Last Pages Viewed

Remuneration Report

This Remuneration Report sets out the Group’s remuneration policies and amounts for all staff including Executive Directors and Non-executive Directors. Pages 58 to 59 comprise the auditable part of the Remuneration Report and form an integral part of the Group’s financial statements. At 31 December 2014, the Group employed a total of 363 full time, shore-based staff (2013: 372), which has since reduced to 340.

GROUP’S REMUNERATION POLICY

The Board, through the Remuneration Committee, seeks to attract and retain staff with the skills, experience and qualifications needed to manage and grow the business successfully. We achieve this by providing remuneration packages, including bonuses, that are competitive, consistent with market practice, and reward performance and align employees and shareholders’ interests.

When considering remuneration adjustments and annual bonuses, the Board makes reference to the prevailing market conditions, local market practice, the levels of emolument of existing staff of the Company and, very importantly, the performance of individuals and the market demand for their skills. The business of shipping is highly cyclical. It is inappropriate to impose straight financial measures for both salary adjustments and bonus determination as to do so would likely generate meaningless results and potentially damaging consequences. The Board seeks to obtain a balance of all the above mentioned factors.

Equity awards are provided through the Company’s Share Award Scheme which is designed to provide Executive Directors and other employees with long-term financial benefits that are aligned to and consistent with the creation of shareholder value as an incentive and recognition for their contribution to the Group. The Board has not granted, and currently has no intention to grant any equity awards to Independent Non-executive Directors as they administer the scheme at their sole discretion.

The Group’s principal retirement benefit scheme is the Mandatory Provident Fund Scheme, a defined contribution scheme provided under the Hong Kong Mandatory Provident Fund Schemes Ordinance for those staff employed under the jurisdiction of the Hong Kong Employment Ordinance. Other locations provide pension contributions in line with the local regulations.

Below sets out the key components of remuneration:

Key remuneration
components
Executive Directors and All staffNon-executive Directors

Fixed base salary

Salaries are reviewed annually. Prevailing market conditions
and local market practice, as well as the individual's role,
duties, experience, responsibilities and performance are
taken into account when assessing salaries.

No

Annual discretionary cash
bonus

Bonuses are determined based on the overall performance
of the individual and the Group. Bonuses for Executive
Directors are assessed by the Remuneration Committee and
those of all other staff are assessed by the Chief Executive
Officer. Bonuses to Directors and employees are expected to
be no more than 12 months' salary equivalent.

No

Long-term equity incentives           

Awards typically vest annually over a three year period. New
Awards for existing awardees are considered each year
by the Remuneration Committee to maintain the incentive
period, in which case they vest at the end of the third year.

No
Retirement benefitIn line with market practice.No
Fixed annual director's feeNoYes and in line with
market practice

REMUNERATION FOR THE YEARS ENDED


31 December 2014
Directors'
fee
Salaries Bonuses Pension Total
Payable
Share-
based
compensation
Total
Payable
and
charged
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Executive Directors
David M. Turnbull - 364 30 2 396 214 610
Mats H. Berglund - 1,046 63 2 1,111 538 1,649
Andrew T. Broomhead - 495 40 2 537 328 865
Chanakya Kocherla - 670 1 38 22 730 304 2 1,034
Jan Rindbo 3 - 494 3 - - 494 (150) 3 344
- 3,069 171 28 3,268 1,234 4,502
Independent Non-executive Directors
Patrick B. Paul 96 - - - 96 - 96
Robert C. Nicholson 90 - - - 90 - 90
Alasdair G. Morrison 83 - - - 83 - 83
Daniel R. Bradshaw 83 - - - 83 - 83
Irene Waage Basili 4 67 - - - 67 - 67
419 - - - 419 - 419
Total Directors'
       remuneration 419 3,069 171 28 3,687 1,234 4,921
Other Employees - 38,058 4,486 2,856 45,400 4,077 49,477
Total remuneration 419 41,127 4,657 2,884 49,087 5,311 54,398

Note:
(1) Included in the salary of Mr. Kocherla is a compensation for additional tax incurred of US$178,000 due to the withdrawal of his superannuation fund upon his
relocation from Australia to Hong Kong.
(2) Included in share-based compensation of Mr. Kocherla is a reimbursement of the difference between Australian income tax and Hong Kong income tax
amounted to US$97,000 in relation to the restricted share awards granted to him.
(3) Mr. Rindbo resigned as an Executive Director on 7 November 2014. As a consequence, 2,163,000 share awards lapsed resulting in a credit to the income
statement. His salary for the period included a director's fee of US$80,000.
(4) Mrs. Basili joined the Board as an Independent Non-executive Director on 1 May 2014.


