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Our Board of Directors and Management are committed to maintaining high standards of corporate governance, to protect the interests of our shareholders and other stakeholders.Our Board of Directors and Management are committed to maintaining high standards of corporate governance, to protect the interests of our shareholders and other stakeholders.

This Report describes our corporate governance practices, with reference to the principles set out in the revised Code of Corporate Governance issued by the Monetary Authority of Singapore (“MAS”) on 6 August 2018 (“Code 2018”), for the financial year ended 31 December 2020.

(A) Board Matters

Principle 1 : Board's Conduct of its Affairs

Our Board is responsible for guiding our overall strategic direction, corporate governance, setting organisation culture and providing oversight in the proper conduct of our businesses. The Board supervises the achievements of Management’s performance targets which align the interests of the Board and Management with that of the shareholders, whilst balancing the interests of all shareholders.

The Board meets regularly to review our key activities and business strategies. Regular Board Meetings are held quarterly to deliberate on strategic matters and policies including significant acquisitions and disposals, the annual budget, review the performance of the business and approve the release of the first quarter and third quarter business updates and half-year and full-year financial results. Where necessary, we convene additional Board sessions to address significant transactions or developments. Where a physical Board meeting is not possible, timely communication with members of our Board is effected through electronic means, which include electronic mail, teleconference and/or videoconference. Our Constitution provides for Directors to participate in meetings by teleconference or videoconference. Where necessary, Management will arrange to brief each Director, before seeking our Board’s approval.

Unless delegated, all transactions of the Company are approved by the Board. Any Director who has an interest or relationship that is likely to interfere or impact on his/her independence or conflict with a subject under discussion or consideration by the Board is required to immediately declare his/her interest or relationship or conflict and, if required by the Board, abstain from further discussion and/or voting on the matter.

Management provides complete, adequate and timely information to our Board, on our affairs and issues requiring our Board’s attention, as well as monthly reports providing updates on our key operational activities and financial performance. The monthly flow of information and reports allows our Directors to make informed decisions and also to keep abreast of key challenges and opportunities between our Board meetings.

Frequent dialogue takes place between Management and members of our Board, and our President & Chief Executive Officer (“President & CEO”) encourages all Directors to interact directly with all members of our Management team.

Our Board has separate and independent access to our senior Management and the Company Secretary at all times and are free to conduct independent or collective discussions with Management, the Company Secretary and independent professional advice, if necessary, on any area of interest or concern.

We have always believed that we should conduct ourselves in ways that deliver maximum sustainable value to our shareholders. We promote best practices as a means to build an excellent business for our shareholders. Our Board has overall accountability to our shareholders for our performance and in ensuring that we are well managed. Management provides our Board members with monthly business and financial reports, comparing actual performance with budget and highlighting key business indicators and major issues that are relevant to our performance, position and prospects.

The Board has also established an Executive Committee (“EC”) to oversee major business and operational matters. The EC comprises Ronald Seah Lim Siang, Stephen Geoffrey Miller, Ho Koon Lian Irene and Lim Chai Hock Clive.

Management regularly consults and updates the EC on all major business and operational issues. The Board is also supported by other Board committees which are delegated with specific responsibilities, as described under “Principle 4: Board Membership” of this Report.

The Board, upon the recommendation of the Audit Committee (“AC”), has adopted a comprehensive set of internal controls, which sets out the authority and approval limits for capital and operating expenditure, investments and divestments, bank borrowings and cheque signatories arrangements at Board level. Authority and approval sub-limits are also provided at Management levels to facilitate operational efficiency.

Management monitors changes to regulations and accounting standards closely. Updates and briefings on regulatory requirements are conducted either during Board sessions or by circulation of papers. Directors are also encouraged to attend seminars and training (including those conducted by Singapore Institute of Directors (“SID”) in conjunction with SGX-ST) that may be relevant to their responsibilities and duties as directors, at the Company’s cost, to continually develop and refresh their professional knowledge and skills and to keep themselves abreast of relevant developments in the Group’s business and the regulatory and industry-specific environments in which the Group operates. This enables the Directors to serve effectively and contribute to the Board. The Directors are regularly provided with a list of upcoming seminars and trainings conducted by the SID and/or SGX-ST.

The Company’s practice is to issue a letter of appointment setting out the duties and obligations of new Directors upon their appointment. New Directors are given briefings by Management on the business activities of the Group and its strategic directions. New Directors are also given manuals containing, among others, relevant information on the Group and information about their statutory and other responsibilities as Directors. New Directors who have no prior experience as directors of a listed company will also be required to attend relevant training by accredited trainers.

To help ensure compliance with the applicable securities and insider trading laws, including the best practices set out in the SGX-ST Listing Manual (the “Listing Manual”), we have adopted and implemented our Guidelines on Dealing in Securities of TeleChoice (the “Guidelines”). We send regular compliance notices to all Directors and employees. In accordance with Rule 1207(19) of the Listing Manual, all our Directors and employees are prohibited from dealing in our securities during the period of, two weeks before the respective announcement of our first quarter and third quarter business updates, and one month before the announcement of our half-year and full-year financial results. Restrictions are lifted from the date of the announcement of the respective results. Similar dealing restrictions also apply in the Company’s acquisition of its securities pursuant to its share purchase mandate. All our Directors and employees, and those of our subsidiaries and associates, are advised not to deal in our securities on short term considerations and are also advised to comply with the Guidelines and observe applicable insider trading laws at all times.

