Singapore Airlines 2014 Annual Report Download - page 54

CORPORATE GOVERNANCE REPORT
b. Economic Value Added (“EVA”)-based Incentive Plan (“EBIP”)
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 an airline business. A portion of the annual
performance-related bonus of key Senior Management is tied to the EVA achieved by the Group in the year. Under the plan,
one-third of the accumulated EBIP bonus, comprising the EBIP bonus declared in the financial year and the balance of such
bonus brought forward from preceding years (which comprises multiple years’ of incentive dollars retained in the EVA bank),
is paid out in cash each year. The remaining two-thirds are carried forward in the individual executive’s EBIP account. Amounts
in the EBIP account are at risk because negative EVA will result in a retraction of EBIP bonus earned in preceding years. This
mechanism encourages key Senior Management to work for sustainable profitability and to adopt strategies that are aligned
with the long-term interests of the Group.
In determining the final EBIP payouts, the BCIRC considers overall Group performance and relevant market remuneration
benchmarks.
The rules of the EBIP are subject to review by the BCIRC, which has the discretion, under authority of the Board, to amend the
rules where appropriate and relevant to the business conditions.
c. Strategic Incentive Plan (“SIP”)
The SIP is an 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 Group’s strategic direction and future-oriented growth.
Under the SIP, a target bonus is set equal to two times the monthly base salary of the respective Senior Management staff
for meeting strategic initiatives set under the individual performance scorecard. At the end of the financial year, the target
bonus is modified by the incumbent’s performance on the execution of the strategic initiatives as assessed by the BCIRC.
The resultant cash payout varies between 0-150% of the SIP target bonus.
The maximum SIP bonus payable is three times the individual’s monthly base salary.
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SINGAPORE AIRLINES