Singapore Airlines 2008 Annual Report Download - page 43

Singapore Airlines Annual Report 2007-08
41
CORPORATE GOVERNANCE REPORT
For the period 1 April 2007 to 31 March 2008
Remuneration Matters (Principles 7, 8 and 9)
Remuneration Mix
In addition to base salary and benefits, SIA has in place short-term and long-term incentive plans to motivate and reward
employees in striving to meet the targets set under these plans.
Short-Term Incentives
Short-term incentives generally take the form of an annual profit-sharing bonus. Payment of the variable bonus is based on
employees achieving the target levels in the following:
(i) SIA Group’s Return on Shareholders’ Fund;
(ii) SIA Company’s Operating Profit Margin; and
(iii) SIA Company’s Passenger Load Factor
Long-Term Incentives
The Company has put in place share-based remuneration programmes allowing employees to share in its growth and success.
These plans comprise the Performance Share Plan (PSP), Restricted Share Plan (RSP) and Employee Share Option Plan (ESOP).
The ESOP was introduced in 2000 with the objective of promoting unity and team spirit through a sense of share ownership.
The last grant under the ESOP will be made in July 2008.
In 2005, the Company enlisted an external consultant to review its share-based incentives. The PSP and RSP, which were
approved by shareholders at the Extraordinary General Meeting of the Company held on 28 July 2005, were introduced with
a view to further strengthen the Company’s competitiveness in attracting and retaining talented key senior management and
senior executives. The PSP and RSP aim to more directly align the interests of key senior management and senior executives
with the interests of Shareholders, to improve performance and achieve sustainable growth for the Company in the changing
business environment, and to foster a greater ownership culture amongst key senior management and senior executives.
These PSP and RSP contemplate the award of fully paid Shares, when and after pre-determined performance and/or service
conditions are met.
The selection of a participant and the number of shares which he would be awarded under the PSP or RSP will be determined
at the absolute discretion of the BCIRC, which will take into account criteria such as his rank, job performance, potential for
future development and his contribution to the success and development of the Company. The BCIRC has the discretion to
review and amend performance conditions and target(s) where it feels appropriate, and as relevant to the business conditions.
Non-executive Directors of the Group are not eligible to participate in the PSP and RSP.
The SIA Performance Share Plan (PSP)
The PSP is targeted at a select group of key senior management who shoulder the responsibility for the Company’s
performance and who are able to drive the growth of the Company through innovation, creativity and superior performance.
Awards under the PSP are performance-based, with stretched performance targets based on criteria such as absolute and
relative total shareholders’ return, to be achieved over a three-year performance period.