The broad principles that guide the ERCC in its administration of fees, benefits, remuneration and incentives for the Board of Directors and Senior Management are set out below.
Singtel’s Group CEO is an Executive Director and is therefore remunerated as part of Senior Management. She does not receive Directors’ fees.
For the financial year ended 31 March 2013, the fees for nonexecutive Directors comprised a basic retainer fee, additional fees for appointment to Board Committees, attendance fees for ad hoc Board meetings and a travel allowance for Directors who were required to travel out of their country or city of residence to attend Board meetings and Board Committee meetings which did not coincide with Board meetings. The framework for determining non-executive Directors’ fees was as follows:
| Basic Retainer Fee | |
| Board Chairman | S$220,000 per annum |
| Director | S$110,000 per annum |
| Fee for appointment to Audit Committee and Finance and Investment Committee | |
| Committee chairman | S$50,000 per annum |
| Committee member | S$35,000 per annum |
| Fee for appointment to any other Board Committee | |
| Committee chairman | S$35,000 per annum |
| Committee member | S$25,000 per annum |
| Attendance Fee per Ad Hoc Board meeting | S$2,000 |
| Travel allowance for Board Meetings and Board Committee Meetings which do not coincide with Board meetings (per day of travel required to attend meeting) | S$3,000 |
The proposed framework for Directors’ fees for the financial year ending 31 March 2014 is the same as that for the financial year ended 31 March 2013 except that the fee for each of the chairmen of the AC and the FIC will be increased from S$50,000 to S$60,000 per annum and the fee for the chairman of the ERCC will be increased from S$35,000 to S$45,000 per annum to align fees with comparable benchmarks. As Singtel has diverse and complex operations and investments internationally and is not just a Singapore-based company, the fees are benchmarked against fees paid by other comparable companies in Singapore and Australia.
The aggregate compensation paid to Singtel non-executive Directors for services in all capacities for the financial year ended 31 March 2013 is set out in the table below. The aggregate compensation paid to or accrued to the Singtel Executive Director for the financial year ended 31 March 2013 is set out here.
| Name of Director | Director's Fees(1) (S$) |
| Simon Israel(2) | 378,048 |
| Bobby Chin(3) | 154,914 |
| Fang Ai Lian | 199,000 |
| David Gonski AC(4) | 13,333 |
| Dominic Ho | 217,000 |
| Low Check Kian | 184,000 |
| Peter Mason AM | 212,952 |
| Kaikhushru Nargolwala | 227,000 |
| Peter Ong(5) | 184,000 |
| Ong Peng Tsin(6) | 250,000 |
No employee of the Group who is an immediate family member of a Director was paid remuneration that exceeded S$50,000 during the financial year ended 31 March 2013.
Directors’ fees are subject to the approval of shareholders at the AGM. Singtel seeks shareholders’ approval for Directors’ fees for the financial year ending 31 March 2014 so that Directors’ fees can be paid on a half-yearly basis in arrears. No Director decides his own fees.
There are no retirement benefit schemes or share-based compensation schemes in place for non-executive Directors. To align Directors with shareholders’ interests, Directors are encouraged to acquire Singtel shares each year from the open market to the extent of one-third of their fees until they hold the equivalent of one year’s fees in shares, and to continue to hold the equivalent of one year’s fees in shares while they remain on the Board.
The remuneration framework and policy is designed to support the implementation of the Group’s strategy and enhance shareholder value. The ERCC adopts the following guiding principles when determining the remuneration arrangements for Senior Management:
The ERCC recognises that the Group operates in a multinational and multifaceted environment and reviews remuneration through a process that considers Group, business unit and individual performance as well as relevant comparative remuneration in the market. The performance evaluations for Senior Management have been conducted for the financial year in accordance with the above considerations.
In 2012/2013, the ERCC engaged Aon Hewitt Singapore Pte Ltd (Aon Hewitt) to provide valuation and vesting computation for grants awarded under the Singtel Performance Share Plan and Carrots Consulting Pte Ltd (Carrots) to design the total remuneration framework. Both Aon Hewitt and Carrots and their respective consultants are independent and not related to Singtel or any of its Directors.
In line with market practice, Singtel may, under special circumstances, compensate Senior Management for their past contributions when their services are no longer needed; for example, due to redundancies arising from reorganisation or restructuring of the Group.
The ERCC has the discretion not to award incentives in any year if an executive is involved in misconduct or fraud resulting in financial loss to the company.
The remuneration structure for Senior Management comprises five components – fixed remuneration, variable bonus, provident/ superannuation fund, benefits and long-term incentives. The structure is designed such that the percentage of the variable component of Senior Management’s remuneration increases as they move up the organisation. On an annual basis, the ERCC proposes the compensation for the Group CEO, CEO Group Consumer, CEO Group Digital L!fe, CEO Group Enterprise and Group CFO (collectively defined as “Key Management”) for the Board’s approval and approves compensation for the other Senior Management.
