KIM HENG OFFSHORE & MARINE HOLDINGS LIMITED
ANNUAL REPORT 2014
34
CORPORATE
GOVERNANCE REPORT
The RC is responsible for ensuring a formal and transparent procedure is in place for fixing the
remuneration packages of individual Directors, key management personnel and related employees. All
aspects of remuneration, including but not limited to, Directors’ fees, salaries, allowances, bonuses, awards
to be granted under the performance share plan and the options to be issued under the employee share
option scheme as well as other benefits-in-kind are reviewed by the RC. The recommendations of the RC
are submitted for endorsement by the Board. Such frameworks are reviewed periodically to ensure that the
Directors and key management personnel are adequately but not excessively remunerated as compared to
industry benchmarks and other comparable companies.
The Executive Directors do not receive Directors’ fees. The annual variable bonus and performance-related
component of remuneration is designed to align the interests of the Executive Directors with those of the
shareholders and link rewards to the Group’s financial performance.
The RC reviews the fairness and reasonableness of the termination clauses of the service agreements of
the Executive Directors and key management personnel to ensure that such contracts of service contain
fair and reasonable termination clauses which are not overly generous, with an aim to be fair and avoid
rewarding poor performance. Each of the Executive Directors has a service agreement with the Company
which can be terminated by the Company (without prejudice to and in addition to any other remedy) by
giving not less than six (6) months’ written notice. The appointment of such senior position is on a long-term
basis and no onerous removal clauses are contained in their respective service agreement.
The RC is of the view that it is currently not necessary to use contractual provisions to allow the Company to
reclaim incentive components of remuneration from the Executive Directors and key management personnel
in exceptional circumstances of misstatement of financial statements, or of misconduct resulting in financial
loss to the Company and the Group.
The remuneration of Non-Executive Directors is in the form of a fixed fee which will be subject to
shareholders’ approval at the AGM. Each member of the RC abstains from voting on any resolutions in
respect of his own remuneration package.
The remuneration of related employees will be reviewed annually by the RC to ensure that their
remuneration packages are in line with the staff remuneration guidelines and commensurate with their
respective job scopes and level of responsibilities. Any bonuses, pay increments and/or promotions for these
related employees will also be subject to the review and approval of the RC. In the event that a member of
the RC is related to the employee under review, he will abstain from participating in the review.
The RC also oversees the administration of the Kim Heng Share Employee Share Option Scheme (“
Kim
Heng ESOS
”) and Kim Heng Performance Share Plan (“
Kim Heng PSP
”) (as well as such other similar
share plans as may be implemented by the Company from time to time) upon the terms of reference as
defined in the Kim Heng ESOS and Kim Heng PSP. Both Kim Heng ESOS and Kim Heng PSP, which were
established on 26 December 2013, had a 10-year tenure commencing on the establishment date.
Where necessary, the RC will consult external professionals on remuneration matters of the Directors and
key management personnel.
Disclosure on Remuneration
Principle 9: Every company should provide clear disclosure of its remuneration policies, level and
mix of remuneration, and the procedure for setting remuneration, in the company’s
Annual Report. It should provide disclosure in relation to its remuneration policies to
enable investors to understand the link between remuneration paid to directors and
key management personnel, and performance.
