERCC;
- Mr Chaly Mah Chee Kheong stepped down from the RC;
- Mr Anthony Lim Weng Kin joined the AC; and
- Ms Goh Swee Chen joined the NC.
The current composition of the various Board Committees is set out in the table below as well as on page 43 of this Annual Report.
China Advisory Panel (CAP) and CapitaLand Technology Council (CTC)
In addition to Board Committees, the Company has also established the CAP in 2014 and CTC in 2015. The CAP shares strategic insights on general, economic and real estate industry developments and trends in China. The CTC apprises the Board on technology developments and initiatives in particular those that are relevant to support the Company's efforts to harness technology in its business operations.
The Company regularly engages its stakeholders based on the principles of sustainability and sound governance. In FY 2019, as part of its commitment to sustainability, the Company established a Sustainability Council which comprises both Board and Management members. The Sustainability Council meets on a regular basis and provides guidance to Management and monitors the Group's progress in its implementation of ESG initiatives.
Information on the Company's approach to its engagement with stakeholders can be found at page 104 under Principle 13 in this Report.
Meetings of Board and Board Committees
The Board and the respective Board Committees meet regularly to discuss strategy, operational and governance matters. Board and Board Committee meetings are scheduled prior to the start of each financial year in consultation with the Directors. The Constitution of the Company (Constitution) also permits Directors to participate via audio or video conference.
The non-executive Directors led by the Chairman, also set aside time at each scheduled meeting to meet without the presence of Management, and at other times when necessary.
The Board holds six scheduled meetings each year, and ad hoc Board meetings are held as required by business imperatives. In this regard, a total of two ad hoc Board meetings were held in FY 2019 principally because of the acquisition of all the issued shares of the former Ascendas Pte Ltd and Singbridge Pte. Ltd. (ASB Acquisition).
Board meetings, in general, last up to a full day. At each Board meeting:
- the chairperson of each Board Committee provides an update on the significant matters discussed at the Board Committee meetings which are typically scheduled before the quarterly Board meetings;
- the GCEO provides updates on the Group's business and operations, including latest market developments and trends, and business initiatives and opportunities; and
- the GCFO presents the financial performance, budgetary and capital management related matters.
Presentations in relation to specific business areas are also made by senior executives, external consultants or experts. Any risk management or other major issues that are relevant to the Company's performance or position are also highlighted to the Board. Further, any material variance between any projections in budget or business plans and the actual results from business activities and operations is disclosed and explained to the Board. To keep the Board abreast of investors' perceptions and concerns, the Investor Relations team also provides updates on analyst consensus estimates and views at the quarterly Board meetings. This includes updates and analyses of the shareholder register, highlights of key shareholder engagements as well as market feedback.
Such presentations and updates allow the Board to develop a good understanding of the progress of the Group's business as well as the prevailing issues and challenges facing the Group, and also promote active engagement with the key executives.
The Board also meets at least annually to review and deliberate on the Group's strategies with Senior Management. The strategy meeting in FY 2019 was held in September 2019 during which the Board and Senior Management had in-depth discussions and agreed on the Company's strategic directions and objectives.
The Company adopts and practises the principle of collective decision making. The Board benefits from a culture of open, frank, rigorous and constructive discussions and debates at Board and Board Committee meetings which are conducted on a professional basis. There is mutual trust and respect amongst the Directors. The Board also benefits from the diversity in views, perspectives and expertise. No individual Director influences or dominates the decisionmaking process.
The Board is provided with relevant information on a timely basis prior to Board and Board Committee meetings. This enables Directors to make informed decisions to discharge their duties and responsibilities. In addition to receiving complete, adequate and timely information on Board affairs and issues requiring the Board's decision, the Board also receives information on an ongoing basis. Management provides the Board with ongoing reports relating to the operational and financial performance of the Company, as well as updates on market developments and trends.
As a general rule, Board papers are sent to Board or Board Committee members at least five working days prior to each Board or Board Committee meeting, to allow them to prepare for the meetings and to enable discussions to focus on any questions or issues that they may have or identify. Where appropriate, Management briefs Directors in advance on issues to be discussed before the Board or Board Committee meeting. Agendas for Board and Board Committee meetings are prepared in consultation with and incorporates inputs from the Senior Management, the Chairman and the respective Board Committees' chairs. This provides assurance that important topics will be covered. Quarterly and year-end financial results are reviewed and recommended by the AC to the Board for approval.
In line with the Company's ongoing commitment to minimise paper waste and reduce its carbon footprint, the Company does not provide printed copies of Board papers. Instead, Directors are provided with tablet devices to enable them to access and review Board and Board Committee papers prior to and during meetings. This initiative also enhances information security as the papers are made available through an encrypted channel. Directors are also able to review and approve written resolutions using the tablet devices.
A total of six pre-scheduled Board and two ad hoc Board meetings were held in FY 2019. The deliberations and decisions taken at Board meetings are minuted.
A record of the Directors' attendance at Board and Board Committee meetings for FY 2019 is set out on page 106 of this Annual Report. GCEO who is also a Director attends all Board meetings. He also attends all Board Committee meetings on an ex officio basis. Other senior executives attend Board and Board Committee meetings as required to brief the Board on specific business matters.
The matters discussed at Board and Board Committee meetings include:
Besides Board and Board Committee meetings in which Management participates, there is active interaction between Board members and Management outside of Board and Board Committee meetings. The Board has unfettered access to any Management staff for any information that it may require at all times. Likewise, Management has access to Directors outside of the formal environment of Board and Board Committee meetings for guidance. The Board and Management share a productive and harmonious relationship which facilitates separate and independent access by Directors to management executives, which is critical for good governance and organisational effectiveness.
The Board also has separate and independent access to the Company Secretaries at all times. The Company Secretaries are legally trained and keep themselves abreast on relevant developments. They attend to corporate secretarial administration matters and are the advisor on corporate governance matters to the Board and Management. The Company Secretaries attend all Board meetings and assist the Chairman in ensuring that Board procedures are followed. The Company Secretaries also facilitate orientation and undertake professional development administration for the Directors. The appointment and the removal of the Company Secretaries are subject to the Board's approval.
The Board, whether as individual Directors or as a group, is also entitled to have access to independent professional advice where required, at the Company's expense.
Principle 2 : Board Composition and Guidance
The Board, through the NC, reviews from time to time the size and composition of the Board and Board Committees, with a view to ensuring that the size of the Board and Board Committees is appropriate in facilitating effective decisionmaking. The Board and Board Committees have a strong independent element and their compositions reflect diversity of thought and background. The review takes into account the scope and nature of the Group's operations, and the competition the Group faces.
The Company has always had and continues to have a significant majority of independent Directors. Its Board Charter provides that at least one-third of the Board shall comprise independent Directors. The Board Charter also provides that, in the event that the Chairman is not an independent Director, the Company will appoint a lead independent Director and ensure that the Board comprises a majority of independent Directors.
The Board has a strong independent element - nine out of 11 Directors, including the Chairman, are Non-Executive Independent Directors. The Non-Executive Deputy Chairman and the GCEO are the only non-independent Directors. Other than GCEO who is the only executive Director on the Board, non-executive Directors make up the rest of the Board. No lead independent Director is appointed as the Chairman is an independent Director. Profiles of the Directors, their respective designations and roles are set out on pages 29 to 35 of this Annual Report. Key information on Directors are also available on the Company's website.
The Board, taking into account the views of the NC, assesses annually (and as and when circumstances require) the independence of each Director in accordance with the requirements of the Listing Manual of the Singapore Exchange Securities Trading Limited (Listing Manual), the Code and where relevant, the recommendations set out in the Practice Guidance accompanying the Code (Practice Guidance). A Director is considered independent if he/she has no relationship with the Company, its related corporations, its substantial shareholders or its officers that could interfere, or be reasonably perceived to interfere with the exercise of his/her independent business judgement in the best interests of the Company.
There is a rigorous process to evaluate the independence of independent Directors. As part of the process:
- each non-executive Director provides information of his or her business interests and confirms, on an annual basis, that there are no relationships which interfere with the exercise of his or her independent business judgement with a view to the best interests of the Company; such information is then reviewed by the NC; and
- the NC also reflects on the respective Directors' conduct and contributions at Board and Board Committee meetings, in particular, whether the relevant Director has exercised independent judgement in discharging his or her duties and responsibilities.
Thereafter, the NC's recommendation is presented to the Board for its determination. Each Director is required to recuse himself or herself from the NC's and the Board's deliberations respectively on his or her own independence. In appropriate cases, the NC also reviews the independence of Directors as and when there is a change of circumstances involving the Director. In this regard, Directors are required to report to the Company any change of circumstances which may affect his or her independence.
The Board has carried out the assessment of the independence of each of its Directors for FY 2019 and the paragraphs below set out the outcome of the assessment. Based on the outcome of the assessment, other than Mr Lee Chee Koon, GCEO, and Mr Miguel Ko, Non-Executive Deputy Chairman, both of whom are the only non-independent Directors, all members of the Board are considered to be independent Directors. Mr Lee, who is the GCEO of the Company, is considered non-independent by virtue of his employment by the Company. Mr Ko is non-independent because he is an executive of CLA Real Estate Holdings Pte. Ltd. (CLA), the holding company of the Company, and therefore, a related corporation of the Company.