The fixed remuneration comprises base salary and reflects the market worth of the job but may vary with responsibilities, performance, qualifications and the experience that the individual brings to the role.
In Australia, consistent with local market practice, executives may opt for a portion of their salaries to be received in tax-effective benefits-in-kind, such as superannuation contributions and motor vehicles, while maintaining the same overall cost to the company.
Variable bonus comprises the Performance Bonus and the Value Sharing Bonus. In determining the final variable bonus payments, the ERCC considers the overall Group, business unit and individual performance as well as relevant market remuneration benchmarks.
Performance bonus is designed to support the Group’s business strategy and the on-going enhancement of shareholder value through the delivery of annual financial strategy and operational objectives. On an individual level, the performance bonus will vary according to the actual achievement against Group, business unit and individual performance objectives. While these objectives are different for each executive, they are assessed on the same principles across two broad categories of targets: Business and People. Business targets comprise financials, strategy, customer and business processes. People targets comprise leadership competencies, core values, people development and staff engagement. In addition, the executives are assessed on teamwork and collaboration across the Group.
A portion of Senior Management’s annual remuneration is tied to the Economic Profit (EP) performance of the Group in the form of the Value Sharing Bonus (VSB) which is also extended to top management executives. VSB is used to defer their bonuses over a time horizon to ensure alignment with sustainable value creation for the shareholders over the longer term. A ‘VSB bank’ is created for each executive to hold the VSB allocated to him or her in any year. One-third of the ‘bank’ balance would be paid out in cash provided it is positive. The remaining balance will be carried forward and at risk as it is subject to clawback and could be reduced in the event of EP underperformance in the future years.
This is made up of Singtel’s contributions towards the Singapore Central Provident Fund or the Optus Superannuation Fund or any other chosen fund, as applicable.
Singtel provides benefits consistent with local market practice, such as an in-company medical scheme, club membership, employee discounts and other benefits that may incur Australian Fringe Benefits Tax, where applicable. Participation in such benefits is dependent on the country in which the executive is located. For expatriates located away from home, additional benefits such as accommodation, children’s education and tax equalisation may be provided.
Long-term incentives, with a focus on encouraging the delivery of long-term growth and shareholder value, are delivered through equity plans, to drive an ownership culture and retain key talents. These are provisionally granted to Senior Management based on performance for the year ended 31 March 2013.
From 1 April 2012, Singtel ceased to grant General Awards (GA) and Senior Management Awards (SMA) under the Singtel Performance Share Plan (see description of GA and SMA in previous annual reports). The Singtel Performance Share Plan was terminated in July 2012 with the adoption of the Singtel Performance Share Plan 2012. The termination of the Singtel Performance Share Plan is without prejudice to the rights of holders of awards outstanding under the Singtel Performance Share Plan as at the date of termination of the plan.
Two new types of award were introduced in 2012 – the Performance Share Award (PSA) and the Restricted Share Award (RSA) – with grants made at the discretion of the ERCC. The PSA is granted to top management while a broader group of executives are eligible for the RSA. The number of performance shares awarded is determined using the valuation of the shares based on a Monte-Carlo simulation.
The share awards are conditional upon the achievement of predetermined performance targets over the performance period. These performance conditions and targets are approved by the ERCC at the beginning of the performance period. The final number of performance shares vested to the recipient will depend on the level of achievement of these targets over the performance period, subject to the approval of the ERCC.
A significant portion of the remuneration package for our Senior Management is delivered in Singtel shares to ensure that their interests are aligned with shareholders. This is further supported by significant shareholding requirements in which they are required to retain at least the equivalent of their annual base salary in shares.
The details of the vesting criteria for the two awards are as follows:
The Restricted Share Award (RSA) has a two-year performance period from 1 April 2013 to 31 March 2015. Shares are allocated according to the following performance conditions:
Details of the RSA vesting schedule are shown in Figure A.
| Group NPAT (50%) | Group FCF (50%) | ||
| Performance | Vesting Level ^ | Performance | Vesting Level ^ |
| Stretch | 130% | Stretch | 130% |
| Target | 100% | Target | 100% |
| Threshold | 50% | Threshold | 50% |
| Below Threshold | 0% | Below Threshold | 0% |
The Performance Share Award (PSA) has a three-year performance period from 1 April 2013 to 31 March 2016. Shares are allocated according to the following performance conditions:
Details of the PSA vesting schedule are shown in Figure B.
| Relative TSR (50%) | Absolute TSR (50%) | ||
| Performance * | Vesting Level ^ | Performance | Vesting Level ^ |
| - | - | Stretch | 200% |
| ≥ +7.00% | 100% | Target | 100% |
| +2.00% | 50% | Threshold | 30% |
| < +2.00% | 0% | Below Threshold | 0% |
The above performance conditions were chosen as they are key drivers of shareholder value creation and aligned to the Group’s business objectives.
