5. Summary of 2014 Remuneration Outcomes SENIOR MANAGEMENT AND MATERIAL RISK TAKERS
Thebalancebetweenixedandvariableelementsoftotalcompensationchangesaccordingtoperformance,rankandfunction.Thisisin linewiththeFSBprincipleofensuringthatemployeeincentivesremainfocusedonprudentrisk-takingandeffectivecontrol,dependingon
theemployee’srole.
ItisaimedatincentivisingemployeeswhosedecisionscanhaveamaterialimpactonDBStoadoptappropriateriskbehaviours.These employeesincludeseniormanagement,keypersonnelatbusinessunitsandseniorcontrolstaff.Wedeinethisgroupofstaffbasedon
theirroles,quantumoftheirvariableremunerationandtheratiooftheirvariabletoixedpay.
WehaveretainedMcLaganasourexternalcompensationconsultanttoprovidebenchmarkingdataandcompensationconsultingservices. McLagananditsconsultantsareindependentandnotrelatedtousoranyofourdirectors.
Duringtheyear,werecordedstrongperformanceagainstthebalancedscorecard.Notably,ourearningshitanall-timehighdespite externalmarketheadwinds,andhavedoubledinthepastiveyears.WecontinuedtoentrenchourleadershipinSingapore,leveragethe
connectivitybetweenChinaandHongKong,andbuildleadingregionalfranchisesinwealthmanagement,SMEandGlobalTransaction Services.Wehavealsomanagedourportfolioriskprudentlybyaligningittoourriskappetiteandstrengthenedtheresiliency
ofourITinfrastructureandcybersecuritydefences.Ouroverallperformanceagainstauditandcompliancehasthereforeimproved. Wealsocontinuedtoexecutewelltoourlonger-termstrategicpriorities.
Thefollowingchartsshowthemixofixedandvariablepayforseniormanagementandmaterialrisktakersinrespectofperformance year2014.
Senior Management Material Risk Takers
Note: •
We do not provide any other forms of fixed and variable remuneration aside from those disclosed in this section
SeniorManagementSMisdeinedastheCEOandmembers oftheGroupManagementCommitteewhohavetheauthority
andresponsibilityfortheGroup’soveralldirectionandexecuting tostrategy.
MaterialrisktakersMRTsaredeinedasemployeeswhoseduties requirethemtotakeonmaterialriskonourbehalfinthecourseof
theirwork.Thesecanbeeitherindividualemployeesoragroupof employeeswhomaynotposearisktoDBS’inancialsoundnesson
anindividualbasis,butmaypresentamaterialriskcollectively.
FixedPay VariablePay-Cash
VariablePay-DeferredShares includingRetentionShares
20
36 44
21 38
41
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CATEGORY SM
MRTs
Numberofguaranteedbonuses Numberofsign-onbonuses
1 5
Numberofseverancepayments Totalamountsofabovepaymentsmade
duringtheFinancialYearSGD’000 2,435
CATEGORY SM
MRTs Change in deferred remuneration awarded in current financial year
1
77
4
1210
4
Change in amount of outstanding deferred remuneration from previous financial year
2
33
3
32
4
27
3
27
4
Outstanding deferred remuneration breakdown: Cash
Sharesshare-linkedinstruments Otherformsofremuneration
Total
100
100
100
100 Outstanding deferred remuneration performance adjustments:
Ofwhichexposedtoex-postadjustments Reductionsincurrentyearduetoex-postadjustmentsexplicit
Reductionsincurrentyearduetoex-postadjustmentsimplicit
2
100 –
– 100
– –
Outstanding retained remuneration performance adjustments: Ofwhichexposedtoex-postadjustments
Reductionsincurrentyearduetoex-postadjustmentsexplicit Reductionsincurrentyeardue-toex-postadjustmentsimplicit
– –
– –
– –
Headcount
20 273
Table 1: Guaranteed Bonuses, Sign-on Bonuses and Severance Payments
Table 2: Breakdown of Long-term Remuneration Awards
1 Value of DBSH ordinary shares including retention shares granted in respect of performance year 2014 vs. value of DBSH ordinary shares including retention
shares granted in respect of performance year 2013. Share price taken at date of grant 2 [No. of unvested DBSH ordinary shares as at 31 Dec 14 x share price as at 31 Dec 14] [No. of unvested DBSH ordinary shares as at 31 Dec 13 x share price as
at 31 Dec 13] 3 The increase is due to the difference in share price between 31 Dec 2013 and 31 Dec 2014 and the higher number of shares granted in 2014 relative to shares
vested in 2014 4 Figures in parentheses show the change in deferred remuneration awarded if the same population of staff that fulfils the definition of SM and MRTs for both
performance year 2013 and 2014 is used
Examplesofexplicitex-postadjustmentsincludemalus,clawbacksorsimilarreversalordownwardrevaluationsofawards. Examplesofimplicitex-postadjustmentsincludeluctuationsinthevalueofDBSHordinarysharesorperformanceunits.
