Singapore Airlines 2015 Annual Report Download - page 69

Under the Additional SIP, a group funding pool of up
to three million Singapore Dollars in cash is allocated
individually to the eligible Senior Management sta. The
group funding pool scales from 0-100% at the discretion
of the BCIRC. Individual allocations are distributed based
on the incumbent’s position level and performance in
achieving pre-set individual contributions to the Group’s
strategic initiatives, with the individual allocation ranging
from 0-100%, subject to available funding and at the sole
discretion of the BCIRC.
Share Incentive Plans
i. The SIA Performance Share Plan 2014 (“PSP 2014”)
The PSP 2014 is a share-based incentive scheme established
with the objective of rewarding, motivating, and retaining a
select group of key Senior Management sta who shoulder
the responsibility for the Group’s performance and who are
able to drive the growth of the Group through innovation,
creativity and superior performance. Awards under the PSP
2014 are performance-based, with stretched targets.
Under the PSP 2014, 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 sta. The final award, which
can vary between 0-200% of the initial award, depends
on stretched value-aligned performance targets. They
are based on absolute and relative Total Shareholder
Return (“TSR”), meeting targets over the performance
period of three financial years. The relative TSR is based
on outperformance of a selected peer group of leading
full service carriers. The absolute TSR is based on
outperformance against Cost of Equity hurdle. The above
performance measures are selected as key measurements
of wealth creation for shareholders.
ii. The SIA Restricted Share Plan 2014 (“RSP 2014”)
The RSP 2014 is targeted at a broader base of senior
executives and enhances the Company’s ability to recruit
and retain talented senior executives, as well as to reward for
Group, Company and individual performance. To retain key
executives, an extended vesting period of a further two years
is imposed beyond the initial two-year performance period.
Under the RSP 2014, an initial award is made in the form
of rights to shares, provided performance conditions are
met in future. Annual grants are made based on individual
performance of the key executives selected to participate
in the RSP 2014. Final awards may vary between 0-150% of
the initial award, depending on the extent to which targets
based on Group and Company EBITDAR Margin and Group
and Company Sta Productivity are met. The performance
measures are selected as they are key drivers of shareholder
value and are aligned to the Group and the Company’s
business objectives. The final award is subject to extended
vesting, with 50% of the final award paid out at the end of
the two-year performance period, and the rest paid out
equally over the next two years.
iii. The SIA Deferred Share Award (“DSA”)
As part of the ESIP, the DSA is a share award established
with the objective of rewarding, motivating and retaining
Senior Management who are responsible for strategic
initiatives. The DSA is granted as a contingent share award
under the RSP 2014. The final award, which includes the
Accumulated Dividend Yield (based on the sum of SIA share
dividend yields declared with ex-dividend dates occurring
during the vesting period), will cli vest at the end of three
years aer the grant date, subject to meeting a three-year
service-based condition, and provided that individual
performance remains satisfactory.
The PSP 2014 and RSP 2014 were adopted with
shareholders’ approval at the Extraordinary General
Meeting of the Company held on 30 July 2014 to replace
the previous performance share plan (“PSP”) and restricted
share plan (“RSP”), which were due to expire on 27 July
2015 and were terminated following the adoption of the
PSP 2014 and RSP 2014. The new plans have substantially
the same terms as the previous plans, except that the
total number of shares which may be delivered under the
PSP 2014 and RSP 2014 (whether in the form of shares or
cash in lieu of shares) is subject to a reduced maximum
limit of 5% of the total number of issued shares (excluding
treasury shares). In addition, the total number of shares
under awards to be granted under the PSP 2014 and RSP
2014 from the forthcoming Annual General Meeting to the
next Annual General Meeting (the “Relevant Year”) shall not
exceed 0.5% of the total number of issued shares (excluding
treasury shares) from time to time (the “Yearly Limit”).
However, if the Yearly Limit is not fully utilised during the
Relevant Year, any unutilised portion of the Yearly Limit can
be used for grants of awards in subsequent years.
The SIA Employee Share Option Plan (“ESOP”) expired in 2010.
Details of the PSP 2014, RSP 2014, DSA and ESOP can
be found on pages 85 to 88 of the Report of the Board
of Directors.
Compensation Risk Assessment
Under the Code, the compensation system should take into
account the risk policies of the Company, be symmetric with
Singapore Airlines | Annual Report FY2014/15 | 67