Principle 2: Board Composition and Guidance

To be effective, we believe our Board should comprise a majority of Non-Executive Directors independent of Management, with the right core competencies and appropriate balance and diversity of skills, knowledge and experience and other aspects of diversity, such as gender and age, from time to time determined by the Board to enable them to contribute effectively.

Our Board currently comprises seven (7) Directors, all of whom are Non-Executive Directors and independent of Management. Our Board comprises a majority of Independent Directors, namely Ronald Seah Lim Siang, Tang Yew Kay Jackson, Cheah Sui Ling and Yeo Siew Chye Stephen, which helps ensure a strong element of independence in all our Board’s deliberations.

Our Board consists of Directors who are business leaders and professionals of high calibre and integrity, collectively with a broad range of core competencies and experience in enterprise and banking, accounting and finance, investment, risk management, regulatory, technology, business and industry knowledge, management and strategic planning experience.

The composition of our Board enables Management to benefit from an outside diverse and objective perspective of issues that are brought before our Board. It also enables our Board to interact and work with Management through a robust exchange of ideas and views to help shape strategic directions. This, coupled with a clear separation of the role of our Chairman and our President & CEO, provides a healthy professional relationship between our Board and Management, with clarity of roles and robust oversight.

Profiles of each Director are found on pages 08 to 11 of this Annual Report.

Principle 3: Chairman and President & Chief Executive Officer

We believe there should be a clear separation of the roles and responsibilities between our Chairman and the President & CEO. Our Chairman and the President & CEO are separate persons and are not related to each other in order to maintain an effective balance of power, increased accountability and greater capacity of the Board for independent decision making.

Our Chairman is Ronald Seah Lim Siang, an Independent Non-Executive Director. Our Chairman leads the Board and ensures that our Board members work together with Management, with the capability and moral authority to engage and contribute effectively and constructively on various matters, including strategic issues and business planning processes.

Our President & CEO, Lim Shuh Moh Vincent, is charged with full executive responsibility for the running of our businesses, making operational decisions and implementing business directions, strategies and policies. Our President & CEO is supported on major business and operational issues by the oversight of our EC.

Principle 4: Board Membership

We believe that Board renewal must be an ongoing process, to ensure good governance, and maintain relevance to the changing needs of the Company and business. As required by our Constitution, our Directors are subject to retirement and re-election by shareholders as part of the Board renewal process. Nominations and election of Board members are the prerogatives and rights of all our shareholders.

In carrying out its functions, our Board is supported by key Board committees, namely the AC, the Remuneration Committee (“RC”), the Nominating Committee (“NC”) and the EC. Each of our Board committees has been established with clear charters setting out their respective areas of authority, terms of reference and committee procedures. Other Board committees can be formed from time to time to look into specific areas as and when the need arises. Membership in the different committees is carefully managed to ensure that there is equitable distribution of responsibilities amongst Board members, to maximise the effectiveness of the Board and foster active participation and contribution from Board members. Diversity of experiences and appropriate skills are also considered, along with the need to ensure appropriate checks and balances between the different Board committees.

Details of frequency and participation at our Board, AC, RC, NC, EC and general meetings for FY2020 are set out in Table 1.

Table 1: FY2020 – Directors’ Attendance at Board, Board Committees and Annual General Meetings

Director Board Audit Committee Remuneration Committee Nominating Committee Executive Committee Annual General Meeting
No. of Meetings Held No. of Meetings Attended (% Attendance) No. of Meetings Held No. of Meetings Attended (% Attendance) No. of Meetings Held No. of Meetings Attended (% Attendance) No. of Meetings Held No. of Meetings Attended (% Attendance) No. of Meetings Held No. of Meetings Attended (% Attendance) No. of Meetings Held No. of Meetings Attended (% Attendance)
Ronald Seah Lim Siang(1) 4 4 (100%) NA NA 1 1 (100%) 0 - 0 1 1 (100%)
Stephen Geoffrey Miller(2) 4 4 (100%) NA NA 1 1 (100%) 1 1 (100%) 0 - 1 1 (100%)
Tang Yew Kay Jackson(3) 4 4 (100%) 4 4 (100%) NA NA 0 - NA NA 1 1 (100%)
Cheah Sui Ling(4) 3 3 (100%) 2 2 (100%) NA NA NA NA NA NA 0 -
Yeo Siew Chye Stephen(5) 3 3 (100%) NA NA 0 - NA NA NA NA 0 -
Ho Koon Lian Irene(6) 4 4 (100%) 4 4 (100%) NA NA NA NA 0 - 1 1 (100%)
Lim Chai Hock Clive 4 4 (100%) NA NA NA NA NA NA 0 1 1 (100%)
Bertie Cheng(7) 2 2 (100%) NA NA 1 1 (100%) 1 1 (100%) 0 1 1 (100%)
Yap Boh Pin(8) 2 2 (100%) 2 2 (100%) NA NA 1 1 (100%) NA NA 1 1 (100%)

Notes:–

  1. Ronald Seah Lim Siang was appointed as Chairman of the Board of Directors and Chairman of the RC, NC and EC with effect from 30 June 2020.
  2. Stephen Geoffrey Miller was appointed as Deputy Chairman of the Board of Directors with effect from 30 June 2020.
  3. Tang Yew Kay Jackson was appointed as Chairman of the AC and a member of the NC with effect from 30 June 2020.
  4. Cheah Sui Ling was appointed as an Independent Director and a member of the AC with effect from 3 June 2020.
  5. Yeo Siew Chye Stephen was appointed as an Independent Director and a member of the RC with effect from 3 June 2020.
  6. Ho Koon Lian Irene was appointed as a member of the EC with effect from 30 June 2020.
  7. Bertie Cheng retired from the Board of Directors with effect from 30 June 2020 and concurrently ceased to be the Chairman and a Director of the Board and the Chairman of the RC, NC and EC.
  8. Yap Boh Pin retired from the Board of Directors with effect from 30 June 2020 and concurrently ceased to be a Director of the Board and the Chairman of the AC and a member of the NC.