Other Provisions Wedonotallowacceleratedpaymentofdeferredremunerationexceptincasessuchasdeathinservice.Therearenoprovisionsfor:
• specialexecutiveretirementplans;
• goldenparachutesorspecialexecutiveseverancepackages;andor
• guaranteedbonusesbeyondoneyear
Due to data confidentiality, the total amount of payments for SM and MRTs have been aggregated for reporting
CHIEF EXECUTIVE OFFICER OurCEOMrPiyushGuptahasledDBSsinceNovember2009.Duringhistenure,thefundamentalconstructofthebankhaschanged,
andDBSisoperatingonahigherplane.Inparticular,inspiteofthechallengingglobalmacroeconomicconditionsofthepastfewyears, DBShasdelivered22consecutivequartersofyear-on-yearearningsgrowth.Since2009,full-yearincomehasgrownbyaround50to
SGD9.6billionwhilenetproithasdoubledtoSGD4billion.
Allthishasbeenmadepossiblethroughfocusedexecutionagainstaclearly-deinedstrategicroadmap.Inthepastiveyears,DBShas entrenchedourleadershipinSingapore,re-positionedHongKong,diversiiedourearningsbase,andbuiltleadingregionalfranchisesin
Wealth,SmallandMediumEnterpriseBanking,TransactionBankingandTreasuryCustomerbusiness.Thebank’ssolidperformanceis underpinnedbystronginancialdisciplineandriskmanagement.
Recognisingthatnewtechnologiesarerevolutionisingthewaypeoplebank,theCEOhasalsochampionedastrongdigitalinnovation agendawithinthebank.ThishasputDBSattheforefrontofshapingthefutureofbanking.Byleveragingtechnology,wearemaking
bankingeasierforourcustomers.Theseeffortshavebeenrecognisedexternally.
Inaddition,notonlyisourbrandgoingfromstrengthtostrength,DBSisalsoincreasinglystandingoutforourimprovedcustomer satisfactionaswellasengagedworkforce.
Onthebackoftheseachievements,theCMDCwiththeBoard’sendorsementhasdecidedontheremunerationfortheCEOafter consideringthefollowing:
• Payingforperformance,takingintoaccountourstrongperformanceandassessingthequalityofexecutionagainstthe
balancedscorecard •
CompetitivenessoftheCEO’scompensationpackage,takingintoaccountoursustainedperformancedespiteexternalmarketheadwinds •
Commitmenttocreatinglong-termvalueforallofourstakeholders,whiledeliveringrisk-adjustedreturnswhichcontributetowards sustainableshareholdervaluecreation
BREAKDOWN OF REMUNERATION FOR PERFORMANCE YEAR 2014 1 JANUARY – 31 DECEMBER
Salary Cash
Share Remuneration
Bonus
1
Plan
3
Others
2
Total
4
SGD SGD
SGD SGD
SGD
MrPiyushGupta 1,200,000
3,791,000 5,074,000
55,545 10,120,545
1 The amount has been accrued in 2014 financial statements 2 Represents non-cash component and comprises club, car and driver
3 At DBS, dividends on unvested shares do not accrue to employees. For better comparability with other listed companies, this figure excludes the estimated value of retention shares amounting to SGD 1,014,800 which is similar in nature to the accrued dividends for deferred awards in those companies
4 Refers to current year performance remuneration – includes fixed pay in current year, cash bonus received in following year and DBSH ordinary shares granted in following year
OTHER KEY EXECUTIVES AlthoughtheCodeandtheGuidelinesrecommendthatatleastthetopivekeyexecutives’remunerationbedisclosedwithinbands
ofSGD250,000andinaggregate,theBoardbelievesthatsuchdisclosurewouldbedisadvantageoustoourbusinessinterests,giventhe highlycompetitiveconditionsinthebankingindustrywherepoachingofexecutivesiscommonplace.Nonetheless,theaggregatedtotal
remunerationforourSeniorManagementexcludingtheCEOin2014amountstoSGD53million.