31 December 2013
Directors'
fee
SalariesBonusesPensionTotal
Payable
Share-
based
compensation
Total
payable
and
charged
US$'000US$'000US$'000US$'000US$'000US$'000US$'000
Executive Directors
David M. Turnbull-3641252491213704
Mats H. Berglund-1,02965011,6807092,389
Jan Rindbo-563 140019642971,261
Andrew T. Broomhead-47025027223291,051
Chanakya Kocherla-494250638071991,006
Wang Chunlin2-348721701,139(297)2842
-3,2682,3961395,8031,4507,253
Independent Non-executive Directors
Patrick B. Paul96---96-96
Robert C. Nicholson90---90-90
Alasdair G. Morrison83---83-83
Daniel R. Bradshaw83---83-83
352---352-352
Total Directors'
     remuneration3523,2682,3961396,1551,4507,605
Other Employees-32,8095,4502,70940,9684,27945,247
Total remuneration35236,0777,8462,84847,1235,72952,852

Note: (1) Included a director's fee of US$96,000. (2) Mr. Wang retired as an Executive Director upon the conclusion of the 2013 AGM on 19 April 2013. As a consequence, 1,284,000 share awards lapsed resulting in a credit to the income statement.

For the year 2014, the five individuals whose emoluments were the highest in the Group were the five Executive Directors (2013: five Executive Directors).

During the year, the Group did not pay the Directors any inducement to join or upon joining the Group. No Directors waived or agreed to waive any emoluments during the year. The median salary of employees excluding the Chief Executive Officer during the year was US$62,814 (2013: US$58,000).

In the year ended 31 December 2013, certain Other Employees benefited from a profit sharing arrangement amounting to approximately US$1,029,000 and such arrangement ended thereafter. This amount combined with the total remuneration of 2013 forms the total employee benefit expenses for 2013 as presented in Note 5 to the financial statements.

ACCOUNTING POLICIES ON EMPLOYEE BENEFITS

Bonuses

The Group recognises a liability and expense for bonuses when there is a contractual or constructive obligation or where there is a past practice that created a constructive obligation.

Retirement Benefit Obligations

• Mandatory Provident Fund Scheme

The Group operates the Mandatory Provident Fund Scheme (the “MPF Scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for those employees employed under the jurisdiction of the Hong Kong Employment Ordinance. The MPF Scheme is a defined contribution scheme, the assets of which are held in separate trustee-administered funds.

Under the MPF scheme, the employer and its employees are each required to make regular mandatory contributions to the scheme at 5% of the employees’ relevant income, subject to a cap of monthly relevant income of HK$25,000. The Group also makes voluntary contribution in addition. The Group’s contributions to the scheme are expensed as incurred. When employees leave the scheme prior to the full vesting of the employer’s voluntary contributions, the amount of forfeited contributions is used to reduce the contributions payable by the Group.

• Other defined contribution Schemes

The Group also operates a number of defined contribution retirement schemes outside Hong Kong in accordance with local statutory requirements. The assets of these schemes are generally held in separate administered funds and are generally funded by payments from employees and by the relevant group companies. The Group’s contributions to the defined contribution retirement schemes are expensed as incurred and are reduced by contributions forfeited by those employees who leave the schemes prior to contributions being fully vested.

Share-Based Compensation

The Group operates an equity-settled, share-based compensation scheme. Restricted share awards and share options are recognised as an expense in the income statement with a corresponding credit to reserves, based on the fair value of the shares.

The total amount to be expensed is calculated by reference to the fair value of the equity instruments granted, excluding the impact of any non-market vesting conditions (for example, requirement of an employee to remain in employment for a specified time period). The number of equity instruments that are expected to vest takes into account non-market assumptions, including expectations of an employee remaining in the Group during the vesting period. The total amount expensed is charged through the vesting period. At each balance sheet date, the Company reviews its estimates of the number of equity instruments that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision of the original estimates, if any, in the consolidated income statement with a corresponding adjustment to equity.

In respect of share options, the proceeds received, net of any directly attributable transaction costs, are credited to share capital and share premium accounts when the share options are exercised.

The grant by the Company of share-based compensation to the employees of subsidiary undertakings in the Group is treated as a capital contribution by the company to the subsidiaries. The fair value of employee services received, measured by reference to fair value of the shares on the grant date is recognised over the vesting period as an increase in investment in subsidiary undertakings, with a corresponding credit to equity in the Company’s account. In the accounts of the subsidiaries, such fair value is recognised as an expense in the income statement with corresponding credit to reserve.

Hidden Link
Please take a few minutes to give us your feedback so we can further improve our Annual Report next year.
(Click HERE for Survey - 2014 Reporting Feedback)