Our NC is chaired by an Independent Non-Executive Director, Ronald Seah Lim Siang and also comprises Tang Yew Kay Jackson (Independent Non-Executive Director) and Stephen Geoffrey Miller (Non-Executive Director). The members of our NC (including the Chairman) are all Non-Executive Directors independent of Management.

Our NC’s responsibilities include:–

  1. recommendations to the Board on the selection, appointment and re-appointment of the Company’s Directors;
  2. determining the independence of a Director on an annual basis;
  3. deciding how the Board’s performance and the performance of the Chairman, Board committees and each individual Directors are to be evaluated;
  4. recommendations to the Board on the review of board succession plans for Directors and Key Management Personnel (defined as the President & CEO and other persons having authority and responsibility for planning, directing and controlling the activities of the Company); and
  5. recommendations to the Board on training and professional development programs for the Board.

In proposing candidates for appointment or re-election as Directors, the NC considers several factors, including the composition, the diversity and the need for progressive renewal of the Board, each candidate’s competencies, commitment, contribution and performance (including attendance, preparedness, participation and candour) and potential conflicts of interest. This ensures that the Board composition reflects an appropriate mix having regard to skills, experience, expertise, diversity and independence, which enables the Board to stay engaged and agile in meeting the needs of the Group. External consultants are engaged to assist with the selection process, if necessary.

As part of the succession planning for our Directors, Cheah Sui Ling and Yeo Siew Chye Stephen were appointed to the Board as new Independent Directors with effect from 3 June 2020, in place of Bertie Cheng and Yap Boh Pin who retired from the Board, with effect from 30 June 2020.

Our Constitution requires one-third of our Directors to retire and subject themselves to re-election by shareholders at every annual general meeting (“AGM”) (“one-third rotation rule”). In other words, no Director stays in office for more than three years without being reelected by our shareholders.

In addition, a newly-appointed Director is required to submit himself/herself for retirement and re-election at the AGM immediately following his/her appointment. Thereafter, he/she is subject to the one-third rotation rule.

Principle 5: Board Performance

We believe that Board performance is ultimately reflected in our business performance. Our Board should ensure compliance with applicable laws and all Board members should act in good faith, with due diligence and care, in our best interests and the best interests of our shareholders.

Our Board, through the delegation of its authority to the NC, has used its best efforts to ensure that our Directors are equipped with the necessary background, experience and expertise in technology, business, finance and management skills to make valuable contributions and that each Director brings to our Board an independent and objective perspective to enable balanced and well-considered decisions to be made.

Our NC has implemented a framework for assessing Board performance and diversity, and undertakes regular reviews of the performance and diversity of our Board, our Chairman, our committees and each individual Director, with inputs from our other Board members. The results of the Board appraisal exercise, which is conducted at least once annually, are circulated to all Directors for information and feedback. The information gleaned from the completed Board appraisal exercise(s) are taken into consideration by the NC, in determining whether there are any changes needed to the appraisal system, prior to the commencement of the next Board appraisal cycle. In addition, our NC also reviews the performance of Directors who hold multiple board representations and has established a guideline that (a) a Director holding a full time position should not be a Director of more than four listed companies; and (b) a “professional” Director should not be a Director of more than six listed companies. However, the NC has the discretion to deviate from this guideline on a case-by-case assessment.

As at 31 December 2020, one of our four Independent Directors, namely Tang Yew Kay Jackson, had served on our Board for more than nine years. In addition, Ronald Seah Lim Siang will also have served on our Board for more than nine years as an Independent Director of the Company come 3 May 2021. Our NC conducts rigorous review of the independence of our non-executive directors particularly for those directors who have served on our Board for more than nine years. Our Board takes the view that the key consideration in ascertaining the effectiveness of a Director’s independence is the ability to exercise independent judgement with a view to the best interests of the Company. After due and careful rigorous review, our Board is of the view that Ronald Seah Lim Siang and Tang Yew Kay Jackson remain independent in their exercise of Board duties as they have continued to demonstrate independent mindedness and conduct, including expressing their own views on issues and challenging Management. Rule 210(5)(d)(iii) of the Listing Manual (which comes into effect from 1 January 2022) requires the continued appointment of a director who has held the position of an independent director of a company for an aggregate period of more than nine years (whether before or after listing) to be approved in separate resolutions by (a) all shareholders; and (b) all shareholders excluding the directors and the chief executive officer of the company, and associates of such directors and chief executive officer. As Tang Yew Kay Jackson has held the position as an Independent Director of the Company for more than nine years, and as Ronald Seah Lim Siang will have held the position as an Independent Director of the Company for more than nine years, come 1 January 2022, each of Ronald Seah Lim Siang and Tang Yew Kay Jackson will be subjected to the above two-tier voting requirement at the upcoming AGM of the Company scheduled to be held on 28 April 2021 (“2021 AGM”) in order for their respective re-appointment as an Independent Director of the Company to be in compliance with Rule 210(5)(d) (iii) of the Listing Manual when such Rule comes into effect. Upon the passing of the requisite resolutions for the above two-tier voting requirement, each of Ronald Seah Lim Siang and Tang Yew Kay Jackson will continue to serve as an Independent Director of the Company and such resolutions may remain in force until the earlier of (x) the retirement or resignation of Ronald Seah Lim Siang and Tang Yew Kay Jackson (as the case may be); or (y) the conclusion of the third annual general meeting following the 2021 AGM. Each of these Independent Directors has declared their independence and has no relationship with Management that could adversely impinge on their independence in the discharge of their duties as Directors on our Board.