Special provisions for vesting and lapsing of awards apply for events such as the termination of employment, misconduct, retirement and any other events approved by the ERCC. Upon occurrence of any of the events, the ERCC will consider, at its discretion, whether or not to release any award, and will take into account circumstances on a case-by-case basis, including (but not limited to) the contributions made by the employee.
Singtel employees are prohibited from entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under Singtel’s equity-based remuneration schemes.
For the financial year ended 31 March 2013, there were no termination, retirement and post-employment benefits granted to Directors and Key Management.
The aggregate compensation paid to or accrued to Group CEO (Chua Sock Koong) for the financial year ended 31 March 2013 is set out in the table below:
| Name | Fixed Remuneration(1) ($) | Variable Bonus(2) ($) | Provident Fund(3) ($) | Benefits(4) ($) | Total Cash & Benefits(5) ($) | Restricted Share Award (RSA)(6) (no. of shares) | Performance Share Award (PSA)(6) (no. of shares) |
| Chua Sock Koong | S$1,647,100 | S$2,880,000 | S$9,850 | S$74,045 | S$4,610,995 | 98,060 | 1,418,169 |
Performance shares granted, vested and lapsed for Ms Chua as at 31 March 2013 are as follows:
| General Award (GA) | Senior Management Award (SMA) | ||||||
| Performance Share Awards | Vesting Date | Granted (‘000) | Vested (‘000) | Lapsed (‘000) | Granted (‘000) | Vested (‘000) | Lapsed (‘000) |
| 2010 Awards | 1-Jun-13 | 934 | 526 | 408 | 630 | 558 | 72 |
| 2011 Awards | 1-Jun-14 | 1,013 | - | - | 655 | - | - |
| Restricted Share Award (RSA) | Performance Share Award (PSA) | ||||||
| Performance Share Awards | Vesting Date | Granted (‘000) | Vested (‘000) | Lapsed (‘000) | Granted (‘000) | Vested (‘000) | Lapsed (‘000) |
| 2012 Awards | 1-Jun-15 | 119 | - | - | 1,273 | - | - |
The aggregate compensation paid to or accrued to the other top five Key Management and Senior Management for the financial year ended 31 March 2013 is set out in the table below:
| Name | Fixed Remuneration(1) ($) | Variable Bonus(2) ($) | Provident/ Superannuation Fund(3) ($) | Benefits(4) ($) | Total Cash & Benefits(5) ($) | Restricted Share Award (RSA)(6) (no. of shares) | Performance Share Award (PSA)(6) (no. of shares) |
| The following are in alphabetical order: | |||||||
| Bill Chang CEO Group Enterprise | S$760,600 | S$950,000 | S$13,600 | S$57,689 | S$1,781,889 | 29,267 | 423,268 |
| Allen Lew CEO Group Digital L!fe/ Country Chief Officer Singapore | S$1,152,900 | S$2,025,000 | S$8,175 | S$63,055 | S$3,249,130 | 59,335 | 858,119 |
| Jeann Low (8) Group CFO | S$910,000 | S$1,125,000 | S$10,900 | S$55,779 | S$2,101,679 | 30,808 | 445,545 |
| Paul O’Sullivan(7)(9) CEO Group Consumer/ Country Chief Officer Australia | A$1,170,023 | A$1,133,028 | A$211,775 | A$181,337 | A$2,696,163 | 84,509 | 1,221,881 |
| Kevin Russell(7)(9) CEO Consumer Australia | A$875,018 | A$720,193 | A$143,569 | A$9,586 | A$1,748,366 | 57,498 | 369,482 |
| Total | S$5,443,811 | S$6,474,531 | S$487,977 | S$421,153 | S$12,827,472 | 261,417 | 3,318,295 |
Performance shares granted, vested and lapsed for the above five executives as at 31 March 2013 are as follows:
| General Award (GA) | Senior Management Award (SMA) | ||||||
| Performance Share Awards | Vesting Date | Granted (‘000) | Vested (‘000) | Lapsed (‘000) | Granted (‘000) | Vested (‘000) | Lapsed (‘000) |
| 2010 Awards | 1-Jun-13 | 1,957 | 1,101 | 856 | 1,320 | 1,169 | 151 |
| 2011 Awards | 1-Jun-14 | 2,167 | - | - | 1,401 | - | - |
| Restricted Share Award (RSA) | Performance Share Award (PSA) | ||||||
| Performance Share Awards | Vesting Date | Granted (‘000) | Vested (‘000) | Lapsed (‘000) | Granted (‘000) | Vested (‘000) | Lapsed (‘000) |
| 2012 Awards | 1-Jun-15 | 276 | - | - | 2,634 | - | - |
| 16-Jul-15 | 20 | - | - | 97 | - | - | |