Solutions for Sustainable Urbanisation - UNLEASH

 
Solutions for Sustainable Urbanisation - UNLEASH
Solutions for
Sustainable Urbanisation
       Report to Shareholders 2017
Solutions for Sustainable Urbanisation - UNLEASH
Vision                                  Mission                              Operating Principles

A global company at the forefront       Guided by our operating principles   1   Best value propositions
of our chosen industries, shaping       and core values, we will deliver         to customers.
the future for the benefit of all our   solutions for sustainable            2   Tapping and developing best
stakeholders – Sustaining Growth,       urbanisation profitably, safely
                                                                                 talents from our global workforce.
Empowering Lives and Nurturing          and responsibly.
Communities.                                                                 3   Cultivating a spirit of innovation
                                                                                 and enterprise.
                                                                             4   Executing our projects well.
                                                                             5   Being financially disciplined to
                                                                                 earn best risk-adjusted returns.
                                                                             6   Clarity of focus and operating
                                                                                 within our core competence.
                                                                             7   Being prepared for the future.

Keppel is a multi-business company committed
to providing robust solutions for sustainable
urbanisation. We are driving value creation
by enhancing collaboration and harnessing
synergies within the Group.

Focused on being at the forefront of our chosen
industries, we are sharpening our competitive
edge and developing new platforms for growth.
Solutions for Sustainable Urbanisation - UNLEASH
Governance & Sustainability

Sustainability Highlights

We place sustainability at the heart of our strategy,
delivering solutions for sustainable urbanisation
while creating enduring value for our stakeholders –
Sustaining Growth, Empowering Lives and
Nurturing Communities.

  Sustainability Framework

  Sustaining                          (PSRZHULQJ                       Nurturing
  *URZWK                              Lives                             &RPPXQLWLHV

  Our commitment to business          People are the cornerstone        As a global citizen, Keppel
  excellence is driven by our         of our businesses.                believes that as communities
  unwavering focus on strong                                            thrive, we thrive.
  corporate governance and            As an employer of choice,
  prudent risk management.            we are committed to grow          We engage and nurture
                                      and nurture our talent pool       communities wherever we are,
  Resource efficiency is our          through continuous training and   with the aim of achieving a
  responsibility and makes good       development to help our people    sustainable future together.
  business sense.                     reach their full potential.
                                                                        As leaders in our businesses,
  Innovation and delivering quality   We want to instil a culture of    we support industry initiatives
  products and services sharpen       safety so that everyone who       and encourage open dialogue
  our competitive edge.               comes to work goes home safe.     to promote growth.

      For more information,             For more information,             For more information,
      go to: pages 64-97                go to: pages 98-99                go to: page 100

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Solutions for Sustainable Urbanisation - UNLEASH
Keppel Corporation Limited | Report to Shareholders 2017

Managing Sustainability

We drive our businesses to deliver solutions for sustainable urbanisation
and create shared value for our stakeholders.

Our Sustainability Framework articulates            management and monitoring of the material          Stakeholder Engagement
our commitment to deliver value to all our          (QYLURQPHQWDO6RFLDODQG*RYHUQDQFH (6*         Collaboration with stakeholders supports
stakeholders through Sustaining Growth              factors of the Company, and take them into         us in addressing sustainability challenges.
in our businesses, Empowering Lives                 consideration in the determination of the          We promote ongoing communication and
of people and Nurturing Communities                 Company's strategic direction and policies.        active engagement with our stakeholders.
wherever we operate.
                                                    The Group Sustainability Steering                  Stakeholder relations, including
Our management systems, policies and                Committee, chaired by Keppel Corporation's         engagement with customers, employees,
guidelines, including our Employee Code of          CEO Loh Chin Hua and comprising senior             investors, media, government agencies
Conduct; Health, Safety and Environment             management from across the Group,                  and communities where we operate, are
Policy, and Supplier Code of Conduct, translate     provides guidance on the Group’s                   managed by departments at the corporate
our principles into practice by setting             sustainability strategy while the Working          level, as well as by functional divisions and
standards both for our Company and those            Committee, comprising discipline-specific          volunteer committees across our business
whom we work with.                                  working groups, executes and reports on            units worldwide.
                                                    the Group’s efforts.
We publish sustainability reports annually,                                                            We also engage with stakeholders on
and the next report will be published in            Material Issues                                    broader issues through our membership
May 2018. Our sustainability reports draw           A robust process was undertaken to identify        and support of multi-stakeholder initiatives.
on internationally-recognised standards of          and prioritise the Company’s material ESG          These include Global Compact Network
reporting, including the Global Reporting           issues. The assessments were based on the          Singapore to advance the United Nations
,QLWLDWLYH *5, DQGDUHH[WHUQDOO\DVVXUHG       foundational principles of inclusivity and         Global Compact initiative and its 10
in adherence to the AccountAbility AA1000           materiality outlined in the AccountAbility         principles, Singapore Institute of Directors
$VVXUDQFH6WDQGDUG  6LQFH             $$3ULQFLSOHV6WDQGDUG  DVZHOODV      to uphold high standards of corporate
our report has been brought in line with the        the GRI Principles for Defining Report Content     governance, as well as Workplace Safety and
new sustainability reporting requirements           – stakeholder inclusiveness, sustainability        Health Council to build industry capabilities
by the Singapore Exchange.                          context, materiality and completeness.             to better manage safety and health at work.

This section contains a summary of our              The process was supported by an independent        Best Practices
approach on sustainability issues that are most     consultant and involved stakeholder                Keppel Corporation has been part of the
material to our business and stakeholders.          consultations, workshops for senior                widely respected Dow Jones Sustainability
                                                    management, an assessment of long-term             Index for five consecutive years. We participate
Management Structure                                global trends and an internal review of our        in the CDP (formerly Carbon Disclosure
Sustainability issues are managed and               businesses. The key material ESG issues for        3URMHFW DQGDUHOLVWHGRQDQXPEHURI
communicated at all levels of the Group. The        Keppel Corporation were reviewed by the            other sustainability indices and rankings,
Keppel Corporation Board and management             Steering and Working Committees in 2017            including MSCI Global Sustainability Index,
regularly review as well as oversee the             and deemed to remain relevant.                     Euronext Vigeo Eiris Index – World 120 and
                                                                                                       all four sustainability indices launched by the
                                                                                                       Singapore Exchange in 2016.

                                                                                                       Keppel Corporation was conferred the Best
                                                                                                       Workforce award and received Special
Keppel Corporation Material Issues                                                                     Recognition for Strategy and Sustainability
                                                                                                       Management at the Sustainable Business
  Tier 1: Issues of Critical Importance                                                                Awards 2017. The Awards, organised by
                                                                                                       Global Initiatives in partnership with
                                                                                                       PwC Singapore, recognise businesses
                                                                                                       with sustainable business practices.

                                                                                                       Keppel Corporation was also awarded
                                                                                                       Winner of the inaugural Sustainability
      Corporate           (FRQRPLF           Safety &           Product         (QYLURQPHQWDO        Award at the Securities Investors Association
     Governance          Sustainability        Health           ([FHOOHQFH        3HUIRUPDQFH
                                                                                                        6LQJDSRUH WK,QYHVWRUV &KRLFH$ZDUGV
                                                                                                       The Award honours companies with a
                                                                                                       strong commitment towards corporate
  Tier 2: Issues of High Importance
                                                                                                       responsibility.