One of our Independent Directors, Ronald Seah Lim Siang, has declared that he and his brother, Peter Seah Lim Huat, are both directors in related corporations of the Company which have business transactions with the Group. Ronald Seah Lim Siang continues to demonstrate strong independence in character and judgement in the discharge of his responsibilities as a Director on our Board. He has continued to express his individual view points, debated issues and objectively scrutinised and challenged Management. After taking into account the views of the NC, our Board is of the view that Ronald Seah Lim Siang remains independent in his exercise of Board duties.

 

 

(B) Remuneration Matters

Principle 6: Procedures for Developing Remuneration Policies

Principle 7: Level and Mix of Remuneration

Principle 8: Disclosure on Remuneration

We believe that a framework of remuneration for our senior Management and key staff should not be taken in isolation. It should be linked to the development of our senior Management and key staff to ensure that there is a continual development of talent and renewal of strong and sound leadership for our continued success. For this reason, our RC oversees the compensation package for our senior Management and key staff.

Our RC is responsible for reviewing cash and long-term incentive compensation policies for our President & CEO, senior Management and key staff. Our RC is chaired by an Independent Non-Executive Director, Ronald Seah Lim Siang and also comprises Yeo Siew Chye Stephen (Independent Non-Executive Director) and Stephen Geoffrey Miller (Non-Executive Director). The members of our RC (including the Chairman) are all Non-Executive Directors independent of Management. From time to time, we may co-opt an outside member into our RC to provide additional perspectives on talent management and remuneration practices.

Our RC has access to expert professional advice on human resource matters whenever there is a need to consult externally. Aon Hewitt Singapore Pte. Ltd. (“Aon”) was appointed to provide professional advice on certain human resource matters. Aon only provides human resource consulting services to the Company and has no other relationships with the Company. In its deliberations, our RC takes into consideration industry practices and norms in compensation. Our President & CEO is not present during the discussions relating to his own compensation, and terms and conditions of service, and the review of his performance. However, our President & CEO will be in attendance when our RC discusses the policies and compensations of our senior Management and key staff, as well as major compensation and incentive policies such as share options, stock purchase schemes, framework for bonus, staff salary and other incentive schemes.

All decisions at any RC meeting are decided by a majority of votes of RC members present and voting (the decision of the RC shall at all times exclude the vote, approval or recommendation of any member having a conflict of interest in the subject matter under consideration).

The RC is guided by its terms of reference which are aligned with requirements under the Code 2018.

Our RC’s responsibilities include:

  1. reviewing and recommending to the Board the cash and long-term incentive compensation policies and framework and fee schedule for Directors and Key Management Personnel of the Company;
  2. administering and reviewing any proposed amendments to the TeleChoice Restricted Share Plan, the TeleChoice Performance Share Plan and such other similar share schemes or plans that may be adopted by the Company from time to time;
  3. reviewing and recommending to the Board for approval, on an annual basis, the specific remuneration packages of each Director and the Key Management Personnel of the Company. Where the RC deems appropriate, it may, in consultation with the Chairman of the Board, make the relevant recommendations in respect of the remuneration of Director or Key Management Personnel, to the entire Board for approval; and
  4. undertaking such other reviews and projects as may be requested by the Board and report to the Board its findings from time to time on matters which require the attention of the RC.

The term “Key Management Personnel” shall mean the President & CEO and other persons having authority and responsibility for planning, directing and controlling the activities of the Company.

Executive Remuneration for the President & Chief Executive Officer and Key Management Personnel

Remuneration for Key Management Personnel comprises a fixed component, a variable cash component, a share-based component and benefits-in-kind.

  • A. Fixed Component:

    The Fixed Component comprises the annual base salary, annual wage supplement and monthly allowances.

  • B. Variable Cash Component:

    The Variable Cash Component, including the Performance Bonus and the Discretionary Bonus, is a remuneration component linked to the achievement of annual performance targets for each Key Management Personnel as agreed with the Board at the beginning of each financial year. Performance objectives aligned to the overall business metrics and strategic goals of the Company are cascaded down throughout the organisation through the use of Performance Scorecards, thereby creating greater alignment between the performance of the Company, business units and the individual employees. These performance objectives could be in the form of both quantitative and qualitative measures which are aligned to the Company’s business strategy. In determining the final payout for each Key Management Personnel, the RC considers the overall performance of the Company, funding affordability and individual performance.

  • C. Share-Based Component:

    The aggregate number of new shares to be issued, when aggregated with existing shares (including treasury shares, if any, and cash equivalents) delivered and/or to be delivered pursuant to the TeleChoice Restricted Share Plan (the “TeleChoice RSP”) (as amended) and the TeleChoice Performance Share Plan (the “TeleChoice PSP”) (as amended) (collectively referred to as the “Share Plans”) then in force, shall not exceed fifteen per cent (15%) of the total number of issued shares (excluding treasury shares and subsidiary holdings, if any) from time to time. To align the interest of the Key Management Personnel and that of shareholders, the Key Management Personnel are required to retain a certain percentage of shares acquired through the share-based plans, up to the lower of: (1) a percentage of total number of shares acquired under the Share Plans for FY2007 and onwards based on position level; or (2) the number of TeleChoice shares to be retained in order to meet the minimum value, which is set at a percentage of annual base salary based on position level.

