This Remuneration Report sets out the Group’s remuneration policies and amounts for all staff including Executive Directors and Non-executive Directors. The table below 'Remuneration For The Years Ended' and 'Accounting Policies on Employee Benefits' comprise the auditable part of the Remuneration Report and form an integral part of the Group’s financial statements. At 31 December 2015, the Group employed a total of 334 full time, shore-based staff (2014: 363).
GROUP’S REMUNERATION POLICY
The Board, through the Remuneration Committee, seeks to attract and retain staff with the skills, experience and qualifications needed to manage and grow the business successfully. We achieve this by providing remuneration packages, including bonuses, that are competitive, consistent with market practice, and reward performance and align employees and shareholders’ interests.
When considering remuneration adjustments and annual bonuses, the Board makes reference to the prevailing market conditions, local market practice, the levels of emolument of existing staff of the Company and, very importantly, the performance of individuals and the market demand for their skills. The business of shipping is highly cyclical. It is inappropriate to impose straight financial measures for both salary adjustments and bonus determination as to do so would likely generate meaningless results and potentially damaging consequences. The Board seeks to obtain a balance of all the above mentioned factors.
Equity awards are provided through the Company’s Share Award Scheme which is designed to provide Executive Directors and other employees with long-term financial benefits that are aligned to and consistent with the creation of shareholder value as an incentive and recognition for their contribution to the Group. The number of share awards granted each year is based on the value of a predetermined number of months of each awardee’s basic salary divided by the prevailing share price at the time of the award. The Board has not granted, and currently has no intention to grant any equity awards to Independent Non-executive Directors as they administer the scheme at their sole discretion.
The Group’s principal retirement benefit scheme is the Mandatory Provident Fund Scheme, a defined contribution scheme provided under the Hong Kong Mandatory Provident Fund Schemes Ordinance for those staff employed under the jurisdiction of the Hong Kong Employment Ordinance. Other locations provide pension contributions in line with the local regulations.
Below sets out the key components of remuneration:
|Key remuneration components||Executive Directors and All staff||Non-executive Directors|
|Fixed base salary||Salaries are reviewed annually. Prevailing market conditions|
and local market practice, as well as the individual's role,duties,
experience, responsibilities and performance are taken into
account when assessing salaries.
|Annual discretionary cash bonus||Bonuses are determined based on the overall performance of|
the individual and the Group. Bonuses for Executive Directors
are assessed by the Remuneration Cor (m tee and those of all
other staff are assessed by the Chief E: tive Officer. Bonuses
to Directors and employees are expected to be no more than 12
months' salary equivalent.
|Long-term equity incentives||Awards typically vest annually over a three year period. New|
Awards for existing awardees are considered each year by the
Remuneration Committee to maintain the incentive period, in
which case they vest at the end of the third year.
|Retirement benefit||In line with market practice.||No|
|Fixed annual director's fee||No||Yes and in line with|
REMUNERATION FOR THE YEARS ENDED
|31 December 2015||Directors|
|David M. Turnbull||-||379||32||2||413||195||608|
|Mats H. Berglund||-||1,153||144||2||1,299||539||1,838|
|Andrew T. Broomhead||-||514||41||2||557||266||823|
|Independent Non-executive Directors|
|Patrick B. Paul||102||-||-||-||102||-||102|
|Robert C. Nicholson||95||-||-||-||95||-||95|
|Alasdair G. Morrison||89||-||-||-||89||-||89|
|Daniel R. Bradshaw||89||-||-||-||89||-||89|
|Irene Waage Basili||93||-||-||-||93||-||93|
|31 December 2014||Directors fee US$'000||Salaries US$'000||Bonuses US$'000||Pension US$'000||Total Payable US$'000||Share- based compensation US$'000||Total payable and charged US$'000|
|David M. Turnbull||-||364||30||2||396||214||610|
|Mats H. Berglund||-||1,046||63||2||1,111||538||1,649|
|Andrew T. Broomhead||-||495||40||2||537||328||865|
|Chanakya Kocherla||-||670 1||38||22||730||304 2||1,034|
|Jan Rindbo 3||-||494 3||-||-||494||(150)3||344|
|Independent Non-executive Directors|
|Patrick B. Paul||96||-||-||-||96||-||96|
|Robert C. Nicholson||90||-||-||-||90||-||90|
|Alasdair G. Morrison||83||-||-||-||83||-||83|
|Daniel R. Bradshaw||83||-||-||-||83||-||83|
|Irene Waage Basili 4||67||-||-||-||67||-||67|
|419||-||-||-||41 9||-||41 9|
(1) Included in the salary of Mr. Kocherla is a compensation for additional tax incurred of US$178,000 due to the withdrawal of his superannuation fund upon his
relocation from Australia to Hong Kong.
