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PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
CORPORATE GOVERNANCE
LEVEL AND MIX OF REMUNERATION
(GUIDELINE 8)
Guideline 8.1: Performance-related remuneration
The Company advocates a performance-centric
remuneration system that is flexible and responsive
to market conditions as well as the performance
of the Company and individual employees.
Such performance-centric remuneration is linked to
the achievement of business and individual
performance targets which emphasises both short and
long-term quantifiable objectives. The Company has
put in place appropriate and meaningful measures to
assess the achievement of these performance targets
by the individual employee.
In designing the remuneration structure, the RC seeks
to ensure that the level and mix of remuneration is
competitive, relevant and appropriate in motivating and
retaining the employees. The RC also exercises
independent judgment in ensuring that the
remuneration structure is aligned with the interests of
Shareholders and promote long-term success and
sustainable growth of Perennial.
The remuneration structure also takes into account the
risk policies and risk tolerance of Perennial. The RC is
of the view that there are adequate risk mitigation
features in the Company’s remuneration structure and
the overall level of remuneration is not considered to be
at a level which is likely to promote behaviour contrary
to Perennial’s risk profile. The RC will undertake
periodic reviews of compensation-related risks.
In determining the remuneration of key management
personnel, the Company leveraged on external
consultants’ data on pay benchmarks as guidance
and compares itself against peer companies and
comparably-sized local listed companies with which
the Company competes with for talent and capital.
The RC is of the view that the remuneration of key
management personnel is competitive and fair.
Guideline 8.2: Short-term and long-term incentive
schemes for key management personnel
The remuneration mix for key management personnel
comprises four key components: fixed compensation,
variable cash compensation, share-based compensation
and market-related benefits:
(a) Fixed Compensation
The fixed component comprises the base salary
and compulsory employer contribution to an
employee’s Central Provident Fund account. The
fixed component is determined by benchmarking
against similar and comparable industries, taking
into account an individual’s responsibilities,
performance, qualifications and experience.
(b) Variable Cash Compensation
The variable cash component includes an annual
performance incentive that is linked to the
achievement of pre-agreed financial and non-
financial performance targets for Perennial and
individual employees.
In determining the payout quantum for employees,
the RC takes into account overall business
performance and individual performance, amongst
other considerations.
(c) Share-based Compensation
Share options were granted in the Period pursuant
to the Perennial Employee Share Option Scheme
2014 approved and adopted by the Shareholders of
the Company on 10 October 2014.
The Perennial Employee Share Option Scheme
2014 was established with the objective of
motivating employees of managerial level and
above to strive for sustained long-term growth and
superior performance in Perennial. It also aims to
foster a share ownership culture among
employees within the Company and better align
employees’ incentives with Shareholders’ interests.
The share options scheme involves the grant of
Market Price share options which are vested and
released over four consecutive years at the rate of
25% for each year. The vesting of the first tranche
of any such share options will be on the
first anniversary of the Date of Grant.
More information on the Perennial Employee
Share Option Scheme 2014 can be found in the
Directors’ Statement from pages 180 to 182 and
in the Notes to Financial Statements from pages
228 to 230.