    Please refer to the section on Equity Compensation Benefits in the Directors’ Statement on pages 83 to 85 of this Annual Report for the details of the Share Plans as well as awards granted under the Share Plans.

    TeleChoice RSP
    Under the TeleChoice RSP (as amended), conditional awards vest over a three-year period, once the RC is, at its sole discretion, satisfied that the performance and extended service conditions are attained. For RSP grants for 2017 onwards, the total number of shares to be awarded depends on the level of attainment of the individual performance targets.

    TeleChoice PSP
    Under the TeleChoice PSP (as amended), conditional awards of shares are granted. Awards represent the right of a participant to receive fully paid shares upon the participant achieving certain pre-determined performance targets which are set based on corporate objectives aimed at sustaining longer-term growth. After the awards vest, the shares comprised in the awards are issued at the end of the performance and/ or service period once the RC is, at its sole discretion, satisfied that the prescribed performance targets have been achieved. The actual number of shares given will depend on the level of achievement of the prescribed performance targets over the performance period, currently prescribed to be a three-year period. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded. The performance measures used in the TeleChoice PSP grants are Total Shareholder Return against Cost of Equity Hurdles (i.e. measure of absolute performance) and Return on Capital Employed (i.e. measure of capital efficiency). The Company has attained an achievement factor which is reflective of not meeting the pre-determined target performance levels based on the performance period from FY2018 to FY2020.

  • D. Benefits-In-Kind:

    Benefits provided are comparable with local market practices and include non-cash benefits such as leave, medical benefits and handphones.

In performing the duties as required under its terms of reference, the RC ensures that remuneration paid to the Key Management Personnel is strongly linked to the achievement of business and individual performance targets, industry practices and compensation norms and the need to ensure the continuing development of talents. The performance targets as determined by the RC are set at realistic yet stretched levels each year to motivate a high degree of business performance with emphasis on both short-term and long-term quantifiable objectives. The RC also considers the tight talent market for senior Management in setting total compensation levels. The RC is satisfied that the level and mix of remuneration is appropriate and is aligned with pay-for-performance principles.

Under the Code 2018, the compensation system should take into account the risk policies of the Company, be symmetric with risk outcomes and be sensitive to the time horizon of risks. The RC has reviewed the various compensation risks that may arise and introduced mitigating policies to better manage risk exposures identified. The RC also undertakes periodic reviews of the compensation related risks.

For FY2020, there were no termination, retirement and post-employment benefits granted to Key Management Personnel.

There is no employee who is an immediate family member of a Director or the President & CEO or a Substantial Shareholder, whose remuneration exceeds S$100,000 a year.

Details of remuneration paid to our President & CEO and top four (4) Key Management Personnel for FY2020 are set out in Table 2 below. For competitive reasons, the Company is only disclosing the band of remuneration of our President & CEO and each Key Management Personnel for FY2020, within bands of S$250,000.

Table 2: FY2020 – President & Chief Executive Officer and Top Four (4) Key Management Personnel’s Remuneration

Name Fixed Component % Variable Cash Component % Share-Based Component % Benefits-In- Kind % Remuneration Bands(1)
Lim Shuh Moh Vincent 61.5 8.5 28 2 C
Lee Yoong Kin 70 9 19 2 B
Pauline Wong Mae Sum 69 9 20 2 B
Wong Loke Mei 72 10 16 2 A
Goh Song Puay 73 10 15 2 A

Notes:-

  1. Remuneration Bands:
    “A” refers to remuneration between S$250,001 and S$500,000.
    “B” refers to remuneration between S$500,001 and S$750,000.
    “C” refers to remuneration between S$750,001 and S$1,000,000.

For FY2020, the aggregate total remuneration paid to the President & CEO and top four (4) Key Management Personnel (who are not Directors) amounted to approximately S$2,954,427

Remuneration for Directors

We remunerate our Directors with Directors’ fees which take into account the nature of their responsibilities. The remuneration structure is based on a scale of basic retainer fees as Director and additional fees for serving on Board Committees as set out in Table 3 below. The Directors’ remuneration for the financial year ended 31 December 2020 will be subject to shareholders’ approval at the forthcoming AGM.

Table 3: FY2020 – Scale of Fees

Basic Retainer Fee S$
Board Chairman(1)
Board Member
85,000
42,000
Fee for appointment to the Audit Committee  
Committee Chairman(1)
Committee Member
26,000
20,000
Fee for appointment to the Remuneration Committee  
Committee Chairman(1)
Committee Member
17,000
9,500
Fee for appointment to the Nominating Committee  
Committee Chairman(1)
Committee Member
17,000
7,500

Notes:-

  1. Board and Committee Chairman Fee includes Annual Basic Retainer as Board Member or Committee Member (as the case may be).