  Labour Practices &      &RPPXQLW\       Supply Chain &
    +XPDQ5LJKWV         'HYHORSPHQW        Responsible
                                            3URFXUHPHQW

                                                                                                                                                         63
Solutions for Sustainable Urbanisation - UNLEASH
Governance & Sustainability

Corporate Governance

The Board and management of Keppel                 *RYHUQDQFH)UDPHZRUN KCL’s governance        The Chairman takes a leading role in the
Corporation Limited (“KCL” or the                  structure is as follows:                      Company’s drive to achieve and maintain a
ŕ&RPSDQ\Ŗ ILUPO\EHOLHYHWKDWDJHQXLQH                                                        high standard of corporate governance with
commitment to good corporate governance            Dr Lee Boon Yang is the non-executive and     the full support of the directors, Company
is essential to the sustainability of the          independent Chairman of the Company.          Secretaries and management.
Company’s businesses and performance,              Mr Loh Chin Hua is the CEO of the Company.
and are pleased to confirm that the                                                              To assist the Board in the discharge of
Company has adhered to the principles              The Chairman, with the assistance of the      its oversight function, various board
and guidelines of the Code of Corporate            Company Secretaries, schedules meetings       committees, namely the Audit, Board Risk,
Governance 20121 WKHŕ&RGHŖ                 and prepares meeting agenda to enable         Nominating, Remuneration, and Board
                                                   the Board to perform its duties responsibly   Safety Committees, have been constituted
The following describes the Company’s              having regard to the flow of the Company’s    with clear written terms of reference. All the
corporate governance practices with specific       operations. He sets guidelines on and         board committees are actively engaged
reference to the 2012 Code.                        monitors the flow of information from         and play an important role in ensuring good
                                                   management to the Board to ensure that        corporate governance in the Company and
Board’s Conduct of Affairs                         all material information is provided in a     within the Group. The responsibilities and
Principle 1:                                       timely manner to the Board for the Board to   authority of the board committees are set
Effective board to lead and control                make good decisions. He also encourages       out in their respective terms of reference
the Company                                        constructive relations between the Board       VHH$SSHQGL[IRUGHWDLOV 
Principle 3:                                       and management, and between the
Chairman and Chief Executive Officer should        executive and non-executive directors.        The CEO, assisted by the management
in principle be separate persons to ensure         At annual general meetings and other          team, makes strategic proposals to the
appropriate balance of power, increased            shareholders’ meetings, the Chairman          Board and after robust and constructive
accountability and greater capacity of the board   ensures constructive dialogue between         board discussions, executes the agreed
for independent decision making                    shareholders, the Board and management.       strategy, manages and develops the
                                                                                                 Group’s businesses and implements the
                                                                                                 Board’s decisions. He is supported by
                                                                                                 management committees that direct and
                                                                                                 guide management on operational policies
                                                                                                 and activities, which includes:

                                                                                                   Investments & Major Projects Action
  Governance Framework 2017                                                                          Committee (IMPAC), which guides the
                                                                                                     Group to exercise the spirit of enterprise
                                                                                                     as well as prudence to earn optimal
                                                                                                     risk-adjusted returns on invested
                                  CHAIRMAN
                                                                                                     capital for our chosen lines of business,
                                                                                                     taking into consideration the risks, in a
                                                                                                     controlled manner;
       Nominating                                          Audit               Internal            Management Development Committee
       Committee                                         Committee              Audit
                                                                                                     (MDC), which nominates candidates
                                                                                                     as nominee directors to the boards of
                                                         Board Risk                                  each unlisted company or entity that
                                    BOARD
                                                         Committee
                                                                                                     the Company is invested in (“Investee
                                                                                                     &RPSDQ\Ŗ VRDVWRVDIHJXDUGWKH
      Remuneration                                      Board Safety                                 Company’s investment. In respect of
       Committee                                         Committee                                   ,QYHVWHH&RPSDQLHVWKDWDUH D OLVWHG
                                                                                                     RQDVWRFNH[FKDQJH E PDQDJHUV
                                                                                                     or trustee-managers of any collective
                               CHIEF EXECUTIVE                                                       investment schemes, business trusts
                                   OFFICER                                                           or any other trusts which are listed on a
                                                                                                     VWRFNH[FKDQJHRU F SDUHQWFRPSDQLHV
                                                                                                     of the Company’s core businesses,
                                                                                                     the Committee will recommend the
        Corporate                                                           Central Finance
                                    IMPAC                                                            candidates for the approval of the
        Functions                                                             Committee
                                                                                                     Nominating Committee. The MDC also
                                                                                                     provides inputs, guidance and direction
                                    Group                                     IT Steering
                                                                              Committee              on operational policies and human
                                 Sustainability
                                   Steering                                                          resources/organisational matters;
                                                        Management
                                  Committee
                                                        Committees
                                                                                                   Central Finance Committee, which
                                                                                                     reviews, guides and monitors financial
                                                                                                     policies and activities of Group
                               Group Regulatory                                Group                 companies;
                                  Compliance                                 Regulatory
                                 Management
                                                                                                   Enterprise Risk Management Committee,
                                                                             Compliance
                                  Committee2                                Working Team2            which drives and coordinates the
                                                                                                     Group’s risk management efforts,
                                                                                                     and implements the Enterprise Risk
                                                                                                     Management framework and processes;

64
Solutions for Sustainable Urbanisation - UNLEASH
Keppel Corporation Limited | Report to Shareholders 2017

  Group Regulatory Compliance                  5HYLHZ3URFHVV A process is in place                       of board and board committee meetings
    Management Committee (Group                  to support the Board in reviewing and                       held in FY 2017, as well as the attendance of
    RCMC), which articulates the                 monitoring the Group’s strategic plans,                     each Board member at these meetings, are
    Group’s commitment to regulatory             including providing directors with the                      disclosed in Table 1 on page 66 of this report.
    compliance, directs and supports             necessary context and opportunity to
    the development of over-arching              undertake effective and robust deliberation                 If a director were unable to attend a board
    compliance policies and guidelines,          and debate. In this regard, a two-day off-site              or board committee meeting, he/she would
    and facilitates the implementation           board strategy meeting is organised                         still receive all the papers and materials for
    and sharing of policies and procedures       annually for in-depth discussion on strategic               discussion at that meeting. He/she would
    across the Group2;                           issues and direction of the Group. This is                  review them and advise the Chairman
  Group Regulatory Compliance Working          followed by an update of each business                      or board committee chairman of his/her
    Team (Group RCWT), which supports            unit’s strategic plans for alignment with the               views and comments on the matters to be
    the Group RCMC and oversees the              Group’s strategy. To support the Board’s                    discussed, so that they may be conveyed to
    development and review of over-arching       oversight of the implementation of the                      other members at the meeting.
    compliance policies and guidelines           strategic plans, one business unit is invited
    for the Group, as well as reviewing          to each quarterly Board meeting to present                  ,QWHUQDO/LPLWVRI$XWKRULW\ The Company
    training and communication                   on its plans and current challenges, and to                 has adopted internal guidelines setting
    programmes2;                                 provide the Board an opportunity to perform                 forth matters that require board approval.
  Keppel IT Steering Committee, which          an in-depth review into each of the Group’s                 8QGHUWKHVHJXLGHOLQHV D QHZLQYHVWPHQWV
    provides strategic information               core businesses.                                            RULQFUHDVHLQLQYHVWPHQWV E DFTXLVLWLRQ
    WHFKQRORJ\ ,7 OHDGHUVKLSDQGHQVXUHV                                                                  DQGGLVSRVDORIDVVHWVDQG F FDSLWDO
    IT strategy alignment in achieving           ,QGHSHQGHQW-XGJPHQW All directors are                     equipment purchase and/or lease, exceeding
    business strategies; and                     expected to exercise independent judgment                   $30 million by any Group company (not
  Group Sustainability Steering Committee,     in the best interests of the Company. This is               VHSDUDWHO\OLVWHG DQGDOOFRPPLWPHQWVWR
    which sets the sustainability strategy and   one of the performance criteria for the peer                term loans and lines of credit from banks
    leads performance in key focus areas.        and self assessment on the effectiveness of                 and financial institutions by the Company,
                                                 the individual directors. Based on the results              require the approval of the Board. Each
Board Matters                                    of the peer and self assessment carried out                 Board member has equal responsibility
Role: The principal functions of the Board       by the directors for FY 2017, all directors have            to oversee the business and affairs of the
are to:                                          discharged this duty consistently well.                     Company. Management, on the other hand,
                                                                                                             is responsible for the day-to-day operation
•   decide on matters in relation to the         Conflicts of Interest: Every director is                    and administration of the Company in
    Group’s activities which are of a            required to declare any conflict of interest                accordance with the policies and strategy set
    significant nature, including decisions      in a transaction or proposed transaction                    by the Board.
    on strategic directions and guidelines       with the Company as soon as is practicable
    and the approval of periodic plans and       after the relevant facts have come to his/                  Director Orientation: A formal letter is sent
    major investments and divestments;           her knowledge. On an annual basis, each                     to newly-appointed directors upon their
•   oversee the business and affairs of the      director is also required to submit details                 appointment explaining their duties and
    Company, establish, with management,         of his/her associates for the purpose of                    obligations as a board director. All newly-
    the strategies and financial objectives      monitoring interested persons transactions.                 appointed directors receive a director tool-kit
    to be implemented by management,                                                                         and undergo a comprehensive orientation
    and monitor the performance of               Meetings: The Board meets six times                         programme which includes site visits and
    management;                                  a year and as warranted by particular                       management presentations on the Group’s
•   set the Company’s values and standards       circumstances. Board meetings are                           businesses, strategic plans and objectives.
     LQFOXGLQJHWKLFDOVWDQGDUGV                scheduled and circulated to the directors
•   oversee processes for evaluating the         prior to the start of the financial year to                 Training: The directors are provided
    adequacy of internal controls, risk          allow directors to plan ahead to attend such                with continuing education in areas such
    management, financial reporting and          meetings, so as to maximise participation.                  as directors’ duties and responsibilities,
    compliance, and satisfy itself as to the     Telephonic attendance and conference                        corporate governance, changes in
    adequacy of such processes;                  via audio-visual communication at board                     financial reporting standards, changes
•   assume responsibility for corporate          meetings are allowed under the Company’s                    in the Companies Act, continuing listing
    governance; and                              constitution. Further, the non-executive                    obligations and industry-related matters,
•   consider sustainability issues such          directors meet without the presence of                      so as to update and refresh them on
    as environmental and social factors          management after each board meeting as                      matters that may affect or enhance their
    as part of its strategic formulation.        well as on a need-be basis. The number                      performance as board or board committee