Mr Ng Kee Choe
Mr Ng, who is Chairman of the Board, serves as a member on the board of Temasek Trustees Pte. Ltd. and Temasek Trust Ltd. (collectively, Temasek Trustees). Temasek Trustees is part of the philanthropic arm of Temasek Holdings (Private) Limited (Temasek), which is the controlling shareholder of CLA, the holding company of the Company. It is a not-forprofit organisation which independently oversees the management and disbursement of Temasek's endowments and gifts. Mr Ng's role as a member of the board of Temasek Trustees is non-executive in nature and he is not involved in the day-to-day conduct of the business of Temasek Trustees. This role does not require him to take or subject him to any obligation to follow any instructions from Temasek in relation to the corporate affairs of the Company. It also does not generate any issue that may affect his independence as a Director of the Company.
Mr Ng is the only Director on the Board who has served for more than nine years. As guided by Guideline 2.4 of the Code of Corporate Governance 2012, the independence of Mr Ng was subject to particularly rigorous review by the NC and the Board. The NC and the Board reviewed Mr Ng's performance and contributions in light of his tenure including his engagement with the Board and the Board Committees he chairs or is a member of and arrived at the determination that he had continued to exercise independent judgement in carrying out his oversight duties. He has continued to be forthcoming in expressing his individual viewpoints, remains active in his debate over issues concerning the Group, and objective in his scrutiny of and challenges to Management. As Chairman, Mr Ng is effective in facilitating robust debate and formulating consensus.
The Board is of the view that the relationship set out above and his length of service as a Director of the Company did not impair his ability to act with independent judgement in the discharge of his duties and responsibilities as a Director. The Board is therefore of the view that Mr Ng has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Board arrived at the determination that Mr Ng is an independent Director. Mr Ng had recused himself from the NC's and the Board's deliberations, respectively, on his independence.
Mr Ng is also not an immediate family member (as defined in the Listing Manual) of GCEO and does not have close family ties with GCEO, as determined by the NC, which could influence his impartiality as Chairman.
Mr Stephen Lee Ching Yen
Mr Lee is a non-executive director of Temasek. Mr Lee's role on the Temasek board is non-executive in nature and he is not involved in the day-to-day conduct of the business of Temasek. He had also confirmed that he was not under any obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of Temasek in relation to the corporate affairs of the Company.
The Board also considered the conduct of Mr Lee in the discharge of his duties and responsibilities as a Director, and is of the view that the relationship set out above, including the fact that the Company became a subsidiary of Temasek when Temasek increased its interest in the Company on 28 June 2019 (in respect of which a special review on Director's independence was conducted), did not impair his ability to act with independent judgement in the discharge of his duties and responsibilities as a Director. The Board is therefore of the view that Mr Lee has continued to be actively engaged and exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Board arrived at the determination that Mr Lee is an independent Director. In the year under review, Mr Lee had also recused himself from participating in any Board deliberation on any transactions involving Temasek. Mr Lee had recused himself from the NC's and the Board's deliberations, respectively on his independence.
Mr Kee Teck Koon
Mr Kee is a non-executive director of Raffles Medical Group Ltd (RMG) which provides healthcare insurance and medical services as part of the welfare and benefits scheme for CapitaLand Group employees. Although the magnitude of the fees and payments made to RMG in FY 2019 exceeded the threshold amount of S$200,000 (which is provided as a general guide in the Practice Guidance), Mr Kee's role in RMG is non-executive in nature and he is not involved in the business operations of RMG. The decision to engage RMG was made by Management in the ordinary course of business and on normal commercial terms, based on merit and competitive terms negotiated by Management. Mr Kee was not involved in the process for or approval of the engagement.
The Board also considered the conduct of Mr Kee in the discharge of his duties and responsibilities as a Director, and is of the view that the relationship set out above did not impair his ability to act with independent judgement in the discharge of his duties and responsibilities as a Director. The Board is therefore of the view that Mr Kee has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Board arrived at the determination that Mr Kee is an independent Director. Mr Kee had recused himself from the Board's deliberations on his independence.
Ms Goh Swee Chen
Ms Goh is a non-executive director of Singapore Airlines Limited (SIA). SIA provides flight services to the Group. The decision to engage SIA was made by Management in the ordinary course of business and on normal commercial terms, based on merit and competitive terms negotiated by Management. Although the magnitude of the fees and payments made to SIA in FY 2019 exceeded the threshold amount of S$200,000 (which is provided as a general guide in the Practice Guidance), Ms Goh's role in SIA is non-executive in nature and she is not involved in the business operations of SIA. The engagement of SIA pre-dates Ms Goh's appointment to the SIA board.
Ms Goh is also a non-executive director of Singapore Power Ltd (SP). SP provides utilities to the properties of the Group. The decision to engage SP was made by Management in the ordinary course of business and on normal commercial terms, based on merit and competitive terms negotiated by Management. Although the magnitude of the fees and payments made to SP in FY 2019 exceeded the threshold amount of S$200,000 (which is provided as a general guide in the Practice Guidance), Ms Goh's role in SP is non-executive in nature and she is not involved in the business operations of SP. The engagement of SP pre-dates Ms Goh's appointment to the SP board.
The Board also considered the conduct of Ms Goh in the discharge of her duties and responsibilities as a Director, and is of the view that the relationships set out above did not impair her ability to act with independent judgement in the discharge of her duties and responsibilities as a Director. The Board is therefore of the view that Ms Goh has exercised independent judgement in the discharge of her duties and responsibilities. Based on the above, the Board arrived at the determination that Ms Goh is an independent Director. Ms Goh had recused herself from the Board's deliberations on her independence.
Dr Philip Nalliah Pillai, Mr Chaly Mah Chee Kheong and Mr Gabriel Lim Meng Liang
Dr Pillai, Mr Mah and Mr Lim do not have any relationships and are not faced with any of the circumstances identified in the Listing Manual, the Code or the Practice Guidance, or any other relationships which may affect their independent judgement. The Board noted that:
- Dr Pillai was a non-executive board member of the Inland Revenue Authority of Singapore, a statutory board which functions as the tax collecting agency of Singapore. He stepped down from this role on 1 September 2019. This role did not require him to take or subject him to any obligation to follow any instructions from any government authorities in relation to the corporate affairs of the Company. It also generated no conflict of interest in respect of his role as a Director of the Company. Dr Pillai is also a director of SMRT Group (comprising SMRT Corporation Ltd and SMRT Trains Ltd, which are both subsidiaries of Temasek and therefore related corporations of the Company). Dr Pillai's role in SMRT Group is non-executive in nature and he is not involved in the business operations of the organisation. SMRT Group is an independently managed group of entities under Temasek. The role did not require him to nor result in him having to act in accordance with any instructions, directions or wishes of Temasek in relation to the corporate affairs of the Company. It also does not generate any issue that may affect his independence as a Director of the Company.
- Mr Mah is a non-executive board member of (i) the Monetary Authority of Singapore, which is Singapore's central bank and financial regulatory authority; and (ii) the Economic Development Board of Singapore, a statutory board which plans and executes strategies for business and investment. These roles do not require him to take or subject him to any obligation to follow any instructions from any government authorities in relation to the corporate affairs of the Company. These roles also generate no conflict of interest in respect of his role as a Director of the Company.
- Mr Lim is presently Permanent Secretary of the Ministry of Trade and Industry. His public office duties do not require him to take or subject him to any obligation to follow any instructions from any government authorities in relation to the corporate affairs of the Company. This role also generates no conflict of interest in respect of his role as a Director of the Company.
The Board also considered the conduct of Dr Pillai, Mr Mah and Mr Lim, respectively, in the discharge of their duties and responsibilities as Directors, and is of the view that each of them had acted with independent judgement in the discharge of their duties and responsibilities as Directors. The Board is therefore of the view that each of Dr Pillai, Mr Mah and Mr Lim has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Board arrived at the determination that Dr Pillai, Mr Mah and Mr Lim are independent Directors. They had recused themselves from the Board's deliberations on their independence. Dr Pillai who is also a NC member had also recused himself from the NC's deliberations on his independence.
Tan Sri Amirsham Bin A Aziz and Mr Anthony Lim Weng Kin
Tan Sri Amirsham and Mr Lim do not have any relationships and are not faced with any of the circumstances identified in the Listing Manual, the Code or the Practice Guidance, or any other relationships which may affect their independent judgement. The Board considered the conduct of each of them in the discharge of their duties and responsibilities as Directors and is of the view that each of them had acted with independent judgement in the discharge of his duties and responsibilities. The Board is therefore of the view that each of Tan Sri Amirsham and Mr Lim has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Board arrived at the determination that Tan Sri Amirsham and Mr Lim are independent Directors. They had recused themselves from the Board's deliberations on their independence.
The Board embraces diversity and formally adopted a Board Diversity Policy in 2019. The Board Diversity Policy provides for the Board to comprise talented and dedicated Directors with a diverse mix of expertise, experience, perspectives, skills and backgrounds, with due consideration to diversity, including but not limited to, diversity in business or professional experience, age and gender.
The Board believes in diversity and values the benefits diversity can bring to the Board in its deliberations. Diversity enhances the Board's decision-making capability and ensures that the Company has the opportunity to benefit from all available talent and perspectives.
The NC, in carrying out its duties of determining the optimal composition of the Board in its Board renewal process, identifying possible candidates and making recommendations of board appointments to the Board, considers diversity factors such as age, educational, business and professional background of its members. Female representation is also considered an important aspect of diversity.