To align the interests of the Directors to that of the shareholders, Directors who served on the Board during FY2020 (other than Lim Chai Hock Clive, in respect of whom please refer to the paragraph below) will be remunerated as to approximately 70 percent (70%) of his/her total Directors’ remuneration in cash and approximately 30 percent (30%) of his/her total Directors’ remuneration in the form of a restricted share award pursuant to the TeleChoice RSP (as amended). The number of shares to be awarded will be based on the volume-weighted average price (“VWAP”) of a share listed on the SGX-ST over the 14 market days commencing on (and including) the first ex-dividend date that immediately follows the date of this AGM (and in the event that no dividend is declared at such last concluded AGM, the VWAP of a share listed on the SGX-ST over the 14 market days commencing after the date of such last concluded AGM). The number of shares to be awarded will be rounded down to the nearest thousand shares, and any residual balance settled in cash. The restricted share awards will consist of the grant of fully paid shares, without any performance or vesting conditions attached. However, in order to encourage alignment of interests of the Directors with the interests of shareholders, a Director is required to hold such number of shares equivalent to at least (i) the prevailing annual basic Board retainer fee, based on the VWAP of a share listed on the SGX-ST over the 14 days market days from (and including) the first ex-dividend date (if any) following the date of the Company’s last concluded AGM (and in the event that no dividend is declared at such last concluded AGM, the VWAP of a share listed on the SGX-ST over the 14 market days commencing after the date of such last concluded AGM); or (ii) the total number of shares awarded to that Director under the TeleChoice RSP (as amended) for FY2013 and onwards, whichever is lower. Notwithstanding the foregoing, a Director is permitted to dispose of all of his shares after the first anniversary of the date of his/her cessation as a Director of the Company.

In relation to Lim Chai Hock Clive, it is proposed that the entire amount of his Director’s remuneration for FY2020 be paid to him in cash in full. Lim Chai Hock Clive is a controlling shareholder of the Company, and approval of independent shareholders by way of a separate resolution for the grant of the specific number of share awards to him is required under Rule 853 of the Listing Manual. However, as the number of share awards to be granted to Lim Chai Hock Clive would have been computed only after the date of the AGM (as described above), such number of awards would not be known until after the AGM, and it is therefore not possible to seek approval for the grant of the specific number of share awards to him at the AGM. In view of the difficulties that the Company would face in complying with the Rule 853 of the Listing Manual for the grant of share awards to Lim Chai Hock Clive, the Company is therefore proposing to pay him in cash in full instead.

The following Table 4 shows the total composition of Directors’ remuneration for FY2020.

Table 4: FY2020 – Directors’ Remuneration

Name Total Directors' Remuneration(1)
Cash-based Share-based Total
Ronald Seah Lim Siang(3) $59,675 $25,575 $85,250
Stephen Geoffrey Miller(4) $41,300(2) $17,700 $59,000
Tang Yew Kay Jackson(5) $48,125 $20,625 $68,750
Cheah Sui Ling(6) $25,317 $10,850 $36,167
Yeo Siew Chye Stephen(7) $21,029 $9,013 $30,042
Ho Koon Lian Irene(8) $43,400(2) $18,600 $62,000
Lim Chai Hock Clive(9) $42,000 $42,000
Bertie Cheng(10) $41,650 $17,850 $59,500
Yap Boh Pin(11) $26,425 $11,325 $37,750

Notes:

  1. The aggregate amount of these fees is subject to approval by shareholders at the upcoming AGM for FY2020.
  2. These fees are payable to STT Communications Ltd.
  3. Ronald Seah Lim Siang was appointed as Chairman of the Board of Directors and Chairman of the RC, NC and EC with effect from 30 June 2020.
  4. Stephen Geoffrey Miller was appointed as Deputy Chairman of the Board of Directors with effect from 30 June 2020.
  5. Tang Yew Kay Jackson was appointed as Chairman of the AC and a member of the NC with effect from 30 June 2020.
  6. Cheah Sui Ling was appointed as an Independent Director and a member of the AC with effect from 3 June 2020.
  7. Yeo Siew Chye Stephen was appointed as an Independent Director and a member of the RC with effect from 3 June 2020.
  8. Ho Koon Lian Irene was appointed as a member of the EC with effect from 30 June 2020.
  9. As explained above, Lim Chai Hock Clive will be paid his Director’s remuneration of S$42,000 in cash in full.
  10. Bertie Cheng retired from the Board of Directors with effect from 30 June 2020 and concurrently ceased to be the Chairman and a Director of the Board and as the Chairman of the RC, NC and EC.
  11. Yap Boh Pin retired from the Board of Directors with effect from 30 June 2020 and concurrently ceased to be a Director of the Board and as the Chairman of the AC and a member of the NC.

From FY2014, the Company has implemented a contractual “Clawback” provision in the event that an executive Director or Key Management Personnel of the Company engages in fraud or misconduct, which results in restatement of the Company’s financial results or a fraud/misconduct resulting in financial loss to the Company. The Board may pursue to reclaim the unvested components of remuneration from an executive Director or Key Management Personnel from all incentive plans for the relevant period, to the extent such incentive has been earned but not yet released or disbursed. The Board, taking into account the RC’s recommendation, can decide whether and to what extent, such recoupment of the incentive is appropriate, based on the specific facts and circumstances of the case.

 

 

(C) Accountability and Audit

Principle 9: Risk Management and Internal Controls

The Company and its subsidiaries (the “>Group”) have in place an Enterprise Risk Management (“ERM”) Framework, which governs the process of identification, prioritisation, assessment, management and monitoring of key financial, operational, compliance and IT risks to the Group. The key risks of the Group are deliberated by Management and reported to the AC. Integral to the ERM is a Group-wide system of internal controls.

The Board, with the advice of the AC, determines the Group’s level of risk tolerance and risk policies and the AC oversees Management in the design, implementation and monitoring of the risk management and internal control systems. The Board and the AC are supported by Management and various independent professional service providers such as external and internal auditors to review the adequacy and effectiveness of the Group’s risk management and internal controls systems.

The Board, with the concurrence of the AC, commented that the Group’s internal controls and risk management systems are adequate and effective in addressing the financial, operational, compliance and IT risks of the Group. The Board acknowledges that it is responsible for the Group’s overall risk management and internal control system framework, but recognises that there is no system that will preclude all errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

The Board has received the following assurances from:

  1. the President and the Chief Financial Officer (“CFO”) that the financial records have been properly maintained and the financial statements give a true and fair view of the Group’s operations and finances; and
  2. the President & CEO and other relevant Key Management Personnel that the Group’s risk management and internal control systems are effective and adequate.