%RDUG6WUDWHJLF5HYLHZ The Board
periodically reviews and approves the
Group’s strategic plans. In FY 2014, the
                                                 1
Board approved the Group’s Vision 20203              The Code of Corporate Governance 2012 issued by the Monetary Authority of Singapore on 2 May 2012.
                                                 2
                                                     The Group RCMC and Group RCWT were set up in October 2015 and operationalised in 2016.
which sets out the vision, operating             3
                                                     With effect from FY 2014, and following a review and update in FY 2017, the vision of the Company is to be
principles and values of the Group, and the          a global company at the forefront of its chosen industries, shaping the future for the benefit of all its
roadmap4 to take the Group’s businesses              stakeholders – Sustaining Growth, Empowering Lives and Nurturing Communities. Guided by our operating
                                                     principles and core values, the Company’s mission is to deliver our solutions for sustainable urbanisation
into 2020 to achieve faster growth, build            profitably, safely and responsibly.
a stronger Keppel that fully captures the        4
                                                   7KLVURDGPDSLQFOXGHVIRXUEURDGDUHDVIRUVXVWDLQDEOHJURZWK  %XVLQHVV6HWWLQJWKHRYHUDUFKLQJVWUDWHJLHV
significant synergies within and among its           WDUJHWVDQGNH\DFWLRQVWREHXQGHUWDNHQE\WKHEXVLQHVVXQLWV  3HRSOH%XLOGLQJDUREXVWVXFFHVVLRQ
                                                     SLSHOLQHDQGFRQWLQXHGVWURQJHPSOR\HHVDWLVIDFWLRQ  3URFHVV3XUVXLQJH[FHOOHQFHLQVDIHW\SURGXFWLYLW\
Group companies, and fully develop the               DQGLQQRYDWLRQDQG  &RUSRUDWH&LWL]HQU\)RUPDOLVLQJDQGIXUWKHURUJDQLVLQJFRPPXQLW\RXWUHDFKHIIRUWVWR
potential of its people.                             positively impact communities in which the Group operates.

                                                                                                                                                                  65
Solutions for Sustainable Urbanisation - UNLEASH
Governance & Sustainability

Corporate Governance

Table 1

                                                                                            Board Committee Meetings
                                                      Board
                                                    Meetings            Audit      Nominating        Remuneration            Safety              Risk

Lee Boon Yang                                             ɴɶ                 -               ɷ                  ɺ                 ɷ                 -
Loh Chin Hua                                              ɴɶ                 -                   -               -                ɷ                 -
Tow Heng Tan                                              ɴɳ                 -               ɷ                  ɹ                 -                ɶ
Alvin Yeo Khirn Hai                                       ɴɵ                ɸ                ɶ                   -                -                 -
Tan Ek Kia                                                ɴɶ                ɸ                    -               -                ɷ                ɷ
Danny Teoh                                                ɴɶ                ɸ                    -              ɸ                 -                ɷ
Tan Puay Chiang                                           ɴɶ                 -               ɷ                   -                ɷ                ɷ
Till Vestring                                             ɴɶ                 -               ɷ                  ɺ                 -                 -
Veronica Eng                                              ɴɵ                ɷ                    -               -                -                ɶ
1RRI0HHWLQJV+HOG                                      ɴɶ                ɸ                ɷ                  ɺ                 ɷ                ɷ

members. A training programme is also           Directors’ Independence Checklist and                non-independent under the 2012 Code.
in place for directors in areas such as         their actual performance on the Board                Mr Tow Heng Tan was previously the Chief
accounting, finance, risk governance and        and board committees.                                Investment Officer of Temasek Holdings
management, the roles and responsibilities                                                            3ULYDWH /LPLWHG ŕ7HPDVHNŖ +HFHDVHGWR
of a director of a listed company and           In this connection, the Committee (save for          be employed by Temasek since 2012 and is
industry specific matters. In FY 2017,          Mr Alvin Yeo who abstained from deliberation         currently the Chief Executive Officer of Pavilion
some KCL directors attended talks on            LQWKLVPDWWHU QRWHGWKDW0U$OYLQ
Keppel Corporation Limited | Report to Shareholders 2017