In line with the Board Diversity Policy, the current Board comprises 11 members who are corporate and business leaders, and are professionals with varied backgrounds, expertise and experience including in finance, banking, real estate, legal, accounting, general management and technology. The current Board has one female member who is also an NC member. For further information on the NC's work in this regard, please refer to "Board Membership" under Principle 4 in this Report.
Principle 3 : Chairman and Chief Executive Officer
The roles and responsibilities of the Chairman and the GCEO are held by separate individuals, in keeping with the principles that there be a clear division of responsibilities between the leadership of the Board and Management and that no one individual has unfettered powers of decision-making. The non-executive independent Chairman is Mr Ng Kee Choe, whereas the GCEO is Mr Lee Chee Koon. They do not share any family ties. The Chairman and the GCEO enjoy a positive and constructive working relationship between them, and support each other in their respective leadership roles.
The Chairman provides leadership to the Board and facilitates the conditions for the overall effectiveness of the Board, Board Committees and individual Directors. This includes setting the agenda of Board meetings, ensuring that there is sufficient information and time at meetings to address all agenda items, and promoting open and constructive engagement among the Directors as well as between the Board and the GCEO on strategic issues.
The Chairman devotes considerable time understanding the business of the Company, as well as the issues and the competition the Company faces. He plays a significant and active leadership role by providing clear oversight, direction, advice and guidance to the GCEO. He also maintains open lines of communication and engages with other members of the senior leadership regularly, and acts as a sounding board for GCEO and the other members of the senior leadership team on strategic and significant operational matters.
The Chairman also presides over Annual General Meetings (AGMs) and other general meetings where he plays a crucial role in fostering constructive dialogue between shareholders, the Board and Management.
GCEO has full executive responsibilities to manage the Group's business and to develop and implement Board approved policies.
The separation of the roles and responsibilities of the Chairman and the GCEO, which is set out in writing, and the resulting clarity of roles provide a healthy professional relationship between the Board and Management, facilitate robust deliberations on the Group's business activities and the exchange of ideas and views to help shape the strategic process, and ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making.
As the roles of the Chairman and the GCEO are held by separate individuals who are not related to each other, and the Chairman is an independent Director, appointment of a lead independent Director is not necessary.
Principle 4 : Board Membership
The Board has a formal and transparent process for the appointment and re-appointment of Directors. It has established the NC, which makes recommendations to the Board on all appointments to the Board and Board Committees. All Board appointments are made based on merit and approved by the Board.
All NC members, including the Chairman of the NC, are Non-Executive Independent Directors. The NC met four times in the year under review.
The NC also reviewed and approved various matters within its remit via circulating papers.
Under its terms of reference, the NC's scope of duties and responsibilities is as follows:
- reviewing and making recommendations to the Board on the size and composition of the Board, the succession plans for Directors, and the structure and membership of the Board Committees;
- reviewing and recommending an objective process and criteria for the evaluation of the performance of the Board, Board Committees and Directors;
- providing training and professional development programmes for the Board, including ensuring that new Directors are aware of their duties and obligations;
- considering annually and, as and when circumstances require, if a Director is independent and providing its views to the Board for consideration; and
- reviewing whether a Director has been adequately carrying out his or her duties as a Director.
Board Composition and Renewal
The Board, through the NC, strives to ensure that there is an optimal blend in the Board of backgrounds, experience and knowledge in business and general management, expertise relevant to the Group's business and track record, and that each Director can bring to the Board an independent and objective perspective to enable balanced and wellconsidered decisions to be made in the interests of the Group. The Board has a few members who have prior working experience in the sector that the Company operates in.
There is a structured process for determining Board composition and for selecting candidates for appointment as Directors. In undertaking its duty of reviewing and making Board appointment recommendations to the Board, the NC evaluates the Board's competencies on a long-term basis and identifies competencies which may be further strengthened in the long-term. Board succession planning takes into account the need to maintain flexibility to effectively address succession planning and to ensure that the Company continues to attract and retain highly qualified individuals to serve on the Board. The process ensures that the Board composition is such that it has capabilities and experience which are aligned with the Company's strategy and environment.
The Board supports the principle that Board renewal is a necessary and continual process, for good governance and ensuring that the Board has the skills, expertise and experience which are relevant to the evolving needs of the Group's business.
Board succession planning is carried out through the annual review by the NC of the Board's composition as well as when a Director gives notice of his or her intention to retire or resign. The outcome of that review is reported to the Board. The Board seeks to refresh its membership progressively and in an orderly manner, whilst ensuring continuity and sustainability of corporate performance. The Board also has in place guidelines on the tenure of Directors. The guidelines provide that a Director is appointed for two terms of a total of approximately six years and any extension of tenure beyond six years will be rigorously considered by the NC in arriving at a recommendation to the Board.
The NC identifies suitable candidates for appointment to the Board. In this regard, external consultants may be retained from time to time to assist the NC in identifying candidates. Candidates are identified based on the needs of the Company and the relevant skills required, taking into account, among other things, the requirements in the Listing Manual and the Code, as well as the factors in the Board Diversity Policy. Those considered will be assessed against a range of criteria including the candidates' demonstrated business sense and judgement, skills and expertise, and market and industry knowledge (and may include elements such as financial, sustainability or other specific competency, geographical representation and business background). The NC also considers the qualities of the candidate in particular if they are aligned to the strategic directions and values of the Company while also assessing his or her ability to commit time to the affairs of the Company, taking into consideration the candidate's other current appointments. The NC uses a skills matrix to determine the skills gaps of the Board and if the expertise and experience of a candidate would complement those of the existing Board members.
In the year under review, no alternate director to any of the Independent Directors was appointed. In keeping with the principle that a Director must be able to commit time to the affairs of the Company, the NC has adopted the principle that it will generally not approve the appointment of alternate directors to Independent Directors.
Shareholders' Approval at AGM
Election of Board members is the prerogative and right of shareholders. The Constitution requires one-third of the Company's Directors (prioritised by length of service since the previous reelection or appointment and who are not otherwise required to retire) to retire and subject themselves to reelection by shareholders (one-third rotation rule) at every AGM. Effectively, this results in all Directors having to retire and stand for reelection at least once every three years or even earlier. In addition, any newly appointed Director (whether as an additional Director or to fill a vacancy) will submit himself or herself for reelection at the AGM immediately following his or her appointment. Thereafter, he or she is subject to the one-third rotation rule.
With regard to the reelection of existing Directors each year, the NC advises the Board of those Directors who are retiring or due for consideration to retire in accordance with the articles of the Constitution. The NC makes recommendations to the Board as to whether the Board should support the reelection of a Director who is retiring and, for the purpose, undertakes a review of the retiring non-executive Director's contributions to the Board's deliberations during the period in which the non-executive Director has been a member of the Board. The NC also considers the respective Directors' attendance record and preparedness for Board meetings, as well as their other appointments and commitments. Each member of the NC is required to recuse himself or herself from deliberations on his or her own reelection. Shareholders elect the Directors or candidates put up for election and reelection at the AGM individually. Key information on the Directors or candidates who are seeking election or reelection at the AGM is provided in the Annual Report.
The GCEO, as a Board member, is also subject to the one-third rotation rule. His role as GCEO is separate from his position as a Board member, and does not affect the ability of shareholders to exercise their right to select all Board members.
Board Changes during FY 2019
On 1 January 2019, Mr Lee Chee Koon, the GCEO, joined the Board as an executive Director. Ms Euleen Goh Yiu Kiang retired from the Board at the conclusion of the last AGM held on 12 April 2019. On 6 August 2019, Mr Miguel Ko joined the Board as its Non-Executive Non-Independent Deputy Chairman.
Mr Ko is an executive of CLA which is the former Ascendas-Singbridge Pte. Ltd. (ASPL), from which the Company acquired all the issued shares of the former Ascendas Pte Ltd and Singbridge Pte. Ltd. pursuant to the ASB Acquisition. The ASB Acquisition was completed in June 2019 and resulted in CLA becoming the Company's majority shareholder. Both the Company and CLA share a common objective for the ASB Acquisition which is to transform the Company into a leading diversified real estate group and take it forward into a new era of growth. Based on Mr Ko's credentials including his leadership role and track record in ASPL, the NC and the Board determined that he would be able to contribute to the growth of the enlarged CapitaLand Group and the integration of the business and people, and on that basis, approved his appointment as Non-Executive Non-Independent Deputy Chairman of the Board. Prior to joining the Board, Mr Ko had prior experience as a director of listed entities.
Review of Directors' Ability to Commit Time
In view of the responsibilities of a Director, Directors need to be able to devote sufficient time and attention to adequately perform their duties and responsibilities. The NC conducts a review of the other appointments and commitments of each Director on an annual basis and as and when there is a change of circumstances involving a Director which may affect his or her ability to commit time to the Company. In this regard, Directors are required to report to the Company any changes in their other appointments.
In respect of the consideration of the Directors' other appointments and commitments, no limit is set as to the number of listed company board appointments. The Board takes the view that the limit on the number of listed company directorships that an individual may hold should be considered on a case-by-case basis, as a person's available time and attention may be affected by many different factors, such as his or her individual capacity, whether he or she is in full-time employment, the nature of his or her other responsibilities and near term plan regarding some of the other appointments. A Director with multiple directorships is expected to ensure that he or she can devote sufficient time and attention to the affairs of the Company. Directors are also required to consult the Chairman before accepting any invitation for appointment as a director of another entity or offer of a full-time executive appointment.
