Singapore Airlines 2015 Annual Report Download - page 68

Fixed Component
The fixed component comprises base salary, the Annual
Wage Supplement (“AWS”) and cash allowances. The fixed
components are benchmarked to comparable positions in the
market, and reflect the market worth of the positions.
Variable Components
Cash Incentive Plans for CEO and Senior Management
This comprises the following three components:
a. Profit-Sharing Bonus (“PSB”)
The PSB targets are designed to achieve a good balance
of both Group financial objectives and the Company’s
operating performance. Payment of the variable bonus
is based on the Group and the Company achieving the
target levels set for each of the Key Performance Indicators
(“KPIs”) stated below and taking into account individual
performance:
• SIAGroup’sReturnonShareholders’Funds
• SIACompany’sOperatingProfitMargin
• SIACompany’sPassengerLoadFactor
Individual performance objectives aligned to the overall
strategic, financial and operational goals of the Company
are set at the beginning of each financial year and are
cascaded down to a select group of key Senior Management
sta using Individual Performance Scorecards, creating
alignment between the performance of the Group,
Company and the individual. While these performance
objectives are dierent for each executive, they are
assessed on the same principles across the following four
broad categories of targets:
• Financial&Business
• Customer&Operations
• People&OrganisationalDevelopment
• StrategicProjects
The PSB Payout is capped at three times of monthly base
salary based on SIA Group and Company Performance
in respect of the CEO and Senior Management. Aer the
assessment of the Individual Performance Scorecards at
the end of a performance year, an Individual Performance
Rating is determined and is subsequently used to modify
the PSB Payout within the range of 0-150%.
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 eiciently 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 EVA generation 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. Enhanced Strategic Incentive Plan (“ESIP”)
The ESIP is an incentive scheme established with the
objective of rewarding, motivating, and retaining a select
group of key Senior Management sta who shoulder the
responsibility for divisional-focused strategic initiatives and
future-oriented growth. It consists of two components: the
Base SIP and the Additional SIP.
Under the Base SIP, a target bonus is set equal to three
times the monthly base salary of the respective Senior
Management sta 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 payout
varies between 0-150% of the Base SIP target bonus with
settlement of 50% in cash and 50% in shares under the
Deferred Share Award (“DSA”).
The maximum SIP bonus payable is four and a half times
the individual’s monthly base salary.
Corporate
Governance Report
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