%RDUG&RPSHWHQF\ The Nominating                for the non-executive directors to familiarise     E  ,QWKHOLJKWRIVXFKUHYLHZDQGLQ
Committee is satisfied that the Board and       themselves with the management team                    consultation with management, the
the board committees comprise directors         so as to facilitate the Board’s review of the          NC assesses if there is any inadequate
who, as a group, provide an appropriate         Group’s succession planning and leadership             representation in respect of any of those
balance and diversity of skills, experience,    development programme.                                 attributes and if so, determines the role
gender, knowledge of the Group, core                                                                   and the desirable competencies for a
competencies such as accounting or finance,     1RQH[HFXWLYH'LUHFWRUVŔ0HHWLQJV                     particular appointment.
business or management experience,              The non-executive directors set aside time         F  ([WHUQDOKHOS IRUH[DPSOHIURP
human resources, risk management,               at each scheduled quarterly meeting to                 the Singapore Institute of Directors,
technology, mergers and acquisitions,           meet without the presence of management                search consultants, or through open
legal, international perspective, industry      to discuss matters such as board processes,            DGYHUWLVHPHQW PD\EHXVHGWRVRXUFH
knowledge, strategic planning experience        corporate governance initiatives, matters              for potential candidates if need be.
and customer-based experience or                which they wish to discuss during the                  Directors and management may also
knowledge, required for the Board and the       board off-site strategy meeting, succession            make recommendations.
board committees to be effective.               planning and leadership development,               G  1&PHHWVZLWKWKHVKRUWOLVWHG
                                                and performance management and                         FDQGLGDWH V WRDVVHVVVXLWDELOLW\DQGWR
In this respect, the Nominating Committee       remuneration matters. Such meetings                    HQVXUHWKDWWKHFDQGLGDWH V LVDUHDZDUH
recognises the merits of gender diversity       may also be scheduled on a need-be basis.              of the expectations and the level of
in relation to the composition of the Board                                                            commitment required.
and, in identifying suitable candidates for     Board Membership                                   H  1&PDNHVUHFRPPHQGDWLRQVWRWKH
new appointment to the Board, would             Principle 4:                                           Board for approval.
ensure that female candidates are included      Formal and transparent process for the
for consideration. Having said that, gender     appointment and re-appointment of directors        The Board believes that orderly succession
is but one aspect of diversity and new          to the Board                                       and renewal is achieved as a result of
directors will continue to be selected based                                                       careful planning, where the appropriate
on objective criteria set as part of the        Nominating Committee                               composition of the Board is continually
process for appointment of new directors        The Company has established a                      under review.
and Board succession planning. In FY 2017,      1RPLQDWLQJ&RPPLWWHH 1& WRDPRQJ
there was one female director out of a total    other things, make recommendations                 Criteria for Appointment
of nine directors.                              to the Board on all board appointments             of New Directors
                                                and oversee the Board and senior                   All new appointments are subject to the
%RDUG,QIRUPDWLRQ The Board and                management’s succession and leadership             recommendation of the NC based on the
management fully appreciate that                development plans. The NC comprises                following objective criteria:
fundamental to good corporate governance        entirely of non-executive directors, four out
is an effective and robust Board whose          RIILYHRIZKRP LQFOXGLQJWKH&KDLUPDQ DUH        ,QWHJULW\
members engage in open and constructive         independent, namely:                                 ,QGHSHQGHQWPLQGHGQHVV
debate and challenge management on its                                                               'LYHUVLW\ŝ3RVVHVVFRUHFRPSHWHQFLHV
assumptions and proposals, and that for         •   Mr Tan Puay Chiang                                 that meet the needs of the Company
this to happen, the Board, in particular, the       Independent Chairman                               and complement the skills and
non-executive directors, must be kept           •   Dr Lee Boon Yang                                   competencies of the existing directors
well-informed of the Company’s business             Independent Member                                 on the Board
and affairs, and be knowledgeable about         •   Mr Tow Heng Tan                                  $EOHWRFRPPLWWLPHDQGHIIRUWWRFDUU\
the industry in which the businesses                Non-Executive and                                  out duties and responsibilities effectively
operate. The Company has therefore                  Non-Independent Member                           7UDFNUHFRUGRIPDNLQJJRRGGHFLVLRQV
adopted initiatives to put in place processes   •   Mr Alvin Yeo                                     ([SHULHQFHLQKLJKSHUIRUPLQJ
to ensure that the non-executive directors          Independent Member                                 companies
are well supported by accurate, complete        •   Mr Till Vestring                                 )LQDQFLDOO\OLWHUDWH
and timely information, have unrestricted           Independent Member
access to management, and have sufficient                                                          Re-nomination of Directors
time and resources to discharge their           The responsibilities of the NC are set out on      The NC is also charged with the responsibility
oversight function effectively.                 pages 79 and 80 herein.                            of re-nomination having regard to the
                                                                                                   director’s contribution and performance
These initiatives include regular informal      Process for appointment of new                     (such as attendance, preparedness,
meetings for management to brief the            directors and Board succession                     SDUWLFLSDWLRQDQGFDQGRXU ZLWKUHIHUHQFH
directors on prospective deals and potential    planning                                           to the results of the assessment of the
developments at an early stage before           The NC is responsible for reviewing the            performance of the individual director by
formal board approval is sought, and            succession plans for the Board. In this            his/her peers.
the circulation of relevant information on      regard, it has put in place a formal process
business initiatives, industry developments,    for the renewal of the Board and the               The directors submit themselves for
and analyst and press commentaries on           selection of new directors. The NC leads           re-nomination and re-election at regular
matters in relation to the Company or the       the process and makes recommendations              intervals of at least once every three years.
industries in which it operates. A two-         to the Board as follows:                           Pursuant to the Company’s constitution,
day off-site board strategy meeting is                                                             one-third of the directors retire from office
organised annually for in-depth discussion      D  1&UHYLHZVDQQXDOO\WKHEDODQFHDQG           at the Company’s annual general meeting,
on strategic issues and direction of the            diversity of skills, experience, gender        and a newly-appointed director must submit
Group, to give the non-executive directors          and knowledge required by the Board            himself/herself for re-election at the annual
a better understanding of the Group and its         and the size of the Board which would          general meeting immediately following his/
businesses, and to provide an opportunity           facilitate decision making.                    her appointment.

                                                                                                                                                     67
Governance & Sustainability

Corporate Governance

Annual Review of Board Committees                 Director” is a person who, at the request            )RUPDO3URFHVVDQG3HUIRUPDQFH&ULWHULD
Composition                                       of KCL, acts as director (whether executive          The evaluation processes and performance
The NC reviews the composition of the             RUQRQH[HFXWLYH RQWKHERDUGRIDQRWKHU           criteria are disclosed in the Appendix to
board committees on an annual basis to            FRPSDQ\RUHQWLW\ ŕ,QYHVWHH&RPSDQ\Ŗ               this report.
ensure that they comprise members with            to oversee and monitor the activities of
the necessary qualifications and skills to        the relevant Investee Company so as to               Objectives and Benefits: The board
discharge their responsibilities effectively.     safeguard KCL’s investment in the company.           assessment exercise provides an
                                                                                                       opportunity to obtain constructive feedback
Annual Review of Directors’                       The purpose of the policy is to highlight            from each director on whether the Board’s
Independence                                      certain obligations of a person while acting         procedures and processes allow him/
The NC is also charged with determining           in his/her capacity as a Nominee Director.           her to discharge his/her duties effectively
the “independence” status of the directors        The policy also sets out the internal process        and the changes which should be made
annually. Please refer to page 66 herein on       for the appointment and resignation of               to enhance the effectiveness of the Board
the basis of the NC’s determination as to         a Nominee Director. The policy would be              and/or board committees. The assessment
whether a director should or should not be        reviewed and amended as required to take             exercise also helps the directors to focus
deemed independent.                               into account current best practices and              on their key responsibilities. The individual
                                                  changes in the law and stock exchange                director assessment exercise allows for peer
Annual Review of Directors’                       requirements.                                        review, with a view to raising the quality
Time Commitments                                                                                       of board members. It also assists the NC
The NC has adopted internal guidelines            Key Information Regarding Directors                  in determining whether to re-nominate
addressing competing time commitments             The following key information regarding              directors who are due for retirement at
that are faced when directors serve on            directors is set out in the following pages          the next annual general meeting, and in
multiple boards and/or have other principal       of this Annual Report:                               determining whether directors with multiple
commitments.                                                                                           board representations are nevertheless able
                                                  Pages 20 to 23: Academic and professional            to and have adequately discharged their
The NC determines annually whether a              qualifications, board committees                     duties as directors of the Company.
director with other listed company board          VHUYHGRQ DVDPHPEHURU&KDLUPDQ 
representations and/or other principal            date of first appointment as director,               Access to Information
commitments is able to and has been               date of last re-election as director,                Principle 6:
adequately carrying out his/her duties as a       directorships or chairmanships both                  Board members to have complete, adequate
director of the Company. The NC takes into        present and past held over the preceding             and timely information
account the results of the assessment of          five years in other listed companies and
the effectiveness of the individual director,     other major appointments, whether                    As a general rule, board papers are
the level of commitment required of the           appointment is executive or non-executive,           required to be distributed to the directors at
director’s other principal commitments,           whether considered by the NC to be                   least seven days before the board meeting
and the respective directors’ actual conduct      independent; and                                     so that the members may better understand
and participation on the Board and board                                                               the matters prior to the board meeting and
committees, including availability and            Pages 103 to 104: Shareholding in the                discussion may be focused on questions
attendance at regular scheduled meetings          Company and its subsidiaries.                        that the directors may have. Directors are
and ad-hoc meetings, in making this                                                                    provided with tablet devices to enable
determination.                                    Board Performance                                    them to access and read the board papers.
                                                  Principle 5:                                         However, sensitive matters may be tabled
In respect of FY 2017, the NC was of the view     Formal assessment of the effectiveness of            at the meeting itself or discussed without
that each director has given sufficient time      the Board and Board Committees and the               any papers being distributed. Managers
and attention to the affairs of the Company       contribution by each director to the effectiveness   who can provide additional insights into the
and has been able to discharge his/her            of the Board                                         matters at hand would be present at the
duties as director effectively. The NC noted                                                           relevant time during the board meeting.
that based on the attendance of board and         The Board has implemented formal                     The directors are also provided with the
board committee meetings during the year,         processes for assessing the effectiveness            names and contact details of the Company’s
all the directors were able to participate        of the Board as a whole and its board                senior management and the Company
in at least a substantial number of such          committees, the contribution by each                 Secretaries to facilitate direct access to senior
meetings to carry out their duties. The NC        individual director to the effectiveness of          management and the Company Secretaries.
also noted that, based on the Independent         the Board, as well as the effectiveness of
Co-ordinator’s Report on individual director      the Chairman of the Board.                           The Company fully recognises that
assessment for FY 2017, all the directors                                                              the flow of relevant information on an
performed well. The NC was therefore              Independent Co-ordinator: To ensure                  accurate and timely basis is critical for
satisfied that in FY 2017, where a director had   that the assessments are done promptly               the Board to be effective in the discharge
other listed company board representations        and fairly, the Board has appointed an               of its duties. Management is therefore
and/or other principal commitments, the           independent third party (the “Independent            expected to provide the Board with accurate
director was able and had been adequately         &RRUGLQDWRUŖ WRDVVLVWLQFROODWLQJDQG           information in a timely manner concerning
carrying out his/her duties as a director         analysing the returns of the board members.          the Company’s progress or shortcomings
of the Company.                                   Mrs Fang Ai Lian, former Chairman, Ernst &           in meeting its strategic business objectives
                                                  Young and Great Eastern Holdings Ltd, and            or financial targets, and other information
Nominee Director Policy                           currently Advisor to Far East Organisation,          relevant to the strategic issues facing
At the recommendation of the NC, the              was appointed for this role. Mrs Fang Ai Lian        the Company.
Board approved the adoption of the KCL            does not have business relationships or any
Nominee Director Policy in January 2009.          other connections with the Company which             Management also provides the Board
For the purposes of the policy, a “Nominee        may affect her independent judgment.                 members with management accounts