Principle 10: Audit Committee

Our AC consists of three (3) Non-Executive Directors, two of whom including the Chairman are Independent Directors. The AC members are Tang Yew Kay Jackson as Chairman, Cheah Sui Ling and Ho Koon Lian Irene. Our AC members bring with them invaluable professional and managerial expertise in the accounting and financial sectors.

Our AC’s responsibilities include reviewing our annual audit plan, internal audit processes, the adequacy and effectiveness of internal controls and Interested Party Transactions for which there is a shareholders’ mandate renewable annually. In addition, our AC is also responsible for overseeing the Group’s risk management framework and policies, including advising the Board on the Group’s overall risk tolerance and policies; overseeing Management on the design, implementation and monitoring of the risk management and internal control systems; and reviewing the adequacy and effectiveness of the Group’s risk management and internal control systems. Major identified risk categories include strategic, operational, market, compliance and information technology risks. The risk management processes are tailored to address these categories of risks.

The AC is supported by senior Management representatives who:–

  1. oversee and ensure that our risk management policies are adequate and remain effective;
  2. conduct regular reviews to ensure that our business units and key functions adequately prioritise and address risk management issues; and
  3. prepare regular updates on risk management issues for the AC.

Our AC has separate and independent access to the external and internal auditors, without the presence of our President & CEO and other senior Management members, in order to have free and unfettered access to information that our AC may require.

Our AC has full authority to commission and review findings of internal investigations into matters where there is any suspected fraud or irregularity or failure of internal controls or violation of any law likely to have a material impact on our operating results. Our AC is also authorised to investigate any matter within its charter with the full cooperation of Management. Our AC reviews and approves the half-yearly and annual financial statements and the appointment and re-appointment of the external and internal auditors before recommending them to the Board for approval.

In 2020, our AC held four meetings and meets with the external and internal auditors without the presence of Management, at least once during the year, to discuss matters it believes should be raised privately.

Our AC reviews the nature and extent of non-audit services, if any, provided by the external auditors during the year to assess the external auditors’ independence, adequacy and effectiveness. For details of fees payable to the auditors in respect of audit and non-audit services, please refer to Note 25 of the financial statements on page 156 of this Annual Report. Having been satisfied that the independence of the external auditors is not impaired by their provision of non-audit services, and that Rules 712 and 715 of the Listing Manual have been complied with, the AC has recommended to the Board that KPMG LLP be nominated for re-appointment as the external auditors at the next AGM. To further maintain the independence of KPMG LLP, the AC ensures that the audit partner in-charge of the Group is rotated every five years. The audit partner in-charge was last rotated for the financial year ended 31 December 2019. None of the Directors (including the AC members) or senior Management is or has in the past two years been a former partner, director or employee of the Group’s external auditors.

In line with our commitment to a high standard of internal controls and its zero tolerance approach to fraud, we have put in place a whistle blower policy (the “Policy”) providing employees a direct channel to the AC, for reporting suspected fraud and possible impropriety in financial reporting, unethical conduct, dishonest practices or other similar matters. This Policy aims at protecting employees against discrimination or retaliation as a result of their reporting information regarding, or their participation in, inquiries, investigations or proceedings involving TeleChoice or its agents. With such a policy in place, we are able to take swift action against any fraudulent conduct and minimise any financial losses arising from such conduct. The Policy is available on our intranet and website for easy access by all employees and the public.

To further emphasise the importance of corporate governance, we have introduced an Anti-Corruption Policy in October 2018. All new employees are required to read, understand and be assessed on these policies as part of the onboard process. There were no incidents of corruption during this period that has a material impact on the Group’s operating results or financial position.

Management monitors changes to accounting standards and issues which have a direct impact on financial statements closely. Updates and briefings on regulatory requirements are conducted either during AC sessions or by circulation of papers.

Financial Reporting

The AC reviewed the draft financial statements and half-year results before recommending their approval to the Board. As part of this review, the AC considered significant accounting policies, estimates and significant judgements. The AC also reviewed reports on findings from internal and external audits.

The key audit matters (“KAM”) in relation to the financial statements considered by the AC and how these were addressed are summarised as follows:–

KAM AC commentary
Impairment assessment of goodwill

The annual impairment of goodwill testing is considered to be a key audit matter as significant judgement is required to determine the assumptions to be used to estimate the recoverable amount. The recoverable amount of the cash generating units (“CGUs”), which is based on the higher of the value in use or fair value less costs to sell, has been derived from discounted cash flow models. These models are based on several key assumptions, including estimates of long term revenue growth rates, operating profit margins and discount rates.

The AC considered the goodwill impairment analysis provided by Management and the views of the external auditors on this issue.

The AC reviewed and challenged the key assumptions used in Management’s calculations including revenue growth rates, operating profit margins and the discount rates. In its view, the AC also considered reports on forecasts for 2021 to 2023 prepared by Management, firm commitments secured from customers and pipelines, as well as the level of headroom in the value in use model prepared by Management.

The AC considered the sensitivity analysis undertaken by Management and the external auditors and the impact on the headroom.