Each of the Directors is required to make his or her own self-assessment and confirm that he or she is able to devote sufficient time and attention to the affairs of the Company. For FY 2019, all Directors had undergone the self assessment and provided the confirmation.
On an annual basis and, where appropriate when there is a change of circumstances involving a Director, the NC assesses each Director's ability to commit time to the affairs of the Company. In the assessment, the NC takes into consideration each Director's confirmation, his or her commitments, attendance record at meetings of the Board and Board Committees, as well as conduct and contributions (including preparedness, participation and candour) at Board and Board Committee meetings.
The Directors' listed company directorships and other principal commitments are disclosed on pages 30 to 35 of this Annual Report. GCEO who is the sole executive director, does not serve on any listed company board outside of the Group. The Directors' attendance record for FY 2019 is set out on page 106 of this Annual Report. For FY 2019, the Directors achieved high attendance rates and they have contributed positively to discussions at Board and Board Committee meetings. In respect of any meetings for which Directors could not attend, comments were provided by the relevant Directors to the Chairman or the relevant Board Committee chair prior to the meeting. Based on the above, the NC has determined that each Director has been adequately carrying out his or her duties as a Director of the Company.
The Board, taking into consideration the NC's assessment, has noted that each Director has been adequately carrying out his or her duties and responsibilities as a Director of the Company and that none of them holds a significant number of listed company directorships and principal commitments.
Principle 5 : Board Performance
The Company believes that oversight from a strong and effective Board goes a long way towards guiding a business enterprise to achieving success.
Whilst Board performance is ultimately reflected in the long-term performance of the Group, the Board believes that engaging in a regular process of self-assessment and evaluation of Board performance provides an opportunity for the Board to reflect on its effectiveness including the quality of its decisions, and for Board members to consider their performance and contributions. It also enables the Board to identify key strengths and areas for improvement which is essential to effective stewardship and attaining success for the Company.
Board and Board Committees
The NC undertakes a process to evaluate the effectiveness of the Board as a whole and the Board Committees for every financial year. For an objective and independent evaluation, an external consultant, Aon Hewitt Singapore Pte Ltd, is engaged to facilitate the evaluation process. The consultant is independent of and is not related to the Company or any of its Directors.
As part of the process, questionnaires are sent by the consultant to the Directors and interviews are conducted where required. The objective of the interviews is to seek clarifications to the feedback obtained from the responses in the questionnaires, during which broader questions might also be raised to help validate certain survey findings. The findings are then evaluated by the consultant and reported, together with the recommendations of the consultant, to the NC and thereafter the Board. The evaluation categories covered in the questionnaire included Board composition, information management, Board processes, corporate integrity and social responsibility, managing company performance, strategy review, Board Committee effectiveness, GCEO performance and succession planning, Director development and management, and managing risk and adversity. For FY 2019, in addition to questionnaires, one-to-one interviews were conducted with each Director to obtain more in-depth feedback on the performance of the Board. Members of Senior Management were also interviewed for their perspectives on the effectiveness of the Board.
Senior Management members also participate in the evaluation and provide their feedback on areas including developing strategy, managing risks and working with Management.
The findings and recommendations of the consultant which include benchmarking information and best practices of other boards, are considered by the Board and follow up action is taken, where necessary. Overall, the Board has maintained a positive trajectory for its performance and effectiveness. Reflecting the positive, professional and constructive relationship amongst Board members, the Board is functioning well as a team. The Board and Management enjoy a positive and healthy relationship and there is an appreciation by Management of the value of the guidance the Board provides. There is candour in the dealings between the Board and Management which, in turn, is reflected in the quality of the discussions between the Board and Management. Board Committees were also considered to work well with thorough debate, a good understanding of the issues and functional knowledge.
In respect of individual Directors, a formal evaluation is also carried out on an annual basis. For FY 2019, the Board Chairman and NC Chairman jointly evaluated each individual Director using an agreed evaluation framework as a guide. Feedback from selected Senior Management members was also sought as part of the process. The outcome of the evaluation is that every Director has been diligent in discharging his or her duties and has performed well, contributing positively to the Board's deliberations. Additionally, Directors worked well with each other, and with Management, contributing to the overall smooth functioning of the Board. Whilst collegial, deliberations at meetings were open, constructive and robust, and conducted on a professional and respectful basis. Management has also provided positive feedback on the performance and contributions of the individual Directors, noting that the relationship between the Board and Management is healthy and good.
Formal evaluation is also carried out by the NC as and when a Director is due for retirement by rotation and is seeking reelection. The NC also takes into consideration the contributions and performance of individual Directors when it reviews Board composition.
The Board also recognises that contributions by an individual Board member can take different forms including providing objective perspectives on issues, facilitating business opportunities and strategic relationships, and accessibility to Management outside of the formal environment of Board and/or Board Committee meetings.
Board Evaluation as an Ongoing Process
The Board believes that performance evaluation should be an ongoing process and the Board achieves this by seeking feedback on a regular basis. The regular interactions between Board members, and between Board members and Management, also contribute to this ongoing process. Through this process of engaging its members, the Board also benefits from an understanding of shared norms between Board members which also contributes to a positive Board culture. The collective Board performance and the contributions of individual Board members are also reflected in, and evidenced by, the synergistic performance of the Board in discharging its responsibilities as a whole by providing proper guidance, diligent oversight and able leadership, and lending support to Management in steering the Company in the appropriate direction, as well as the long-term performance of the Company whether under favourable or challenging market conditions.
(B) REMUNERATION MATTERS
Principles 6, 7 and 8: Procedures for Developing Remuneration Policies, Level and Mix of Remuneration
and Disclosure on Remuneration
The Board has a formal and transparent procedure for developing policies on Director and executive remuneration, and for fixing the remuneration packages of individual Directors and key management personnel. It has established the ERCC to recommend to the Board for approval a general framework of remuneration for the non-executive Directors and key management personnel of the Group, and the specific remuneration package for each key management personnel. The ERCC also recommends to the Board for endorsement the specific remuneration package for each Director.
A majority of ERCC members, including the Chairman of the ERCC, are Non-Executive Independent Directors. The ERCC met four times in FY 2019.
The ERCC is guided by its terms of reference. The ERCC oversees leadership and succession planning for key management personnel. This includes overseeing the process that supports the Board in making a decision regarding the appointment of GCEO and his terms of appointment and remuneration package, and approving the appointment and remuneration of other key management personnel. In carrying out its role, the ERCC also aims to build capable and committed management teams through market competitive compensation and progressive policies which are aligned to the long-term interests and risk policies of the Group. The ERCC thus plays a crucial role in helping to ensure that the Company is able to attract, motivate and retain the best talents to drive the Group's business forward and deliver sustainable returns to shareholders.
The ERCC also conducts, on an annual basis, the evaluation of the GCEO's performance and a succession planning review of the GCEO and key management positions in the Group, and presents its findings and recommendations to the Board. Potential candidates for leadership succession are reviewed for their readiness in the immediate, medium and longer term.
Remuneration Policy for Key Management Personnel
The remuneration framework and policy is designed to support the implementation of the Group's strategy and deliver sustainable returns to shareholders. The principles governing the Company's key management personnel remuneration policy are as follows:
> Create sustainable value and drive dollar returns above the risk-adjusted cost of capital to align with longer term interests of its stakeholders
> Provide sound and structured funding to ensure affordability and cost-effectiveness in line with performance goals
> Enhance retention of key talents to build strong organisational capabilities
Motivate Right Behaviour
> Pay for performance - align, differentiate and balance rewards according to multiple dimensions of performance
> Strengthen line-of-sight linking rewards and performance
> Foster Group-wide interests to recognise the interdependence of the various businesses of the Group and drive superior outcomes
Fair & Appropriate
> Ensure competitive remuneration relative to the appropriate external talents
> Manage internal equity such that remuneration is viewed as fair across the Group
> Significant and appropriate portion of pay-at-risk, taking into account risk policies of the Group, symmetrical with risk outcomes and sensitive to the risk time horizon
> Maintain rigorous corporate governance standards
> Exercise appropriate flexibility to meet strategic business needs and practical implementation considerations
> Facilitate employee understanding to maximise the value of the remuneration programmes
The Board sets the remuneration policies in line with the Company's business strategy and approves the executive compensation framework based on the key principle of linking pay to performance. Pay-for-performance is emphasised by linking total remuneration to the achievement of corporate and individual goals and objectives. In its deliberations, the ERCC also took into consideration industry practices and norms in compensation to maintain market competitiveness. The ERCC also considers all aspects of remuneration, including termination terms, to ensure they are fair.
The Board has access to independent remuneration consultants to advise on remuneration matters as required.
Consistent with its practice in previous years, the ERCC appointed an independent remuneration consultant, Willis Towers Watson, to provide professional advice on Board and executive remuneration in FY 2019. Willis Towers Watson is a leading global advisory, broking and solutions company with over 45,000 employees serving more than 140 countries. The remuneration consultant is not related to the Company or any of its Directors and does not otherwise have any relationships with the Company that could affect its independence and objectivity.
