Singapore Airlines 2012 Annual Report Download - page 45

043ANNUAL REPORT 2011/2012
Corporate Governance Report
For the period 1 April 2011 to 31 March 2012
Variable Components:
Short-term incentives
Short-term incentives take the form of an annual profit-sharing bonus. The profit sharing bonus targets are designed to achieve
a good balance of both Group financial objectives and the Company’s operational performance. Payment of the variable bonus
is based on senior executives achieving the target levels set for each of the Key Performance Indicators stated below, and taking
into account individual performance:
(i) SIA Group’s Return on Shareholders’ Funds
(ii) SIA Company’s Operating Profit Margin
(iii) SIA Company’s Passenger Load Factor
Long-term incentives
The Company’s long term incentive plans for Senior Management (SVPs and above) comprise the Performance Share Plan (PSP),
Restricted Share Plan (RSP), Employee Share Option Plan (ESOP) and the EVA-Based Incentive Plan (EBIP).
The ESOP was introduced in 2000. The last grant was made in July 2008. No additional grants will be made under the ESOP.
The PSP and RSP, which were approved by Shareholders at the Extraordinary General Meeting of the Company held on 28 July
2005, were introduced in 2006 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.
The 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 deemed appropriate and 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 a share-based incentive scheme established with the objective of rewarding, motivating, and retaining a select group
of key senior management staff 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.
Under the PSP, an initial award is made in the form of rights to shares, provided performance targets are met. Annual awards
are made based on strategic contribution of senior management staff. The final award depends on the stretched value-aligned
performance targets, such as absolute and relative shareholder returns being met over the performance period of three financial
years, and can vary between 0 – 2 times the initial award.