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SUMMARY OF DISCLOSURES
ExpressdisclosurerequirementsintheGuidelinesonCorporateGovernanceforFinancialHoldingCompanies,Banks,DirectInsurers, ReinsurersandCaptiveInsurerswhichareincorporatedinSingaporewhichcomprisestheCodeofCorporateGovernance2012,andthe
applicabledisclosurespursuanttotheCorporateGovernanceDisclosureGuideissuedbytheSingaporeExchangeon29January2015.
PRINCIPLE AND GUIDELINES PAGE REFERENCE IN
DBS ANNUAL REPORT 2014
Guideline 1.3 Delegationofauthority,bytheBoardtoanyBoardcommittee,tomakedecisions
oncertainBoardmatters Page63
Guideline 1.4 ThenumberofmeetingsoftheBoardandBoardcommitteesheldintheyear,
aswellastheattendanceofeveryBoardmemberatthesemeetings Pages61to62
Guideline 1.5 ThetypeofmaterialtransactionsthatrequireBoardapprovalunderguidelines
Page60
Guideline 1.6 Theinduction,orientationandtrainingprovidedtonewandexistingdirectors
Pages66to67
Guideline 1.16 AnassessmentofhowtheseprogrammesmeettherequirementsassetoutbytheNCto
equiptheBoardandtherespectiveBoardcommitteeswithrelevantknowledgeandskills inordertoperformtheirroleseffectively
Pages66to67
Guideline 2.1 CompliancewiththeguidelineonproportionofindependentdirectorsontheBoard
Page66
Guideline 2.3 TheBoardshouldidentifyintheCompany’sAnnualReporteachdirectoritconsiders
tobeindependent.WheretheBoardconsidersadirectortobeindependentinspite oftheexistenceofarelationshipasstatedintheCodethatwouldotherwisedeem
adirectornottobeindependent,thenatureofthedirector’srelationshipandthe reasonsforconsideringhimasindependentshouldbedisclosed
Page66
Guideline 2.4 WheretheBoardconsidersanindependentdirector,whohasservedontheBoard
formorethannineyearsfromthedateofhisirstappointment,tobeindependent, thereasonsforconsideringhimasindependentshouldbedisclosed
NotApplicable
Guideline 2.6 a TheBoard’spolicywithregardtodiversityinidentifyingdirectornominees
b WhethercurrentcompositionoftheBoardprovidesdiversityonskills,experience, genderandknowledgeoftheCompany,andelaboratewithnumericaldatawhere
appropriate c StepsthattheBoardhastakentoachievethebalanceanddiversitynecessary
tomaximiseitseffectiveness Pages59and65
Guideline 2.13 NamesofthemembersoftheEXCOandthekeytermsofreferenceoftheEXCO,
explainingitsroleandtheauthoritydelegatedtoitbytheBoard Page68
Guideline 3.1 RelationshipbetweentheChairmanandtheCEOwheretheyareimmediate
familymembers NotApplicable
PRINCIPLE AND GUIDELINES PAGE REFERENCE IN
DBS ANNUAL REPORT 2014
Guideline 4.1 NamesofthemembersoftheNCandthekeytermsofreferenceoftheNC,
explainingitsroleandtheauthoritydelegatedtoitbytheBoard Pages64to67
Guideline 4.4 a ThemaximumnumberoflistedcompanyBoardrepresentationswhichdirectors
mayholdshouldbedisclosed b ReasonsfornotdeterminingmaximumnumberoflistedcompanyBoard
representations c Speciicconsiderationsindecidingonthecapacityofdirectors
Page67
Guideline 4.6 Processfortheselection,appointmentandre-appointmentofnewdirectors
totheBoard,includingthesearchandnominationprocess Page65
Guideline 4.7 Keyinformationregardingdirectors,includingwhichdirectorsareexecutive,
non-executiveorconsideredbytheNCtobeindependent Pages58,61,62and66
Guideline 4.13 Resignationordismissalofkeyappointmentholders
NotApplicable
Guideline 4.14 Deviationandexplanationforthedeviationfromtheinternalguidelinesontime
