My first Publication ocbc_ar17_fullreport_english | Page 72

CORPORATE GOVERNANCE
under the Scheme cannot exceed 10%
of the Bank’s total number of issued
ordinary shares.
The acquisition price for each ordinary
share in respect of which the option
is exercisable shall be determined by
the Remuneration Committee to be a
price equal to the average of the last
dealt price of the shares for the five
consecutive trading days immediately
prior to the date of grant. No options
have been granted at a discount to the
price as determined above since the
commencement of the Scheme.
The validity period of the options is
subject to legislation applicable on
the date of grant. Based on current
legislation, options granted to
Group executives are exercisable
for up to ten years, while options
granted to non-executive Directors
are exercisable for up to five years.
The options may be exercised after
the first anniversary of the date of
grant, in accordance with a vesting
schedule to be determined by the
Remuneration Committee on the
date of grant of the respective options.
The Committee has adopted the
following vesting schedule:
Percentage of shares for
which an option is exercisable
On or before the first anniversary
of the date of grant
Nil
After the first anniversary but on
or before the second anniversary of
the date of grant 33%
After the second anniversary but
on or before the third anniversary
of the date of grant 33%
After the third anniversary but
before the date of expiry of the
exercise period 34%
These options will lapse immediately
upon termination of employment or
appointment, except in the event of
retirement, redundancy or death, or
where approved by the Remuneration
Committee, in which case the Committee
may allow the options to be retained and
exercisable within the relevant option
70
OCBC ANNUAL REPORT 2017
periods or such option periods as may
be determined by the Remuneration
Committee. Shares granted upon the
exercising of options are allocated from
treasury shares or from new ordinary
shares issued by the Bank.
All grants are subject to cancellation and
clawback if it is determined that they
were made on the basis of materially
inaccurate financial statements and/
or that the employee has engaged in
conduct that results in financial loss,
reputational harm, restatement of
financial results and/or adverse changes
to the Bank’s risk profile/rating.
OCBC Deferred Share Plan
The OCBC Deferred Share Plan ("the
Plan") aims to increase the performance-
orientation and retention factor in
compensation packages of executives,
and foster an ownership culture within
the organisation. It also aligns the
interests of executives with the
sustained business performance of
the Bank. Group executives holding the
rank or equivalent rank of Assistant
Manager and above, and any Group
Executive Director selected by the
Remuneration Committee, are eligible
to participate in the Plan. In 2017,
the participants are executives of
the Bank, selected overseas locations
and subsidiaries.
Share awards are granted annually to
eligible executives who are paid variable
performance bonuses of S$70,000 or
more. The share awards form 20% to
40% of their total variable performance
bonus for the year. Half (50%) of the share
awards will vest after two years with the
remaining 50% vesting at the end of three
years in accordance with the guidelines
established under the Plan. Prior to the
vesting date, the executives will not be
accorded voting rights for the shares.
Shares granted are allocated from treasury
shares or acquired from the market in
accordance with guidelines established
under the Plan. The unvested deferred
share grants will be adjusted to take into
account dividends declared by the Bank.
The additional shares granted in respect
of this adjustment may be acquired from
the market in accordance with guidelines
established under the Plan.
The awards will lapse immediately
upon termination of employment or
appointment, except in the event of
retirement, redundancy or death, or
where approved by the Remuneration
Committee, in which case the Committee
may allow the awards to be retained and
vested within the relevant vesting periods
or such periods as may be determined by
the Remuneration Committee.
All awards are subject to cancellation and
clawback if it is determined that they
were granted on the basis of materially
inaccurate financial statements and/or
that the employee has engaged in
conduct that results in financial loss,
reputational harm, restatement of
financial results and/or adverse changes
to the Bank’s risk profile/rating.
During the financial year, an aggregate of
6,291,099 ordinary shares were granted to
eligible executives of the Group pursuant
to the Plan.
OCBC Employee Share Purchase Plan
The OCBC Employee Share Purchase
Plan ("ESPP") was implemented for all
employees of the participating companies
in the Group, including executive
Directors, to inculcate in all participants
a stronger and more lasting sense of
identification with the Group.
The ESPP is a saving-based share
ownership plan to help employees own
ordinary shares in the Bank through their
monthly contributions via deductions
from payroll and/or CPF funds. The
employees have the option to convert
the contributions to ordinary shares after
one year or to withdraw the contributions
at any time. As a further incentive to
employees to enrol in the ESPP, the Bank
pays interest on the amounts saved at a
preferential interest rate.
The duration of the offering period is
24 months and the share acquisition
price is fixed before the offering period
based on the average of the last traded
prices over the five consecutive trading
days immediately preceding the price