We thank Mr Roland Chia for his letter (Are CEOs' massive pay packages justified?; July 6).
It is important that our stakeholders and the public have a balanced and complete view of how we remunerate senior management, including our group chief executive officer.
We have a pay-for-performance philosophy that goes beyond current year profits alone to ensure long-term value creation and sustainability.
This philosophy measures and rewards short-term, mid-term and long-term performances.
Short-term performance is measured through a balanced scorecard approach which rates individuals against key financial and non-financial performance indicators.
Mid-term performance is rewarded by a value-sharing bonus, which is dependent on the overall economic profit of the group, that is, excess return over risk-adjusted cost of capital.
This is a measure of value creation for our shareholders and is not linked in any way to the choppiness of economic cycles nor the vagaries of the stock market.
It is important to note that this bonus can be clawed back down the road if our senior management does not continue to deliver sustainable value for the company.
Lastly, there is a long-term incentive scheme in the form of performance shares to reinforce the delivery of long-term growth, measured by total shareholder returns in relative and absolute terms.
Over the last five years, our group CEO has led a company-wide business transformation that has not just revamped our core businesses to stay relevant and compete in the new economy. She and her team have also built new digital businesses that are becoming fresh sources of revenue for the mid to long term.
As a large and complex business that operates across the region, our compensation is also benchmarked against comparable businesses.
About 70 per cent of our earnings come from overseas and this diversification has also helped create considerable shareholder value.
Over the last five years, Singtel has delivered total shareholder returns of 9.4 per cent.
This return outperformed both the MSCI Asia Pacific Telecommunications Index (9.3 per cent) and the Straits Times Index (4.4 per cent).