68
Keppel Corporation Limited | Report to Shareholders 2017

on a monthly basis and as the Board may          Remuneration Committee                             fee for services performed on board
require from time to time. Such reports          7KH5HPXQHUDWLRQ&RPPLWWHH 5&                    committees. The Chairman of each
keep the Board informed, on a balanced           comprises entirely non-executive directors,        board committee is also paid a higher
and understandable basis, of the Group’s         three out of four of whom (including the           fee compared with the members of the
performance, financial position and              &KDLUPDQ DUHLQGHSHQGHQWQDPHO\                 respective committees in view of the greater
prospects.                                                                                          responsibility carried by that office. The
                                                 •   Mr Till Vestring                               non-executive directors participated
The Company Secretaries administer,                  Independent Chairman                           in additional ad-hoc meetings with
attend and prepare minutes of board              •   Dr Lee Boon Yang                               management during the year and are not
proceedings. They assist the Chairman                Independent Member                             paid for attending such meetings. Executive
to ensure that board procedures (including       •   Mr Danny Teoh                                  directors are not paid directors’ fees.
but not limited to assisting the Chairman            Independent Member
to ensure timely and good information flow       •   Mr Tow Heng Tan                                The RC, in consultation with Aon Hewitt,
to the Board and board committees,                   Non-Executive and                              conducted a review of the non-executive
and between senior management and                    Non-Independent Member                         directors’ fee structure in 2017. The review
the non-executive directors, and facilitating                                                       took into account a variety of factors,
orientation and assisting in the professional    The RC is responsible for ensuring a formal        including prevailing market practices and
GHYHORSPHQWRIWKHGLUHFWRUV DUHIROORZHG      and transparent procedure for developing           referencing directors’ fees against comparable
and regularly reviewed to ensure effective       policy on executive remuneration and for           EHQFKPDUNV ORFDOO\DQGLQWKHUHJLRQ DV
functioning of the Board, and that the           determining the remuneration packages of           well as the roles and responsibilities of the
Company’s constitution and relevant rules        individual directors and senior management.        Board and board committees. Recognising
and regulations, including requirements          The RC assists the Board to ensure that            that directors have ongoing oversight
of the Companies Act, Securities & Futures       remuneration policies and practices are            responsibilities towards the Company,
Act and Listing Manual of the Singapore          sound in that they are able to attract, retain     a revised directors’ fee structure was
([FKDQJH6HFXULWLHV7UDGLQJ/LPLWHG ŕ6*;Ŗ     and motivate without being excessive, and          developed, comprising only basic fees for
are complied with. They also assist the          thereby maximise shareholder value. The RC         the Board, as well as additional fees for
Chairman and the Board to implement              recommends to the Board for endorsement a          services performed on board committees.
and strengthen corporate governance              framework of remuneration (which covers all        Attendance fees were removed from the
practices and processes with a view to           aspects of remuneration including directors’       non-executive directors’ fee structure from
enhancing long-term shareholder value.           fees, salaries, allowances, bonuses, grant of      2017 onwards. The 2017 total fees for
They are also the primary channel of             VKDUHVDQGEHQHILWVLQNLQG DQGWKHVSHFLILF     non-executive directors are lower than
communication between the Company                remuneration packages for each director            2016’s total fees (before the 10% voluntary
and the SGX.                                     and the key management personnel. The              IHHUHGXFWLRQDJUHHGWRLQ 
                                                 RC also reviews the remuneration of senior
The appointment and removal of the               management and administers the KCL Share           The directors’ fee structure is set out in
Company Secretaries are subject to               Option Scheme in respect of the outstanding        Table 2 on page 70 of this report.
the approval of the Board.                       options granted prior to the termination of
                                                 the KCL Share Option Scheme in 2010, the           Each of the non-executive directors
Subject to the approval of the Chairman, the     .&/5HVWULFWHG6KDUH3ODQ WKHŕ.&/563Ŗ           LQFOXGLQJWKH&KDLUPDQ ZLOOUHFHLYH
directors, whether as a group or individually,   and the KCL Performance Share Plan                 of his/her total directors’ fees in cash
may seek and obtain independent                   WKHŕ.&/363Ŗ ,QDGGLWLRQWKH5&UHYLHZV       ŕ&DVK&RPSRQHQWŖ DQGLQWKHIRUP
professional advice to assist them in their      the Company’s obligations arising in the           RI.&/VKDUHV ŕ5HPXQHUDWLRQ6KDUHVŖ  ERWK
duties, at the expense of the Company.           event of termination of the executive              amounts subject to adjustment as described
                                                 directors’ and key management personnel’s          EHORZ 7KHDFWXDOQXPEHURI5HPXQHUDWLRQ
Remuneration Matters                             contract of service, to ensure that such           Shares, to be purchased from the market
Principle 7:                                     contracts of service contain fair and              on the first trading day immediately after
The procedure for developing policy on           reasonable termination clauses which are           the date of the Annual General Meeting
executive remuneration and for fixing            not overly generous.                                ŕ7UDGLQJ'D\Ŗ IRUGHOLYHU\WRWKHUHVSHFWLYH
remuneration packages of individual directors                                                       non-executive directors, will be based on
should be formal and transparent                 The RC has access to expert advice from            the market price of the Company’s shares
Principle 8:                                     external remuneration consultants where            on the SGX on the Trading Day. The actual
The level and structure of director fees are     required. In FY 2017, the RC sought views on       number of Remuneration Shares will be
aligned with the long-term interest of the       market practice and trends from external           rounded down to the nearest thousand
Company and appropriate to attract, retain       remuneration consultants, Aon Hewitt. The          and any residual balance will be paid in
and motivate directors to provide good           RC undertook a review of the independence          cash. Such incorporation of an equity
stewardship of the Company                       and objectivity of the external remuneration       component in the total remuneration of
                                                 consultants through discussions with the           the non-executive directors is intended
The level and structure of key management        external remuneration consultants, and has         to achieve the objective of aligning the
remuneration are aligned with the long-term      confirmed that the external remuneration           interests of the non-executive directors with
interest and risk policies of the Company and    consultants had no relationships with              those of the shareholders’ and the long-term
appropriate to attract, retain and motivate      the Company which would affect their               interests of the Company. The aggregate
key management to successfully manage            independence and objectivity.                      directors’ fees for non-executive directors
the Company                                                                                         is subject to shareholders’approval at the
Principle 9:                                     Annual Remuneration Report                         Annual General Meeting. The Chairman
There should be clear disclosure of              Policy in respect of Non-Executive                 and the non-executive directors will abstain
remuneration policy, level and mix of            Directors’ Remuneration                            from voting, and will procure their respective
remuneration, and procedure for setting          Each non-executive director’s remuneration         associates to abstain from voting in respect
remuneration                                     comprises a basic fee and an additional            of this resolution.