(2) Included in share-based compensation of Mr. Kocherla is a reimbursement of the difference between Australian income tax and Hong Kong income tax
amounted to US$97,000 in relation to the restricted share awards granted to him.
(3) Mr. Rindbo resigned as an Executive Director on 7 November 2014. As a consequence, 2,163,000 share awards lapsed resulting in a credit to the income
statement. His salary for the period included a director’s fee of US$80,000.
(4) Mrs. Basili joined the Board as an Independent Non-executive Director on 1 May 2014.
For the year 2015, the five individuals whose emoluments were the highest in the Group were the four Executive Directors and one employee (2014: five Executive Directors). The emoluments of the one employee fell within the band of HK$4,000,001 to HK$4,500,000.
During the year, the Group did not pay the Directors any inducement to join or upon joining the Group. No Directors waived or agreed to waive any emoluments during the year. The median salary of employees excluding the Chief Executive Officer during the year was US$57,902 (2014: US$62,814).
ACCOUNTING POLICIES ON EMPLOYEE BENEFITS
The Group recognises a liability and expense for bonuses when there is a contractual or constructive obligation or where there is a past practice that created a constructive obligation.
Retirement Benefit Obligations
Mandatory Provident Fund Scheme
The Group operates the Mandatory Provident Fund Scheme (the “MPF Scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for those employees employed under the jurisdiction of the Hong Kong Employment Ordinance. The MPF Scheme is a defined contribution scheme, the assets of which are held in separate trustee-administered funds.
Under the MPF scheme, the employer and its employees are each required to make regular mandatory contributions to the scheme at 5% of the employees’ relevant income, subject to a cap of monthly relevant income of HK$25,000. The Group also makes voluntary contribution in addition. The Group’s contributions to the scheme are expensed as incurred. When employees leave the scheme prior to the full vesting of the employer’s voluntary contributions, the amount of forfeited contributions is used to reduce the contributions payable by the Group.
Other defined contribution Schemes
The Group also operates a number of defined contribution retirement schemes outside Hong Kong in accordance with local statutory requirements. The assets of these schemes are generally held in separate administered funds and are generally funded by payments from employees and by the relevant group companies. The Group’s contributions to the defined contribution retirement schemes are expensed as incurred and are reduced by contributions forfeited by those employees who leave the schemes prior to contributions being fully vested.
The Group operates an equity-settled, share-based compensation scheme. Restricted share awards are recognised as an expense in the income statement with a corresponding credit to reserves, based on the fair value of the shares.
The total amount to be expensed is calculated by reference to the fair value of the equity instruments granted, excluding the impact of any non-market vesting conditions (for example, requirement of an employee to remain in employment for a specified time period). The number of equity instruments that are expected to vest takes into account non-market assumptions, including expectations of an employee remaining in the Group during the vesting period. The total amount expensed is charged through the vesting period. At each balance sheet date, the Company reviews its estimates of the number of equity instruments that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision of the original estimates, if any, in the consolidated income statement with a corresponding adjustment to equity.
The grant by the Company of share-based compensation to the employees of subsidiary undertakings in the Group is treated as a capital contribution by the company to the subsidiaries. The fair value of employee services received, measured by reference to fair value of the shares on the grant date is recognised over the vesting period as an increase in investment in subsidiary undertakings, with a corresponding credit to equity in the Company’s account. In the accounts of the subsidiaries, such fair value is recognised as an expense in the income statement with corresponding credit to reserve.