commitmentreferredtoinGuidelines4.4and4.10 Page67
Guideline 5.1 TheBoardshouldstateintheCompany’sAnnualReporthowassessmentoftheBoard,
itsBoardcommitteesandeachdirectorhasbeenconducted.Ifanexternalfacilitator hasbeenused,theBoardshoulddiscloseintheCompany’sAnnualReportwhetherthe
externalfacilitatorhasanyotherconnectionwiththeCompanyoranyofitsdirectors. ThisassessmentprocessshouldbedisclosedintheCompany’sAnnualReport
Pages65to66
Guideline 6.1 TypesofinformationwhichtheCompanyprovidestoindependentdirectorstoenable
themtounderstanditsbusiness,thebusinessandinancialenvironmentaswellasthe risksfacedbytheCompany,andhowfrequentissuchinformationprovided.
Pages60,61,71and73
Guideline 7.1 NamesofthemembersoftheRemunerationCommitteeRCandthekeytermsof
referenceoftheRC,explainingitsroleandtheauthoritydelegatedtoitbytheBoard Pages71to72
Guideline 7.3 Namesandirmsoftheremunerationconsultantsifanyshouldbedisclosed
intheannualremunerationreport,includingastatementonwhetherthe remunerationconsultantshaveanyrelationshipswiththeCompany
Page80
Principle 9 Cleardisclosureofremunerationpolicies,levelandmixofremuneration,andprocedure
forsettingremuneration Pages77to80
Guideline 9.1 Remunerationofdirectors,theCEOandatleastthetopivekeymanagementpersonnel
whoarenotalsodirectorsortheCEOoftheCompany.Theannualremunerationreport shouldincludetheaggregateamountofanytermination,retirementandpost-
employmentbeneitsthatmaybegrantedtodirectors,theCEOandthetopivekey managementpersonnelwhoarenotdirectorsortheCEO
For the CEO and management: Page81
For the Company’s other directors:
Pages61,62and72
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PRINCIPLE AND GUIDELINES PAGE REFERENCE IN
DBS ANNUAL REPORT 2014
Guideline 9.2 FullydisclosetheremunerationofeachindividualdirectorandtheCEOonanamed
basis.Therewillbeabreakdowninpercentageordollartermsofeachdirector’s andtheCEO’sremunerationearnedthroughbaseixedsalary,variableorperformance-
relatedincomebonuses,beneitsinkind,stockoptionsgranted,share-basedincentives andawards,andotherlong-termincentives
For the CEO: Page82
For the Company’s other directors:
Pages61,62and72
Guideline 9.3 Nameanddisclosetheremunerationofatleastthetopivekeymanagementpersonnel
whoarenotdirectorsortheCEOinbandsofSGD250,000.Therewillbeabreakdown inpercentageordollartermsofeachkeymanagementpersonnel’sremunerationearned
throughbaseixedsalary,variableorperformance-relatedincomebonuses,beneitsin kind,stockoptionsgranted,share-basedincentivesandawards,andotherlong-term
incentives.Inaddition,theCompanyshoulddiscloseinaggregatethetotalremuneration paidtothetopivekeymanagementpersonnelwhoarenotdirectorsortheCEO.As
bestpractice,companiesarealsoencouragedtofullydisclosetheremunerationofthe saidtopivekeymanagementpersonnel
Page82
Guideline 9.4 Detailsoftheremunerationofemployeeswhoareimmediatefamilymembersofa
directorortheCEO,andwhoseremunerationexceedsSGD50,000duringtheyear.This willbedoneonanamedbasiswithclearindicationoftheemployee’srelationshipwith
therelevantdirectorortheCEO.Disclosureofremunerationshouldbeinincremental bandsofSGD50,000
Page72
Guideline 9.5 Detailsandimportanttermsofemployeeshareschemes
Pages79,186and187
Guideline 9.6 Forgreatertransparency,companiesshoulddisclosemoreinformationonthelink
