34 | CapitaLand Limited Annual Report 2014
Corporate Governance Report
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. The Board has access to
independent remuneration consultants to advise as required.
In FY 2014, the ERCC appointed an independent remuneration consultant Carrots Consulting Pte Ltd to provide
professional advice on Board and executive remuneration. The consultant is not related to the Company or any of its
Directors. In its deliberations, the ERCC took into consideration industry practices and norms in compensation.
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Remuneration for key management personnel comprises a mxed component, a variable cash component,
a share-based component and market-related benemts
A. Fixed Component:
The mxed component comprises the base salary, mxed allowances and compulsory employer contribution to an
employee’s Central Provident Fund.
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The variable cash component comprises the Balanced Scorecard Bonus Plan and Economic 7alue Added-based
Incentive Plan (E7A-based Incentive Plan or EBIP).
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The Balanced Scorecard Bonus Plan is linked to the achievement of annual performance targets for each
key management personnel as agreed at the beginning of the mnancial year with the Board and/or the P&GCEO as the
case may be.
Performance outcomes aligned to the key business performance measures and strategic goals of the Group are
cascaded down throughout the organisation using the Balanced Scorecard framework, thereby creating greater
alignment between performance of the Group, Business Units and the individual employees. These are in the form of
both quantitative and qualitative measures which are aligned to the Group’s business strategy.
In determining the payout quantum for the key management personnel under the plan, the ERCC considers overall
business performance, individual performance and affordability.
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The EBIP is based on sharing a portion of the economic value created with employees, which varies according to the
actual achievement of residual economic promt.
The EBIP rewards for sustainable shareholder value creation over the medium term achieved by growing promts,
deploying capital efmciently and managing the risk promle and risk time hori[on 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. Amounts in each participant’s EBIP account are at risk
because a signimcant reduction in E7A 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 E7A generation
and to take actions that are aligned with the longer term interests of shareholders.
In determining the EBIP bonus declared to each participant, the ERCC considers the overall Group performance,
individual performance and relevant market remuneration benchmarks.
Based on the ERCC’s assessment that the actual performance of the Group in FY 2014 has not met the
pre-determined E7A targets, the resulting bonus declared under the EBIP has been adjusted accordingly to renect the
performance level.
C. Share-based Components:
Share awards were granted in FY 2014 pursuant to the CapitaLand Performance Share Plan 2010 and the
CapitaLand Restricted Share Plan 2010 (the Share Plans) approved and adopted by the shareholders of the
Company at the Extraordinary General Meeting held on 16 April 2010.
Corporate Governance & Transparency