                                                                                                                                                      69
Governance & Sustainability

Corporate Governance

Table 2

                                                                                                                             Basic Fee (per annum)
Board Chairman                                                                                                                    ɽɺɸɳɳɳɳ DOOLQ
Board Member                                                                                                                             ɽɴɳɻɳɳɳ

                                                                                  Additional Fees for Membership in Board Committees (per annum)
                                                                                    Chairman                                              Member
Audit Committee                                                                      ɽɹɺɳɳɳ                                             ɽɶɹɳɳɳ
Board Risk Committee                                                                 ɽɹɺɳɳɳ                                             ɽɶɹɳɳɳ
Remuneration Committee                                                               ɽɷɺɳɳɳ                                             ɽɶɴɳɳɳ
Board Safety Committee                                                               ɽɷɺɳɳɳ                                             ɽɶɴɳɳɳ
Nominating Committee                                                                 ɽɷɳɳɳɳ                                             ɽɵɷɳɳɳ

Remuneration policy in respect of               relevant industry market median. The size of                 LLL 6WDNHKROGHUVDQG LY 3HRSOH
Executive Directors and other Key               the Company's annual performance bonus                      Some of the key sub-targets within
Management Personnel                            pot is determined by the Group’s financial                  each of the scorecard areas include
The Company advocates a performance-            and non-financial performance, and is                       key financial indicators, safety goals,
based remuneration system that is highly        distributed to employees based on their                     risk management, compliance and
flexible and responsive to the market,          individual performance. The KCL Share Plans                 controls measures, corporate social
Company’s, business unit’s and individual       are in the form of two share plans approved                 responsibilities activities, employee
employee’s performance, and is aligned          by shareholders, the KCL RSP and the KCL PSP.               engagement, talent development
with shareholders’ interests.                   A portion of the annual performance bonus                   and succession planning;
                                                is granted in the form of deferred shares that         LL  7KHIRXUVFRUHFDUGDUHDVKDYHEHHQ
In designing the remuneration structure, the    are awarded under the KCL RSP. The KCL PSP                  chosen because they support how
RC seeks to ensure that the level and mix of    comprises performance targets determined                    the Group achieves its strategic
remuneration is competitive, relevant and       on an annual basis. The KCL RSP and KCL                     objectives. The framework provides
appropriate in finding a balance between        PSP are long-term incentive plans which                     a link for staff to understand how
current versus long-term remuneration,          vest over a longer term horizon. Executives                 they contribute to each area of the
and between cash versus equity incentive        who have a greater ability to influence Group               scorecard, and therefore to the
remuneration.                                   outcomes have a greater proportion of their                 Company’s overall strategic
                                                overall remuneration at risk.                               goals. This is designed to achieve
In 2016/2017, the RC undertook a                                                                            a consistent approach and
comprehensive review of the total               The RC exercises broad discretion and                       understanding across the Group.
remuneration structure. With the assistance     independent judgement in ensuring that                      The RC reviews and approves the
of Aon Hewitt, the RC revised the total         the amount and mix of remuneration is                       scorecard annually;
remuneration structure to reflect the           aligned with the interests of shareholders        F  E\VHOHFWLQJSHUIRUPDQFHFRQGLWLRQV
following four key objectives:                  and promotes the long-term success of the             for the KCL PSP awards, such as Total
                                                Company. The mix of fixed and variable                Shareholder Return, Return on Capital
D  6KDUHKROGHU$OLJQPHQW7RLQFRUSRUDWH     reward is considered appropriate for the              Employed and Net Profit that are
     performance measures that are aligned      Group and for each individual role.                   aligned with shareholder interests;
     to shareholders’ interests                                                                   G  E\UHTXLULQJWKRVH.3,VRUFRQGLWLRQV
E  /RQJWHUP2ULHQWDWLRQ7RPRWLYDWH        The remuneration structure is directly linked         to be met in order for the At Risk
     employees to drive sustainable             to corporate and individual performance,              components of remuneration to be
     long-term growth                           both in terms of financial and non-financial          awarded or to vest; and
F  6LPSOLFLW\7RHQVXUHWKDWWKH            performance. This link is achieved in the         H  E\IRUIHLWLQJWKH$W5LVNFRPSRQHQWV
     remuneration structure is easy to          following ways:                                       of remuneration when those KPIs
     understand and communicate to                                                                    or conditions are not met at a
     stakeholders                               D  E\SODFLQJDVLJQLILFDQWSRUWLRQRI              satisfactory level.
G  6\QHUJ\7RIDFLOLWDWHWDOHQWPRELOLW\        executives’ remuneration at risk
     and enhance collaboration across               ŕ$W5LVNFRPSRQHQWŖ DQGVXEMHFWWR         The RC also recognises the need for a
     businesses                                     a vesting schedule;                          reasonable alignment between risk and
                                                E  E\LQFRUSRUDWLQJDSSURSULDWHNH\            remuneration to discourage excessive
The revised total remuneration structure            SHUIRUPDQFHLQGLFDWRUV ŕ.3,VŖ IRU         risk taking. Therefore, in determining the
comprises three components; that is, annual         awarding of annual performance bonus:        remuneration structure, the RC had taken into
fixed cash, annual performance bonus,                L  7KHUHDUHIRXUVFRUHFDUGDUHDV         account the risk policies and risk tolerance
and the KCL Share Plans. The annual fixed                that the Company has identified as      of the Group as well as the time horizon of
cash component comprises the annual                      key to measuring the performance        risks, and incorporated risk-adjustments into
basic salary plus any other fixed allowances,            RIWKH*URXSŝ L )LQDQFLDODQG       the remuneration structure through several
which the Company benchmarks with the                    %XVLQHVV'ULYHUV LL 3URFHVV        initiatives, including but not limited to:

70
Keppel Corporation Limited | Report to Shareholders 2017

D  SUXGHQWIXQGLQJRIDQQXDOSHUIRUPDQFH                   personnel are remunerated partially in the                    management and employees. The KCL RSP
    bonus;                                                   form of shares in the Company and are                         applies to a broader base of employees
E  JUDQWLQJDSRUWLRQRIWKHDQQXDO                        encouraged to hold such shares while they                     while the KCL PSP applies to a selected
    performance bonus in the form of                         remain in the employment of the Company.                      group of key management personnel.
    deferred shares, to be awarded under                     They are also required to hold a minimum                      The range of performance targets to be set
    the KCL RSP;                                             number of shares under the share ownership                    under the KCL PSP emphasise stretched
F  YHVWLQJRIFRQWLQJHQWVKDUHDZDUGV                      guideline which requires them to maintain a                   or strategic targets aimed at sustaining
    under the KCL PSP being subject to KPIs                  beneficial ownership stake in the Company,                    longer-term growth.
    and/or performance conditions being                      thus further aligning their interests with
    met; and                                                 shareholders.                                                 The RC has the discretion not to award
G  SRWHQWLDOIRUIHLWXUHRIYDULDEOHLQFHQWLYHV                                                                           variable incentives in any year if an executive
    in any year due to misconduct.                           The directors, the CEO and the key                            is directly involved in a material restatement
                                                             management personnel (who are not                             of financial statements, in misconduct
The RC is of the view that the overall level of              GLUHFWRUVRUWKH&(2 DUHUHPXQHUDWHGRQDQ                  resulting in restatement of financial
remuneration is not considered to be at a                    earned basis and there are no termination,                    statements, or in misconduct resulting in
level which is likely to promote behaviours                  retirement and post-employment benefits                       financial loss to the Company. Outstanding
contrary to the Group’s risk profile.                        that are granted over and above what has                      performance bonuses, KCL RSP and KCL PSP
                                                             been disclosed.                                               are also subject to RC’s discretion before
In determining the actual quantum of                                                                                       further payment or vesting can occur.
variable component of remuneration, the                      Long-term Incentive Plans
RC had taken into account the extent to                      KCL Share Plans                                               Details of the KCL Share Plans are set out on
which the performance conditions, set forth                  The KCL Share Plans are put in place to                       pages 104 to 106 and 134 to 136.
above, have been met. The RC is therefore                    increase the Group’s effectiveness in its
of the view that remuneration is aligned to                  continuing efforts to reward, retain and                      Level and mix of remuneration of
performance during FY 2017.                                  motivate employees to achieve superior                        Directors and Key Management
                                                             performance and to motivate them to                           Personnel (who are not also Directors
In order to align the interests of the                       continue to strive for long-term shareholder                  or the CEO) for the year ended
executive director and key management                        value. The KCL Share Plans also aim to                        31 December 2017
personnel with that of shareholders, the                     strengthen the Group’s competitiveness in                     The level and mix of each of the directors’
executive director and key management                        attracting and retaining talented key senior                  remuneration are set out below:

                            Base/Fixed            Performance-Related                                              Benefits-                      Contingent              Total
                                Salary            Cash Bonuses Earnedɴ                Directors’ Total Feesɵ        in-Kind                  awards of sharesɶ     Remuneration
                                     ɽ                              ɽ                                     ɽ               ɽ                                 ɽ                 ɽ
                                                                                    Cash            Shares
                                                                               componentɷ       componentɷ                                PSP               RSP
5HPXQHUDWLRQ 
1DPHRI'LUHFWRU
Loh Chin Huaɸ               ɴɳɻɵɷɹɳ                          ɴɺɸɹɸɹɺ                   –                 –         n.m.ɹ       ɴɺɵɵɹɳɳ        ɵɴɴɶɷɸɵ         ɹɹɺɸɳɺɼɺ
Lee Boon Yang                          –                                  –        ɸɵɸɳɳɳ          ɵɵɸɳɳɳ                 –                –                 –         ɺɸɳɳɳɳ
Tow Heng Tan                           –                                  –        ɴɶɼɶɳɳ            ɸɼɺɳɳ                –                –                 –         ɴɼɼɳɳɳ
Alvin Yeo Khirn Hai                    –                                  –        ɴɴɺɹɳɳ            ɸɳɷɳɳ                –                –                 –         ɴɹɻɳɳɳ
Tan Ek Kia                             –                                  –        ɴɸɻɼɳɳ            ɹɻɴɳɳ                –                –                 –         ɵɵɺɳɳɳ
Danny Teoh                             –                                  –        ɴɹɼɷɳɳ            ɺɵɹɳɳ                –                –                 –         ɵɷɵɳɳɳ
Tan Puay Chiang                        –                                  –        ɴɸɳɸɳɳ            ɹɷɸɳɳ                –                –                 –         ɵɴɸɳɳɳ
Till Vestring                          –                                  –        ɴɵɸɶɳɳ            ɸɶɺɳɳ                –                –                 –         ɴɺɼɳɳɳ
Veronica Eng                           –                                  –        ɴɷɺɺɳɳ            ɹɶɶɳɳ                –                –                 –         ɵɴɴɳɳɳ
Notes:
1.
     The RC is satisfied that the quantum of performance-related cash bonuses earned by the executive director was fair and appropriate taking into account the extent to
     which his KPIs for FY 2017 were met.
2.
    7KHGLUHFWRUVŔWRWDOIHHVDPRXQWWRZKLFKLVORZHUWKDQŔVWRWDOIHHV EHIRUHWKHYROXQWDU\IHHUHGXFWLRQ 7KHGLUHFWRUVŔWRWDOIHHVDUH
     subject to shareholders’ approval at the Company’s Annual General Meeting.
3.
     Shares awarded under the KCL PSP are subject to pre-determined performance targets over a three-year performance period. As at 28 April 2017, being the grant date for
     the contingent awards under the KCL PSP, the estimated value of each share was $5.22. As at 23 February 2018, being the grant date for the contingent deferred shares
     award under the KCL RSP, the estimated value of each share was $7.76. For the KCL PSP, the figures are based on the value of the PSP shares at 100% of the award and the
     figures may not be indicative of the actual value at vesting which can range from 0% to 150% of the award.
4.
     The amounts stated may be adjusted as indicated on pages 69 to 70 of this report.
5.
     Mr Loh Chin Hua’s monthly base salary had been reduced by 10% with effect from 1 October 2016.
6.
     n.m. – not material
7.
     Total remuneration shown above for Mr Loh Chin Hua does not include vested share of carried interests for funds created during the time he was Managing Director at
     Alpha Investment Partners. These carried interests are only earned at the end of the fund life and depends entirely on the actual performance of the funds after they have
     been liquidated.

                                                                                                                                                                                 71
Governance & Sustainability

Corporate Governance

PSP and RSP Shares granted and vested for the Executive Director are shown below:
                                                     Contingent                        Value of                                     Contingent                         Value of
                                                        Awards       Number of       PSP Shares                                        Awards       Number of        RSP Shares
                             PSP        Vesting          of PSP      PSP Shares          Vested         RSP             Vesting         of RSP      RSP Shares           Vested
                           Awards         Date           Shares          Vested              ɽɻ       Awards              Date          Shares          Vested               ɽɻ
1DPHRI([HFXWLYH
Director
Loh Chin Hua                ɵɳɴɷ        ɵɻ)HE            ɳWR              ɳ               ɳ      ɵɳɴɷ       ɵɺ)HEɵɳɴɸ         ɴɸɳɳɳɳ         ɸɳɳɳɳ         ɷɶɻɳɳɳ
                           Awards         ɵɳɴɺ          ɵɺɳɳɳɳ                                      Awards       ɵɹ)HEɵɳɴɹ                          ɸɳɳɳɳ         ɵɹɸɸɳɳ
                                                                                                                   ɼ0DUɵɳɴɺ                           ɸɳɳɳɳ         ɶɶɺɸɳɳ
                            ɵɳɴɸ        ɵɻ)HE            ɳWR               –               –     ɵɳɴɸ       ɵɹ)HEɵɳɴɹ        ɴɸɳɳɳɳ          ɸɳɳɳɳ         ɵɹɸɸɳɳ
                           Awards         ɵɳɴɻ          ɶɶɳɳɳɳ                                      Awards        ɼ0DUɵɳɴɺ                          ɸɳɳɳɳ         ɶɶɺɸɳɳ
                                                                                                                  ɵɻ)HEɵɳɴɻ                                –               –
                            ɵɳɴɹ        ɵɻ)HE            ɳWRɼ              –               –     ɵɳɴɹ        ɼ0DUɵɳɴɺ         ɴɻɳɳɳɳ          ɹɳɳɳɳ         ɷɳɸɳɳɳ
                           Awards         ɵɳɴɼ          ɷɸɳɳɳɳ                                      Awards       ɵɻ)HEɵɳɴɻ                               –               –
                                                                                                                  ɵɻ)HEɵɳɴɼ                                –               –
                                         ɵɻ)HE            ɳWRɴɳ
                                          ɵɳɵɵ        ɴɴɵɸɳɳɳ
                            ɵɳɴɺ        ɵɻ)HE            ɳWR               –               –     ɵɳɴɻ      ɵɻ)HEɵɳɴɻ          ɵɺɵɶɸɵ                  –             –
                           Awards         ɵɳɵɳ          ɷɼɸɳɳɳ                                     Awards       ɵɻ)HEɵɳɴɼ                                    –             –
                                                                                                                  ɵɻ)HEɵɳɵɳ                                   –             –
Notes:
8.
    The value of the shares vested under KCL PSP and RSP is computed based on the market price of the shares when the shares are credited to the employee’s CDP account.
    The RC is satisfied that the value of the shares vested under the KCL PSP and RSP to the executive director was fair and appropriate taking into account the extent to which
    his KPIs and performance conditions for FY 2017 were met.
9.
    Refers to contingent shares awarded under the KCL PSP.
10.
    Refers to one-time contingent shares awarded under the KCL PSP – TIP.