Remuneration for Key Management Personnel
Remuneration for key management personnel comprises fixed components, variable cash components, share-based components and employee benefits. A significant proportion of key management personnel's remuneration is in the form of variable compensation, awarded in a combination of short-term and long-term incentives, in keeping with the principle that the interests of GCEO and key management personnel align with those of the Company's stakeholders and that the remuneration framework links rewards to corporate and individual performance.
A. Fixed Components:
The fixed components comprise the base salary, fixed allowances and compulsory employer contribution to an employee's Central Provident Fund.
B. Variable Cash Components:
The variable cash components comprise the Balanced Scorecard Bonus Plan (BSBP) and Economic Value-Added (EVA)-based Incentive Plan (EBIP).
Balanced Scorecard Bonus Plan
The BSBP is linked to the achievement of annual performance targets for each key management personnel as agreed at the beginning of the financial year with the Board and/or the GCEO, as the case may be.
Under the Balanced Scorecard framework, the Group's strategy and goals are translated into performance outcomes comprising both quantitative and qualitative targets in the dimensions of Financial, Execution, Future Growth and Sustainability; these are cascaded down throughout the organisation, thereby creating alignment across the Group.
After the close of each year, the ERCC reviews the Group's achievements against the targets set in the Balanced Scorecard, determines the overall performance taking into consideration qualitative factors such as the quality of earnings, business environment, regulatory landscape and industry trends, and approves a bonus pool that corresponds to the performance achieved.
In determining the payout quantum for each key management personnel under the plan, the ERCC considers the overall business performance, both qualitative and quantative aspects of individual performance, as well as the affordability of the payout for the Company.
Economic Value-Added-based Incentive Plan
The EBIP is based on sharing with employees a portion of the EVA, which varies according to the actual achievement of residual economic profit.
The EBIP rewards sustainable value creation over the medium term achieved by growing profits, deploying capital efficiently and managing the risk profile and risk time horizon of a real estate business.
Under this plan, the bonus declared to each EBIP participant for the current year is added to the participant's balance carried forward from the previous year, upon which one-third of the resulting total amount is paid out in cash, with the remaining two-thirds to be carried forward to the following year. The balance in each participant's EBIP account is at risk because a significant reduction in EVA in any year may result in retraction (performance clawback) of the EBIP bonus declared in preceding years. The EBIP encourages key management personnel to work for sustained EVA generation and to take actions that are aligned with the longer term interests of the Company's stakeholders.
In determining the EBIP bonus declared to each participant, the ERCC considers the overall business performance, individual job responsibilities, performance and contribution, as well as the relevant market remuneration benchmarks.
C. Share-based Components:
Share awards were granted in FY 2019 pursuant to the CapitaLand Performance Share Plan 2010 (PSP) and the CapitaLand Restricted Share Plan 2010 (RSP) (together, the Share Plans), approved and adopted by the shareholders of the Company at the Extraordinary General Meeting held on 16 April 2010.
For FY 2019, the total number of shares in the awards granted under the Share Plans did not exceed the yearly limit of 1% of the total number of issued shares (excluding treasury shares). The obligation to deliver the shares is expected to be satisfied out of treasury shares.
To promote the alignment of Management's interests with that of the Company's stakeholders, the ERCC has approved share ownership guidelines for Senior Management to instil stronger identification by senior executives with the longer term performance and growth of the Group. Under these guidelines, Senior Management participants are required to retain a prescribed proportion of the Company's shares received under the Share Plans.
Details of the Share Plans as well as awards granted under the Share Plans are given in the Share Plans section of the Directors' Statement on pages 149 to 152 of this Annual Report and the Equity Compensation Benefits section of the Notes to the FY 2019 Financial Statements on pages 231 to 236 of this Annual Report.
Shareholders of the Company had also approved the CapitaLand Performance Share Plan 2020 and CapitaLand Restricted Share Plan 2020 (RSP 2020 and collectively, the New Share Plans) at the AGM held on 12 April 2019, to replace, with effect from 1 April 2020, the Share Plans. No awards under the New Share Plans were granted in FY 2019 in light of the effective date of the New Share Plans. In alignment with the Practice Guidance, shares awarded pursuant to the New Share Plans may be clawed back in circumstances of misstatement of financial results, misconduct resulting in financial or other losses to the Company or other misdemeanours.
CapitaLand Performance Share Plan 2010
In FY 2019, the ERCC granted awards which are conditional on targets set for a three-year performance period. A specified number of shares will only be released to recipients at the end of the qualifying performance period, provided that minimally the threshold targets are achieved.
Under the PSP, an initial number of shares (baseline award) is allocated according to the following performance conditions:
- Absolute Total Shareholder Return (TSR) of the Group measured as a multiple of Cost of Equity;
- Relative TSR of the Group measured by the percentile ranking of the Group's TSR relative to the constituents of a peer group comprising public-listed companies of comparable scale, scope and business mix in Singapore, Hong Kong and China; and
- Average ROE of the Group, over the three years of the performance period.
The above performance measures have been selected as key measurements of wealth creation for shareholders. The final number of shares to be released will depend on the achievement of pre-determined targets over the three-year qualifying performance period. No share will be released if the threshold targets are not met at the end of the qualifying performance period. On the other hand, if superior targets are met, more shares than the baseline award can be delivered up to a maximum of 200% of the baseline award. Recipients will receive fully paid shares at no cost.
For the year under review, the relevant award for assessment of the performance achieved by the Group is the award granted in FY 2017 where the qualifying performance period was FY 2017 to FY 2019. Based on the ERCC's assessment that the performance achieved by the Group has met the pre-determined performance targets for such performance period, the resulting number of shares released has been adjusted accordingly to reflect the performance level. In respect of the share awards granted in FY 2018 and FY 2019, the respective qualifying performance periods have not ended as at the date of this Report.
CapitaLand Restricted Share Plan 2010
In FY 2019, the ERCC granted awards which are conditional on targets set for a one-year performance period. A specified number of shares will only be released to recipients at the end of the qualifying performance period, provided that minimally the threshold targets are achieved.
Under the RSP, an initial number of shares (baseline award) is allocated according to the following performance conditions:
(a) Operating EBIT of the Group; and
(b) Operating ROE of the Group.
The above performance measures have been selected as they are the key drivers of business performance. The final number of shares to be released will depend on the achievement of pre-determined targets at the end of the one-year qualifying performance period. The shares will be released over a vesting period of three years. No share will be released if the threshold targets are not met at the end of the qualifying performance period. On the other hand, if superior targets are met, more shares than the baseline award can be delivered up to a maximum of 150% of the baseline award. Recipients can receive fully paid shares, their equivalent cash value or combinations thereof, at no cost.
In respect of the award granted in FY 2019, based on the ERCC's assessment that the performance achieved by the Group has met the pre-determined performance targets for FY 2019, the resulting number of shares released has been adjusted accordingly to reflect the performance level.
D. Employee Benefits:
The benefits provided are comparable with local market practices.
Each year, the ERCC evaluates the extent to which the GCEO and each of the key management personnel have delivered on the corporate and individual goals and objectives, and based on the outcome of the evaluation, approves the compensation for the key management personnel, and proposes the compensation for GCEO for the Board's approval. GCEO who attends meetings of the ERCC on an ex officio basis does not attend discussions relating to his own performance and remuneration.
The details of the remuneration for the GCEO are provided in the Directors' and GCEO's Remuneration section on page 107 of this Annual Report.
Provision 8.1 of the Code requires an issuer to disclose the names, amounts and breakdown of remuneration of at least the top five key management personnel (who are not also Directors or the GCEO) of the Company in bands no wider than S$250,000 and in aggregate the total remuneration paid to these key management personnel. The Board considered this matter carefully and has decided against such a disclosure with effect from FY 2019 due to the confidential and commercial sensitivities associated with remuneration matters. Such a disclosure would also not be in the interest of the Company due to the intense competition for talents in the industry. The Company is making available, however, the aggregate remuneration and the breakdown of the components of remuneration in percentage terms of the top five key management personnel which are set out on page 108 of this Annual Report. The Company is of the view that the disclosures in this Report and the information on pages 91 to 95 of this Annual Report provide sufficient information to shareholders on the Company's remuneration policies, the level and mix of remuneration, the procedure for setting remuneration and the relationships between remuneration, performance and value creation.
The ERCC seeks to ensure that the remuneration paid to the GCEO and key management personnel is strongly linked to the achievement of business and individual performance targets. The performance targets endorsed by the ERCC and approved by the Board are set at realistic yet stretched levels each year to motivate a high degree of business performance with emphasis on both short and longer term quantifiable objectives. A pay-for-performance alignment study was conducted by the appointed independent remuneration consultant and reviewed by the ERCC; the findings indicate that there has been effective pay-for-performance alignment for the Group in both absolute and relative terms against a peer group of large listed companies in Singapore and the region over a multi-year period.
In FY 2019, there were no termination, retirement or post-employment benefits granted to Directors, the GCEO and key management personnel. There was also no special retirement plan, 'golden parachute' or special severance package for any of the key management personnel.
There are no employees of the Group who are substantial shareholders of the Company or immediate family members of such a substantial shareholder, Director or the GCEO. "Immediate family member" refers to the spouse, child, adopted child, step-child, sibling or parent of the individual.