On the basis of these reviews, the AC agreed with Management that:–

  1. No impairment on goodwill was necessary as at 31 December 2020 for the NxGen Group.
  2. For the S & I Group, due to the uncertain economic outlook arising from the COVID-19 pandemic, with lesser visibility on the order book building for FY2021, a lower revenue and revenue growth rate for S & I were forecasted for FY2021. As the recoverable amount is below the carrying value, a full impairment of S$5,329,000 was made as at 31 December 2020.
Valuation of inventories

The valuation of inventory and the inventory allowance involves subjective estimates and are influenced by assumptions concerning future demand and sales prices.
The AC reviewed and challenged the basis used by Management in estimating the inventory allowance required for slow moving inventory.

The AC considered the nature and extent of the work performed by external auditors in ascertaining the adequacy of inventory allowance.

The AC also reviewed reports from the Company’s internal auditors on inventory valuation.

On the basis of these reviews, the AC agreed with Management that the Group’s inventory allowance was adequate for the financial year ended 31 December 2020.

Revenue recognition

Significant judgement is required in determining the stage of completion used for long term projects and for bundled contracts, appropriate allocation of contract value to the different performance obligation is crucial for proper revenue recognition.

The AC reviewed the revenue recognition policies of the Group’s various revenue streams and considered them to be appropriate.

The AC considered the nature and extent of the work performed by external auditors in ascertaining appropriateness of the Group’s revenue recognition policies.

The AC also reviewed reports from the Company’s internal auditors in relation to work performed on revenue recognition.

On the basis of these reviews, the AC concluded that the positions and judgements taken by Management reasonably reflected the extent of the work done and the revenue to be recognised.

All of the matters considered above were discussed with the President & CEO and the CFO and the external auditors. The AC was satisfied that each of the matters set out above have been appropriately tested and reviewed by the external auditors and the disclosures relating to each of these matters made in the financial statements were appropriate.

The internal audit function of the Group is carried out by the internal auditors, Ernst & Young Advisory Pte. Ltd., an independent firm. The internal auditors are guided by the Standards for Professional Practice of Internal Auditing, prescribed by the Institute of Internal Auditors.

The AC conducts a review of the adequacy, effectiveness, scope and independence of the internal audit function annually to ensure that the internal auditors have direct and unrestricted access to the Chairman of the Board and the AC and that the Group maintains an effective internal audit function that is adequately staffed and independent of the audited activities. The AC is satisfied that the internal audit function is independent, effective and adequately resourced to perform its functions effectively.

The internal auditors report functionally to the AC and administratively to the President & CEO and the CFO. The AC approves the appointment, termination and remuneration of the internal auditors.

The primary role of the internal audit function is to help to evaluate the adequacy and effectiveness of the Group’s controls and compliance processes. The Group’s internal audit approach is aligned with the Group’s Risk Management Framework by focusing on key financial and compliance risks. The annual internal audit plan is established in consultation with, but independent of Management. The annual internal audit plan is then reviewed and approved by the AC. All internal audit findings, recommendations and status of remediation, are circulated to the AC, the President & CEO and relevant senior Management every quarter.

The internal auditors present the internal audit findings to the AC each quarter. The AC meets with the internal auditors at least once a year, without the presence of Management. The internal auditors have unfettered access to all the Group’s documents, records, properties and personnel, including access to the AC, and has appropriate standing within the Group.

 

 

(D) Shareholders Right and Engagement

Principle 11: Shareholder Rights and Conduct of General Meetings

Principle 12: Engagement with Shareholders

Principle 13: Engagement with Stakeholders

We believe in having regular communication with shareholders. Our Investor Relations team manages and facilitates effective communication with the Company’s shareholders, analysts and other stakeholders in the investment community.

The Board’s policy is that shareholders should be equally and timely informed of all major developments and events that impact the Company or its business, in particular, share price-sensitive as well as trade-sensitive information. All announcements including first quarter and third quarter business updates, half-year and full-year financial results, major developments, press releases, presentations and distribution of notices, are communicated to our shareholders via SGXNET and the Company’s website http://www.telechoice.com.sg, which is updated on a regular basis. Annual reports or circulars are made available to all shareholders via electronic communications and/or printed copies, and notices of general meeting are advertised. The Company’s website has a dedicated “Investor Relations” link, which features the latest and past financial results and related information, and an investor relations contact is available on the dedicated link to enable shareholders to contact the Company. The Company also undertake regular analyst briefings on its business performance. Information disclosed at such meetings are within the ambit of the Company’s SGXNET announcements to ensure that there is fair and non-selective disclosure of information.

We support the Code 2018’s principle to encourage greater shareholders’ participation at general meetings. Separate resolutions are proposed on each separate issue at our general meetings. To enhance transparency in the voting process, the Company has implemented poll voting for all resolutions tabled at its general meetings. A registered shareholder who is not a relevant intermediary may appoint not more than two proxies to attend and vote at our general meetings. A registered shareholder who is a relevant intermediary may appoint more than two proxies to attend and vote at our general meetings, but each proxy must be appointed to exercise the rights attached to a different share or shares held by such shareholder. Shareholders are given the opportunity at the general meetings to share their view and raise queries to the Directors and senior Management on matters relating to the Company and its operations. All Directors together with senior Management attend our general meetings, and the external auditors are also invited to be present at our general meetings to assist in answering questions from our shareholders relating to the conduct of the audit and the preparation and content of the auditors’ report. The Company record minutes of all general meetings which are available to shareholders upon request in accordance with applicable laws.

Since FY2004, the Board has set a benchmark to declare and pay annual dividends of at least 30% of our annual net profit after tax, subject to the Group’s earnings, cash flow and capital requirements. The Company has good track record of adhering to this benchmark and any pay-outs are clearly communicated to shareholders via the financial results announcements through SGXNET.