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Keppel Corporation Limited | Report to Shareholders 2017

Remuneration of employees who                    The Board, supported by the Audit                    The AC met with the external auditors five
are immediate family members of a                &RPPLWWHH $& DQG%RDUG5LVN&RPPLWWHH             times, and with the internal auditors five
Director or the Chief Executive Officer           %5& RYHUVHHVWKH&RPSDQ\ŔV.HSSHOŔV              times during the year, and at least one of
No employee of the Company and its               System of Management Controls Framework              these meetings was conducted without the
subsidiaries was an immediate family              WKHŕ)UDPHZRUNŖ ZKLFKRXWOLQHVWKH               presence of management.
member of a director or the CEO and whose        Company’s internal control and risk
remuneration exceeded $50,000 during             management processes and procedures                  The AC reviewed and approved the Group
the financial year ended 31 December 2017.       to, among others, ensure compliance with             internal auditor’s plan to ensure that
“Immediate family member” means the              legislative and regulatory requirements.             the risk-based plan sufficiently covered
spouse, child, adopted child, step-child,        Details of the Framework are set out on              the effectiveness of controls to mitigate
brother, sister and parent.                      pages 74 and 75 of this Annual Report.               the significant risks of the Company.
                                                                                                      Such significant controls comprise
Details of the KCL Share Plans                   Audit Committee                                      financial, operational, compliance and IT
The KCL Share Plans, which have been             The AC comprises the following non-executive         controls. All significant audit findings and
approved by shareholders of the Company,         directors, all of whom are independent:              recommendations put up by the internal
are administered by the RC. Please refer to                                                           and the external auditors were forwarded
pages 104 to 106 and 134 to 136 of this Annual   •   Mr Danny Teoh                                    to the AC, and discussed at AC meetings.
Report for details on the KCL Share Plans.           Independent Chairman
                                                 •   Mr Alvin Yeo                                     The AC also reviewed and approved the
Accountability and Audit                             Independent Member                               Group external auditor’s audit plan for the
Principle 10:                                    •   Ms Veronica Eng                                  year. The AC also undertook a review of
The Board should present a balanced and              Independent Member                               the independence and objectivity of the
understandable assessment of the Company’s       •   Mr Tan Ek Kia                                    external auditors through discussions with
performance, position and prospects                  Independent Member                               the external auditors, as well as reviewing
Principle 12:                                                                                         the non-audit fees awarded to them, and
Establishment of Audit Committee with            Mr Danny Teoh and Ms Veronica Eng have               has confirmed that the non-audit services
written terms of reference                       recent and relevant accounting and related           performed by the external auditors would
                                                 financial management expertise and in-               not affect their independence. For details
The Board is responsible for providing a         depth experience. Mr Alvin Yeo has in-depth          of fees payable to the auditors in respect of
balanced and understandable assessment           knowledge of the responsibilities of the AC,         audit and non-audit services, please refer
of the Company’s and Group’s performance,        and practical experience and knowledge               to Note 24 of the Notes to the Financial
position and prospects, including interim        of the issues and considerations affecting           Statements on page 155.
and other price sensitive public reports, and    the Committee from serving on the audit
UHSRUWVWRUHJXODWRUV LIUHTXLUHG             committee of other listed companies. Mr              The Company has complied with Rules 712,
                                                 Tan Ek Kia, who is a seasoned executive              and Rule 715 read with 716 of the SGX Listing
The Board has embraced openness                  in the oil and gas and petrochemicals                Manual in relation to its auditing firms.
and transparency in the conduct of the           businesses and had held senior positions in
Company’s affairs, whilst preserving the         Shell, has sufficient financial management           The AC also reviewed the adequacy of
commercial interests of the Company.             knowledge and experience to discharge                the internal audit function and is satisfied
Financial reports and other price                his responsibilities as a member of the              that the team is adequately resourced
sensitive information are disseminated to        Committee. Mr Danny Teoh, Mr Tan Ek Kia              and has appropriate standing within the
shareholders through announcements via           and Ms Veronica Eng are also members                 Company. The internal audit team attends
SGXNET, press releases, the Company’s            of BRC, with Ms Veronica Eng being the               the Company’s and the Group’s key strategy
website, public webcast and media and            Chairman of the BRC.                                 sessions and executive meetings, and is
analyst briefings.                                                                                    staffed with professionals with sufficient
                                                 None of the members of the AC were partners          expertise in corporate governance, risk
The Company’s Annual Report is accessible        or directors of the Company’s existing               management, internal controls, and other
on the Company’s website, and can be             external auditors within the last 12 months          relevant disciplines. The AC also reviewed
viewed or downloaded from the Annual             and none of the members of the AC hold               the training costs and programs attended by
Report microsite at www.kepcorp.                 any financial interest in the auditing firm.         the internal audit team to ensure that their
com/annualreport2017/. In line with the                                                               technical knowledge and skill sets remain
Company’s drive towards sustainable              The AC’s primary role is to assist the Board         current and relevant.
development, the Company encourages              to ensure integrity of financial reporting and
shareholders to read the Annual Report           that there is in place sound internal control        The AC has reviewed the “Keppel Whistle-
on the Company’s website. Shareholders           systems. The Committee’s responsibilities            %ORZHU3ROLF\Ŗ WKHŕ3ROLF\Ŗ ZKLFKSURYLGHV
may, however, request for a physical copy        are set out on page 79 herein.                       for the mechanisms by which employees
at no cost.                                                                                           and other persons may, in confidence, raise
                                                 The AC has explicit authority to investigate         concerns about possible improprieties
Management provides all members of the           any matter within its responsibilities, full         in business conduct, and was satisfied
Board with management accounts which             access to and co-operation by management             that arrangements are in place for the
present a balanced and understandable            and full discretion to invite any director or        independent investigation of such matters
assessment of the Company’s and Group’s          executive officer to attend its meetings, and        and for appropriate follow-up action. To
performance, position and prospects on           reasonable resources (including access to            facilitate the management of incidences
a monthly basis and as the Board may             H[WHUQDOFRQVXOWDQWV WRHQDEOHLWWRGLVFKDUJH     of alleged fraud or other misconduct,
require from time to time. Such reports          its functions properly. The Company has an           the AC is guided by a set of guidelines to
keep the board members informed of the           internal audit team, which together with the         ensure proper conduct of investigations
Company’s and Group’s performance,               external auditors, report their findings and         and appropriate closure actions following
position and prospects.                          recommendations to the AC independently.             completion of the investigations, including

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