Non-Executive Director Remuneration
The compensation policy for Directors (except the Chairman) is based on a scale of fees divided into basic retainer fees for serving as Director and additional fees for attendance and serving on Board Committees. The Chairman receives an all-inclusive fee (i.e. without any additional fee for attendance and for serving on Board Committees). The compensation package is market benchmarked on an annual basis, taking into account the effort, time spent and demanding responsibilities on the part of the Directors in light of the scale, complexity and the international nature of the business. The remuneration of Directors is reviewed from time to time to ensure that it is appropriate to attract, retain and motivate the Directors to provide good stewardship of the Company.
The GCEO who is also a Director is remunerated as part of key management personnel and therefore does not receive any Director's fees.
No individual Director by himself or herself could decide his or her own remuneration. Directors' fees will be paid only upon shareholders' approval at an AGM. These measures serve to assure that the independence of the non-executive Directors is not compromised by their compensation.
The fee structure for non-executive Directors for FY 2019, which remains unchanged as that for the previous financial year save for the introduction of a basic retainer fee for the Board Deputy Chairman who was appointed in August 2019, is as follows:
Directors' fees of the non-executive Directors (including the Chairman) will be paid as to about 70% in cash and about 30% in the form of share awards under the RSP 2020, save in the case of (i) a Director who is retiring from the Board at the conclusion of the AGM, and a Director who retired from the Board at the conclusion of the last AGM, both of whom will receive their fees wholly in cash; (ii) Mr Gabriel Lim Meng Liang whose fees will be paid fully in cash to a government agency, The Directorship & Consultancy Appointments Council; and (iii) Mr Miguel Ko whose fees will be paid fully in cash to his employer, CLA. The awards consist of the grant of fully paid shares, with no performance conditions attached and no vesting periods imposed. In order to encourage the alignment of the interests of the non-executive Directors with the interests of shareholders, a non-executive Director is required to hold shares in the Company worth at least one year of his or her basic retainer fee or the total number of shares awarded under the above policy, whichever is lower, at all times during his or her Board tenure. For the Chairman, the shares are required to be held for at least two years from the date of award, and the two-year moratorium shall continue to apply in the event of retirement. Other than this, the non-executive Directors do not receive any other share incentives under any of the Company's share plans. Details of the Directors' remuneration are provided in the Directors' and GCEO's Remuneration section on page 107 of this Annual Report.
The Company will seek shareholders' approval at the 2020 AGM for the remuneration to be paid to the Directors in respect of (inter alia) the Directors' fees for FY 2019.
As with each past year, an independent remuneration consultant was engaged in FY 2019 to carry out a comprehensive review of the fee structure for the non-executive Directors. The review is undertaken each year with a view to ensuring that the fee structure remains competitive. A competitive fee structure is essential to help ensure that the Company is able to attract and retain qualified individuals necessary to contribute effectively to the Board.
Compensation Risk Assessment
Under the Practice Guidance, the compensation system shall take into account the risk policies of the Group, be symmetric with risk outcomes and sensitive to the time horizon of risks. The ERCC has conducted a Compensation Risk Assessment to review the various compensation risks that may arise as well as the mitigating policies to better manage risk exposures identified. The ERCC is satisfied that there are adequate risk mitigation features in the Group's compensation system, such as the use of malus, deferral and clawback features in the Share Plans and EBIP. The ERCC will continue to undertake periodic reviews of compensation-related risks.
(C) ACCOUNTABILITY AND AUDIT
Principle 9: Risk Management and Internal Controls
The Board should present a balanced and understandable assessment of the company's performance, position and prospects.
The Company maintains an adequate and effective system of risk management and internal controls (including financial, operational, compliance and information technology (IT) controls) to safeguard stakeholders' interests and the Group's assets.
The Board has overall responsibility for the governance of risk, including determining the risk strategy, risk appetite and risk limits, as well as the risk policies. The Board has established the RC to assist it in carrying out the Board's responsibility of overseeing the Company's risk management framework and policies for the Group and ensuring that Management maintains a sound system of risk management and internal controls.
Under its terms of reference, the RC's scope of duties and responsibilities is as follows:
- making recommendations to the Board on risk strategy, risk appetite and risk limits;
- reviewing the risk management framework, including the processes and resources to identify, assess and manage material risks;
- overseeing the design, implementation and monitoring of the risk management and internal controls systems;
- reviewing the material risks facing the Group and the management of risks thereof;
- reviewing the adequacy and effectiveness of the risk management and internal controls systems covering material risks and the assurance given by Management, as well as the disclosures in the Annual Report; and
- considering and advising on risk matters referred to it by the Board or Management.
All RC members, including the Chairman of the RC, are Non-Executive Independent Directors. The RC met twice in FY 2019.
To facilitate sharing of information and knowledge and to foster common understanding of the risk management and internal controls systems, two members of the RC are also members of the AC.
The Group adopts an Enterprise Risk Management (ERM) Framework which sets out the required environmental and organisational components for managing risks in an integrated, systematic and consistent manner. The ERM Framework and related policies are reviewed annually. A team comprising the GCEO and other key management personnel is responsible for directing and monitoring the development, implementation and practice of ERM across the Group.
As part of the ERM Framework, Management, among other things, undertakes and performs a Group-wide Risk and Control Self-Assessment (RCSA) annually to identify material risks along with their mitigating measures.
The adequacy and effectiveness of the systems of risk management and internal controls are reviewed at least annually by Management, the RC, the AC and the Board, taking into account the best practices and guidance in the Risk Governance Guidance for Listed Boards issued by the Corporate Governance Council and the Listing Manual.
The Group Risk Appetite Statement (RAS), incorporating the Group's risk limits, addresses the management of material risks faced by the Group. Alignment of the Group's risk profile to the Group RAS is achieved through various communication and monitoring mechanisms (including key performance indicators set for Management) put in place across the Group.
More information on the Group's ERM Framework including the material risks identified can be found in the ERM section on pages 109 to 113 of this Annual Report.
The internal and external auditors conduct reviews of the adequacy and effectiveness of the material internal controls (including financial, operational, compliance and IT controls) and risk management systems. This includes testing, where practicable, material internal controls in areas managed by external service providers. Any material non-compliance or lapses in internal controls together with corrective measures recommended by the internal and external auditors are reported to and reviewed by the AC. The AC also reviews the adequacy and effectiveness of the measures taken by Management on the recommendations made by the internal and external auditors in this respect.
The Board has received assurance from the GCEO and the GCFO that the financial records of the Group have been properly maintained and the financial statements for FY 2019 give a true and fair view of the Group's operations and finances. It has also received assurance from the GCEO and the relevant key management personnel who have responsibility regarding various aspects of risk management and internal controls that the systems of risk management and internal controls within the Group are adequate and effective to address the risks (including financial, operational, compliance and IT risks) which the Company considers relevant and material to its current business environment.
The GCEO, GCFO and the other key management personnel have obtained similar assurances from the respective business and corporate executive heads in the Group.
In addition, in FY 2019, the Board received quarterly certification by Management on the integrity of financial reporting and the Board provided a negative assurance confirmation to shareholders as required by the Listing Manual.
Based on the ERM Framework established and the reviews conducted by Management and both the internal and external auditors, as well as the assurance from the GCEO, the GCFO and the relevant key management personnel, the Board is of the opinion that the systems of risk management and internal controls within the Group are adequate and effective to address the risks (including financial, operational, compliance and IT risks) which the Company considers relevant and material to its current business environment as at 31 December 2019. The AC and RC concur with the Board in its opinion. No material weaknesses in the systems of risk management and internal controls were identified by the Board, the AC or the RC in the review for FY 2019.
The Board notes that the systems of risk management and internal controls established by Management provide reasonable assurance that the Group, as it strives to achieve its business objectives, will not be significantly affected by any event that can be reasonably foreseen or anticipated. However, the Board also notes that no system of risk management and internal controls can provide absolute assurance in this regard, or absolute assurance against poor judgement in decision-making, human error, losses, fraud or other irregularities.
Principle 10: Audit Committee
All members of the AC, including the Chairman of the AC, are Non-Executive Independent Directors. The Chairman of the AC is not the Chairman of the Board. The members bring with them invaluable recent and relevant managerial and professional expertise in accounting and related financial management domains. The Chairman of the AC, Mr Chaly Mah Chee Kheong, is a Fellow of the Institute of Singapore Chartered Accountants, among other professional affiliations, and Tan Sri Amirsham Bin A Aziz, another AC member, is a Certified Public Accountant of Malaysia. The AC meets at least four times in a year and met six times in FY 2019.
The AC does not comprise members who were partners or directors of the incumbent external auditors, KPMG LLP, within the period of two years commencing on the date of their ceasing to be a partner or director of KPMG LLP. The AC also does not comprise any member who has any financial interest in KPMG LLP.
The AC has explicit authority to investigate any matter within its terms of reference. Management provides the fullest co-operation in providing information and resources to the AC, and in implementing or carrying out all requests made by the AC. The AC has direct access to the internal and external auditors and full discretion to invite any Director or executive officer to attend its meetings. Similarly, both the internal and external auditors have unrestricted access to the AC.
Under its terms of reference, the AC's scope of duties and responsibilities is as follows:
- reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of the Company and any announcements relating to the Company's financial performance;
- reviewing and reporting to the Board at least annually the adequacy and effectiveness of the Company's internal controls, and together with the RC, the risk management systems including financial, operational, compliance and information technology controls;
- reviewing the assurances from the GCEO and GCFO on the financial records and financial statements of the Company;
- reviewing the scope and results of the internal audit, and the adequacy, effectiveness and independence of the Company's internal audit function;
- reviewing the scope and results of the external audit, and the adequacy, effectiveness and independence of the external auditors;
- reviewing the policy, processes and whistleblowing reports relating to detection, investigation and action relating to financial improprieties; and
- making recommendations to the Board on the proposals to the shareholders on the appointment, reappointment and removal of the external auditors, and the remuneration and terms of engagement of the external auditors.
