Corporate Governance reasonable as such contracts only contain the standard clause on notice period for termination with the appropriate period of notice, taking into account the seniority of the relevant employee. In the deliberation of remuneration matters, none of the NRC members is involved in deciding any remuneration, compensation, incentives, or any form of benefits to be granted to himself. In discharging its duties, the NRC may seek advice from HR and external consultants whenever necessary. Remuneration for the Executive Chairman and Chief Executive Officer and Key Management Personnel The Group advocates a remuneration system that is flexible and responsive to market conditions, as well as a remuneration framework that is based on the key principle of aligning compensation to business performance and strategic objectives. Such performance-centric remuneration is linked to the achievement of corporate and individual performance targets, both in terms of short and longterm quantifiable objectives, as well as to support the ongoing enhancement of shareholder value. The remuneration system also takes into account the value creation capability of the Executive Chairman and CEO and KMP. The Board determines value creation to be the amount of value-add contributed by the individual, including but not limited to deal introduction to the Group, cost-savings ideas and novel initiatives which have the potential of increasing the performance of the Group. In designing the remuneration structure, the NRC seeks to ensure that the level and mix of remuneration is competitive and relevant in attracting, motivating and retaining employees. The NRC also ensures that the remuneration structure is aligned with the interests of the stakeholders and promotes long-term success and sustainable growth of the Group. The balance between fixed and variable compensation elements changes according to the individual employee’s performance, value creation, seniority and department, so as to incentivise employees into adopting appropriate risk behaviour and to remain focused on prudent risk management. The NRC considers the mix of fixed and variable compensation to be appropriate for the Group and for each individual role. The remuneration structure also takes into account the Group’s risk policies and risk tolerance limits, as well as the time horizon of risks, in order to build sustainable leadership and business in the long term. The NRC is satisfied that there are adequate risk mitigation features in the Group’s remuneration structure with prudent funding of annual cash compensation. The NRC is also of the view that the overall level of remuneration is not considered to be at a level which is likely to promote behaviour contrary to the Group’s risk profile. The NRC also has the discretion to claw back any incentives awarded earlier if an executive is subsequently found to be involved in misconduct or fraud resulting in financial loss to the Group. The NRC will continue to undertake periodic reviews of compensation-related risks. In determining the remuneration of KMP, the Group leverages external consultants’ data on pay benchmarks as guidance and compares itself against peer companies and comparably-sized local listed companies with which the Group competes for talent and capital. The NRC is of the view that the remuneration of KMP is competitive and fair, and they have met the performance targets. Level and Mix of Remuneration The remuneration mix for KMP comprises two key components: fixed and variable compensation. These components comprise various elements which ensure a close linkage between total compensation and the achievement of long-term business objectives, thereby driving sustainable performance for the Group. As part of the Group’s formal succession planning, HR assists in identifying the critical positions at the management level. The requirements of and gaps in these positions are determined before mapping succession to the pipeline of internal high-potential executive talents that have been identified. HR recognises the need to support identified talents within the Group’s international talent pipeline with developmental efforts to prepare them for designated roles with adequately designed and implemented career development plans. These plans include on-the-job assignments, job rotations, international assignments and assuming larger or different roles in the organisation. HR also reviews and surveys the practices of other corporations and harmonises best practices that are suited to the Group’s culture, structure and strategy. Fixed Compensation (i) Base Salary and Compulsory Employer Contribution Base salary is determined by benchmarking against similar and comparable industries, taking into account an individual’s responsibilities, competencies, performance, value creation, qualifications and experience. (ii) Market-Related Benefits The market-related benefits provided are comparable with local market practices. Variable Compensation The variable compensation is designed to support the Group’s business strategy and the ongoing creation of shareholder value through the delivery of annual financial and operational objectives. (i) Annual Performance Incentive This is a short-term incentive that is linked to the achievement of pre-agreed financial and non-financial performance targets for the Group and individual employees. Group-wide performance targets are dependent on factors such as business performance, profitability, and operational growth. Individual performance targets are set at the beginning of each financial year and are aligned to the overall strategic, financial, and operational goals of the Group. This encourages day-today behaviour and actions that are aligned towards the creation of value for shareholders and stakeholders. In determining the cash payout quantum for employees, the NRC takes into account overall business performance and individual performance, amongst other considerations. 134 PERENNIAL HOLDINGS PRIVATE LIMITED
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