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CapitaLand Limited
Annual Report 2015
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 2015, the ERCC appointed an independent remuneration consultant, Mercer (Singapore) 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 also took into consideration industry practices and norms in compensation.
Executive Remuneration for Key Management Personnel
Remuneration for key management personnel comprises a fixed component, a variable cash component, a share-based
component and market-related benefits:
A. Fixed Component:
The fixed component comprises the base salary, fixed allowances and compulsory employer contribution to an employee’s
Central Provident Fund.
B. Variable Cash Component:
The variable cash component comprises the Balanced Scorecard Bonus Plan (BSBP) and Economic Value-Added (EVA)-
based Incentive Plan (EBIP).
Balance 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 P&GCEO, as the case may be.
Under the Balanced Scorecard framework, the Group’s strategy and goals are translated to performance outcomes
comprising both quantitative and qualitative targets in the dimensions of
Financial, Execution, Growth
and
People
; these
are cascaded down throughout the organisation, thereby creating alignment across the Group.
After the close of the 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 business environment,
regulatory landscape and industry trends, and approves of a bonus pool that is commensurate with the performance
achieved.
In determining the payout quantum for each key management personnel under the plan, the ERCC considers overall
business performance, individual performance as well as affordability.
Economic Value-Added -based Incentive Plan
The EBIP is based on sharing a portion of the economic value added with employees, which varies according to the actual
achievement of residual economic profit.
The EBIP rewards for sustainable shareholder 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. Amounts in each participant’s EBIP account are 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 shareholders.
In determining the EBIP bonus declared to each participant, the ERCC considers the overall business performance,
individual performance and relevant market remuneration benchmarks.
Based on the ERCC’s assessment that the actual performance of the Group in FY 2015 has not met the pre-determined
EVA targets, the resulting bonus declared and paid out under the EBIP has been adjusted accordingly to reflect the
performance level.