To assist the AC to carry out its duty to monitor the performance, objectivity and independence of the external auditors, in particular, to balance the independence and objectivity of the external auditors, the Company has developed policies regarding the types of non-audit services that the external auditors can provide to the Group and the related approval processes. The AC has reviewed the nature and extent of non-audit services provided by the external auditors in FY 2019 and the fees paid for such services. The AC is satisfied that the independence of the external auditors is not impaired by the provision of those services. The external auditors have also provided confirmation of their independence to the AC.
The total audit and non-audit fees paid to the external auditors for FY 2019 were as follows:
At all pre-scheduled quarterly meetings of the AC in FY 2019, the GCEO and all key management personnel were in attendance. During each of these meetings, among other things, the AC reviewed the financial statements including the relevance and consistency of the accounting principles adopted and any significant financial reporting issues and judgements. The AC recommended the financial statements and corresponding announcements to the Board for approval. In FY 2019, it also, together with the RC, reviewed and assessed the adequacy and effectiveness of the Company's internal controls and risk management systems to address the material risks faced by the Company, taking into consideration the outcome of reviews conducted by Management and both the internal and external auditors, as well as the assurance from the GCEO and the GCFO.
The AC also met with the internal and external auditors, separately and without Management's presence, to discuss the reasonableness of the financial reporting process, the internal controls and risk management systems, and the significant comments and recommendations by the auditors.
Where relevant, the AC makes reference to the best practices and guidance for Audit Committees in Singapore including practice directions issued from time to time in relation to the Financial Reporting Surveillance Programme administered by the Accounting and Corporate Regulatory Authority of Singapore.
Key Audit Matters
In its review of the financial statements of the Group and the Company for FY 2019, the AC had discussed with Management the accounting principles that were applied and their judgement of items that could affect the integrity of the financial statements; they also considered the clarity of key disclosures in the financial statements. The AC reviewed, amongst other matters, the following key audit matters as reported by the external auditors for FY 2019.
Changes to the accounting standards and accounting issues which have a direct impact on the financial statements are reported to and discussed with the AC at its meetings. Directors are also invited to attend relevant seminars on changes to accounting standards and issues by leading accounting firms.
The Company confirms that it complies with Rules 712, 715 and 716 of the Listing Manual.
The Company has an Internal Audit Department (CL IA). CL IA is independent of the activities it audits. The primary reporting line of CL IA is to the AC, which also decides on the appointment, termination and remuneration of the head of CL IA. CL IA has unfettered access to the Group's documents, records, properties and employees, including access to the AC, and has appropriate standing within the Company.
The AC has carried out a review of the internal audit function and is satisfied that the internal audit function performed by CL IA is adequately resourced, effective and independent.
CL IA plans its internal audit schedules in consultation with, but independently of, Management and its plan is submitted to the AC for approval prior to the beginning of each year. During FY 2019, the AC reviewed the results of audits performed by CL IA based on the approved audit plan. The AC also reviewed reports on whistle blower complaints reviewed by CL IA to ensure independent and thorough investigation and adequate follow-up. The AC also received reports on interested person transactions reviewed by CL IA that they were on normal commercial terms and are not prejudicial to the interests of the Company and its minority shareholders. In FY 2019, there was an interested person transaction, namely, the acquisition of all the issued shares of Ascendas Pte Ltd and Singbridge Pte. Ltd. which was subject to the approval of shareholders. An Extraordinary General Meeting was convened on 12 April 2019 and the transaction was duly approved by independent shareholders.
The AC also meets with CL IA at least once a year without the presence of Management.
CL IA is adequately resourced and staffed with persons having the relevant qualifications and experience. CL IA is a corporate member of the Institute of Internal Auditors Inc. Singapore (IIAS), which is an affiliate of the Institute of Internal Auditors Inc. headquartered in the United States of America (USA). CL IA subscribes to, and is guided by, the International Standards for the Professional Practice of Internal Auditing (Standards) developed by the IIAS, and has incorporated these Standards into its audit practices.
To ensure that internal audits are performed by competent professionals, CL IA recruits and employs suitably qualified professional staff with the requisite skill sets and experience. This includes CL IA staff who are involved in IT audits having relevant professional IT certifications. The IT auditors are also members of the ISACA Singapore Chapter, a professional body administering information systems audit and information security certifications that is headquartered in the USA. The ISACA Information Systems Auditing Standards provide guidance on the standards and procedures to be applied in IT audits. CL IA identifies and provides training and development opportunities for its staff to ensure their technical knowledge and skill sets remain current and relevant.
(D) SHAREHOLDER RIGHTS AND RESPONSIBILITIES
Principles 11 and 12: Shareholder Rights and Conduct of General Meetings and Engagement with
The Company is committed to treating all its shareholders fairly and equitably. All shareholders enjoy specific rights under the Constitution and the relevant laws and regulations. These rights include, among other things, the right to participate in profit distributions, and the right to approve any proposed amendments to the Constitution.
Shareholders are entitled to attend general meetings and are accorded the opportunity to participate effectively and vote at general meetings (including through the appointment of up to two proxies, if they are unable to attend in person or in the case of a corporate shareholder, through its appointed representative). Shareholders such as nominee companies which provide custodial services for securities are not constrained by the two proxy limitation, and are able to appoint more than two proxies to attend, speak and vote at general meetings of the Company.
The Company supports the principle of encouraging shareholder participation and voting at general meetings. The Annual Report of the Company is provided to shareholders within 120 days from the end of the Company's financial year. Shareholders may download the Annual Report (printed copies are available upon request) and notice of the general meeting from the Company's website at www.capitaland.com. The notice of general meeting is also advertised in the press and issued on SGXNet. More than the legally required notice period for general meetings is generally provided. The rationale and explanation for each agenda item which requires shareholders' approval are provided in the notice of general meeting so as to enable shareholders to exercise their voting rights on an informed basis. To safeguard shareholder interests and rights, a separate resolution is proposed for each substantially separate issue at general meetings.
At general meetings, the GCEO makes a presentation to shareholders to update them on the Company's performance, position and prospects. The presentation materials are made available to shareholders on the Company's website and SGXNet. Shareholders are given the opportunity to communicate their views, ask questions and discuss with the Board and Management on matters affecting the Company. All Directors (including the chairpersons of the respective Board Committees), Management and the external auditors, are present for the entire duration of general meetings to address any queries that the shareholders may have, including queries about the conduct of the Company's audit and preparation and contents of the auditors' report. Directors and Management also interact with shareholders after the general meetings. All Directors (including the GCEO who is also a Director, but excluding Mr Miguel Ko who was only appointed onto the Board later in the year) attended both general meetings of shareholders held during FY 2019. A record of the Directors' attendance at the general meetings held on 12 April 2019 can be found in the record of their attendance of Shareholders, Board and Board Committee meetings set out on page 106 of this Annual Report.
To ensure transparency in the voting process and better reflect shareholders' shareholding interests, the Company conducts electronic poll voting for all the resolutions proposed at general meetings. One ordinary share is entitled to one vote. Voting procedures and rules governing general meetings are explained and vote tabulations are disclosed at the general meetings. An independent scrutineer is also appointed to validate the vote tabulation procedures. Votes cast, for or against and the respective percentages, on each resolution are tallied and displayed 'live' on-screen to shareholders immediately at the general meetings. The total number of votes cast for or against the resolutions and the respective percentages are also announced on SGXNet after the general meetings.
Provision 11.4 of the Code requires an issuer's Constitution to allow for absentia voting at general meetings of shareholders. The Company's Constitution currently does not, however, permit shareholders to vote at general meetings in absentia (such as via mail or email). The Company will consider implementing the relevant amendments to the Constitution to permit absentia voting after it has carried out careful study and is satisfied that the integrity of information and authentication of the identity of shareholders will not be compromised through web transmission, and legislative changes are effected to recognise remote voting. The Company is of the view that despite its deviation from Provision 11.4 of the Code, shareholders nevertheless have opportunities to communicate their views on matters affecting the Company even when they are not in attendance at general meetings. For example, shareholders may appoint proxies to attend, speak and vote, on their behalf, at the respective general meetings.
Minutes of the general meetings, recording the substantial and relevant comments made, questions raised and answers provided, are prepared and available to shareholders for their inspection upon request. Minutes of general meetings are also uploaded to the Company's website at www.capitaland.com.
Engagement with Shareholders
Outside of general meetings, the Company actively engages with its shareholders to provide them with the information they need to make informed judgements about the Company, and to solicit and understand their views.
The Company's institutional shareholder base is geographically well-diversified. To keep them updated on the Company's progress, the Company regularly participates in investor conferences and conducts non-deal roadshows in global financial hubs across Asia, Europe and North America. The Company also held its Investor Day successfully in FY 2019 in Singapore, which attracted more than 100 participants, mainly from Singapore and Hong Kong. This is the Company's annual initiative where the Company's full senior management bench share insights on the Company's strategy, key growth areas and market focus.