betweenremunerationpaidtotheexecutivedirectorsandkeymanagementpersonnel, andperformance.Theannualremunerationreportshouldsetoutadescriptionof
performanceconditionstowhichentitlementtoshort-termandlong-termincentive schemesaresubject,anexplanationonwhysuchperformanceconditionswerechosen,
andastatementofwhethersuchperformanceconditionsaremet Pages77to80and82
Guideline 11.3 TheBoardshouldcommentontheadequacyandeffectivenessoftheinternalcontrols,
includinginancial,operational,complianceandinformationtechnologycontrols, andriskmanagementsystems.Thecommentaryshouldincludeinformationneeded
bystakeholderstomakeaninformedassessmentoftheCompany’sinternalcontroland riskmanagementsystems.TheBoardshouldalsocommentonwhetherithasreceived
assurancefromtheCEOandtheCFO:athattheinancialrecordshavebeenproperly maintainedandtheinancialstatementsgivetrueandfairviewoftheCompany’s
operationsandinances;andbregardingtheeffectivenessoftheCompany’srisk managementandinternalcontrolsystems
Page73
Guideline 11.14 NamesofthemembersoftheBoardriskcommitteeandthekeytermsofreferenceofthe
Boardriskcommittee,explainingitsroleandtheauthoritydelegatedtoitbytheBoard Pages70to71
Guideline 12.1 NamesofthemembersoftheACandthekeytermsofreferenceoftheAC,explainingits
roleandtheauthoritydelegatedtoitbytheBoard Pages68to70
PRINCIPLE AND GUIDELINES PAGE REFERENCE IN
DBS ANNUAL REPORT 2014
Guideline 12.6 Aggregateamountoffeespaidtotheexternalauditorforthatinancialyear,and
breakdownoffeespaidintotalforauditandnon-auditservicesrespectively,oran appropriatenegativestatement
Page70
Guideline 12.7 Theexistenceofawhistle-blowingpolicyshouldbedisclosedintheCompany’s
AnnualReport Pages74to75
Guideline 12.8 SummaryoftheAC’sactivitiesandmeasurestakentokeepabreastofchangesto
accountingstandardsandissueswhichhaveadirectimpactoninancialstatements Page70
Guideline 13.1 WhethertheCompanyhasaninternalauditfunction
Pages69,73and74
Guideline 15.4 ThestepstheBoardhastakentosolicitandunderstandtheviewsoftheshareholders
e.g.throughanalystbrieings,investorroadshowsorInvestors’Daybrieings Page76
Guideline 15.5 Wheredividendsarenotpaid,companiesshoulddisclosetheirreasons
NotApplicable
Guideline 17.4 Materialrelatedpartytransactions
Page75
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The table below gives an overview of the locations of our risk disclosures.
In 2014, we have implemented most of the Enhanced Disclosure Task Force EDTF recommendations for improved bank risk disclosures
1
. For an overview of the recommendations and where we have incorporated the relevant disclosures,
please refer to Appendix on page 115.
Management
Risk
RISK MANAGEMENT SECTION OTHER LOCATIONS IN
ANNUAL REPORT PILLAR 3 QUANTITATIVE
DISCLOSURES
R IS
K O
V E
RV IE
W
1
RiskTakingandour BusinessSegments
2
RiskOverview 89
89 CapitalManagement
andPlanning 118
1
Introduction
2 CapitalAdequacy 3
ExposuresandRiskWeighted AssetsRWA
RI S
K G
O V
ERN A
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E
3.1 RiskandControl 3.2 GovernanceStructure
92 93
CorporateGovernanceReport 57
R IS
K A
P PE
T IT
E
4.1 RiskConstrainingThresholds
andUseofEconomicCapital
4.2 StressTesting
94 95
RemunerationReport 77
C R
ED IT
RI S
K
5.1 CreditRiskManagement
atDBS
5.2 CreditRiskMitigants 5.3 InternalCreditRiskModels
5.4 CreditRiskin2014