For retail shareholders, the Company also pursues opportunities to keep them informed through the media, website postings and other publicity channels. In FY 2019, CapitaLand hosted a dialogue session for 250 retail investors during which attendees shared their views about the Company. The Company also held smaller sessions for retail investors through collaborations with financial institutions.
Materials disseminated to institutional investors are also disseminated via SGXNet for access by retail shareholders.
The Company has an Investor Relations department which facilitates effective communication with the Company's shareholders and the general investor community which includes sell-side analysts, fund managers and retail investors analysts. The Company maintains a website which contains information on the Company including but not limited to announcements and news releases, quarterly and annual financial reports (current and past), investor presentations, Annual Reports (current and past years), the Constitution and key events.
The Company has in place an Investor Relations Policy (Policy) to promote regular, effective and fair communications with its shareholders. The Policy, which sets out the mechanism through which shareholders may contact the Company with questions and through which the Company may respond to such questions, is available on the Group's website at www.capitaland.com. Shareholders are encouraged to engage with the Company beyond general meetings and they may do so by contacting the Investor Relations department whose details may be found on the Group's website.
The Company also has a Group Communications team which works closely with the media and oversees the Company's external communications efforts.
More information on the Company's investor and media relations efforts can be found in the Investor & Media Relations section on pages 22 to 23 of this Annual Report.
The Company has a policy on the payment of dividends. Barring unforeseen circumstances, the Company's policy is to declare a dividend of at least 30% of the annual cash PATMI (profit after tax and non-controlling interests), defined as the sum of operating PATMI, portfolio gains/losses and realised revaluation gains/losses. Upon approval by shareholders at the general meeting, dividends are paid to all shareholders within 15 market days of the record date.
Timely Disclosure of Information
The Company is committed to ensuring that its shareholders, other stakeholders, analysts and the media have access to accurate information on a timely basis. This is performed through posting announcements and news releases on SGXNet on a timely and consistent basis. These announcements and news releases are also posted on the Company's website.
For FY 2019, the Company provided shareholders with quarterly and annual financial statements within the relevant periods prescribed by the Listing Manual. These quarterly and annual financial statements were reviewed and approved by the Board prior to release to shareholders by announcement on the SGXNet. The releases of quarterly and annual financial statements were accompanied by news releases issued to the media and which were also posted on the SGXNet. In presenting the quarterly and annual financial statements to shareholders, the Board sought to provide shareholders with a balanced, clear and understandable assessment of the Company and the Group's performance, position and prospects. In order to achieve this, Management provided the Board with management accounts on a monthly basis and such explanation and information as any Director may require, to enable the Directors to keep abreast, and make a balanced and informed assessment, of the Group's financial performance, position and prospects.
In addition to financial statements, the Company also keeps its shareholders, stakeholders and analysts informed of the performance and changes in the Group or its business which are materially price- or trade- sensitive, so as to assist shareholders and investors in their investment decision-making.
The Group has a formal policy on corporate disclosure controls and procedures to ensure that the Company complies with its disclosure obligations under the Listing Manual. These controls and procedures incorporate decision-making processes and an obligation on internal reporting of decisions made.
The Company believes in conducting itself in ways that seek to deliver maximum sustainable value to its stakeholders. Best practices are promoted as a means to build an excellent business for its stakeholders. Prompt fulfilment of statutory reporting requirements is but one way to maintain stakeholders' confidence and trust in the capability and integrity of the Company.
(E) MANAGING STAKEHOLDER RELATIONSHIPS
Principle 13: Engagement with Stakeholders
The Company engages with its stakeholders based on the principles of sustainability and sound governance, in keeping with its commitment to sustainability with a view to enabling the Company to generate stronger and sustainable returns over time. It adopts an inclusive approach by considering and balancing the needs and interests of material stakeholders and embeds environment, social and governance considerations into its investment analysis, risk assessment, financing consideration and day-to-day business operations. Its sustainability strategy is aligned with its credo of "Building People. Building Communities.". It has arrangements in place to identify and engage stakeholder groups, and manage its relationships with such groups.
The Company has received recognition for its efforts - it is listed in the Sustainability Yearbook, Dow Jones Sustainability World Index and FTSE4Good Index Series, amongst others. More information on the Company's efforts on sustainability management can be found on pages 114 to 119 of this Annual Report and in the CapitaLand Global Sustainability Report, which will be published by end May 2020.
(F) ADDITIONAL INFORMATION
Dealings in Securities
The Company has adopted a securities dealing policy for the Group's officers and employees which applies the best practice recommendations in the Listing Manual. Under the policy, Directors and employees in the Group are required to refrain from dealing in the Company's securities (i) while in possession of material unpublished price-sensitive information, and (ii) during the one month period immediately preceding, and up to the time of the announcement of the Company's half year and full year financial statements1. Prior to the commencement of each relevant period, an email would be sent out to all Directors and employees of the Group to inform them of the duration of the period.
The policy also provides for the Company to maintain a list(s) of persons who are privy to price-sensitive information relating to the Group as and when circumstances require such a list to be maintained.
Directors and employees of the Group are also required to refrain from dealing in securities of the Company and/or other relevant listed entities in the Group if they are in possession of unpublished price-sensitive information of the Company and/or these other listed entities arising from their appointment as Directors and/or in the course of performing their duties. As and when appropriate, they would be issued an advisory to refrain from dealing in the relevant securities.
Under the policy, Directors and employees are also discouraged from trading on short-term or speculative considerations. They are also prohibited from using any information with respect to other companies or entities obtained in the course of their employment in connection with securities transactions of such companies or entities. In addition, senior management are required to notify the GCEO of any intended trade prior to any trade of the Company's securities.
A Director is required to notify the Company of his or her interest in the Company's securities within two business day after (a) the date on which he or she becomes a Director or (b) the date on which he or she acquires an interest in the Company's securities. A Director is also required to notify the Company of any change in his or her interests in the Company's securities within two business days after he or she becomes aware of such change. Any dealings by the Directors (including the GCEO who is also a Director) in securities of the Company are disclosed, in accordance with the requirements of the Securities and Futures Act, Chapter 289. In FY 2019, there were no dealings by the Directors in the securities of the Company (other than the award of shares to them in part payment of their Directors' fees).
- This follows the Company's adoption of announcement of half yearly financial statements with effect from FY ending 31 December 2020.
Ethics and Code of Business Conduct
The Company adheres to an ethics and code of business conduct policy which deals with issues such as confidentiality, conduct and work discipline.
The Company's core values include integrity. The Company is committed to doing business with integrity and has adopted a zero tolerance stance against fraud, bribery and corruption. Consistent with this commitment, the Company has in place a Fraud, Bribery and Corruption Risk Management Policy (FBC Risk Management Policy). The FBC Risk Management Policy reiterates the Company's strong stance against fraud, bribery and corruption, and sets the overarching approach and standards in managing fraud, bribery and corruption risks in an integrated, systematic and consistent manner. The FBC Risk Management Policy works together with various other policies and guidelines to guide all employees to maintain the highest standards of integrity in their work and business dealings. This includes guidelines and procedures for the giving and receipt of corporate gifts and concessionary offers. The Company's zero tolerance policy on bribery and corruption extends to its business dealings with third parties. The Company's stance against bribery and corruption is also reiterated by Management during its regular staff communication sessions. In addition, on an annual basis, all employees of the Group are required to pledge that they will uphold the Company's core values and not engage in any corrupt or unethical practices.
In addition to the FBC Risk Management Policy and related policies, various other policies and guidelines are in place to guide employees' behaviour.
Together, these policies aim to help to detect and prevent occupational fraud in mainly three ways. First, the Company offers fair compensation packages, based on practices of pay-for-performance and promotion based on merit to its employees. The Company also provides various healthcare subsidies and financial assistance schemes to alleviate the common financial pressures its employees may face. Second, clearly documented policies and work procedures incorporate internal controls which ensure that adequate checks and balances are in place. Periodic audits are also conducted to evaluate the effectiveness of these internal controls. Finally, the Company seeks to build and maintain the right organisational culture through its core values and imbibing employees on good business conduct and ethical values.
These policies and guidelines are published on the Company's Intranet, which is accessible by all employees.
A whistle-blowing policy and other procedures are put in place to provide the Group's employees and parties who have dealings with the Group with well defined, accessible and trusted channels to report suspected fraud, corruption, dishonest practices or other improprieties in the workplace, and for the independent investigation of any reported incidents and appropriate follow up action. The objective of the whistle-blowing policy is to encourage the reporting of such matters - that employees or external parties making any reports in good faith will be able to do so with the confidence that they will be treated fairly and, to the extent possible, be protected from reprisal.
The AC reviews all whistle-blowing complaints at its quarterly meetings. Independent, thorough investigation and appropriate follow-up actions are taken. The outcome of each investigation is reported to the AC.
The policy is made available to all employees on the Company's intranet. Further, as part of the Group's efforts to promote strong ethical values and fraud and control awareness, the whistle-blowing policy is covered during periodical communications to all staff.
Attendance Record of Meetings of Shareholders, Board and Board Committees in 20191
Directors' and GCEO's Remuneration Table for the Financial Year Ended 31 December 2019
Remuneration of GCEO and Top 5 Key Management Personnel
The remuneration of the GCEO and top 5 key management personnel and in aggregate the total remuneration paid to them for the financial year ended 31 December 2019 are set out in the table below: