Rising Above

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CORPORATE GOVERNANCE REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007The Group has operations in Singapore and the People’s Republic of China (“PRC”). The Chairman oversees the Group operation. Theexecutive responsibilities of various head office functions in Singapore are carried out by the executive directors of the Company whilethe CEO is primarily responsible for operations in the PRC subsidiaries. These roles are separated to ensure an appropriate balance ofpower, increased accountability and greater capacity of the Board for independent decision making.The Chairman has nearly 40 years of experiences in the shipbuilding industry. He is responsible for strategic business developmentdecisions, leading the Board and facilitating its effectiveness. The CEO was appointed in June 2006. He brings with him more than20 years of industry experiences in design, production and management of offshore projects and bears executive responsibility for thePRC operation. The Chairman and the CEO are not related.The Board is provided with quarterly management accounts, project progress and operational reports. The annual budget, quarterlyfinancial results and updated forecasts are presented to the Board for approval. As a general rule, board papers are sent to directorsat least three working days in advance in order for directors to be adequately prepared for each meeting. Senior management attendsboard meetings to answer any queries from the Board. The directors also have unrestricted access to the Group’s senior managementat all times.The Company Secretary attends all Board meetings and ensures the Board procedures are followed. It is the Company Secretary’sresponsibility to ensure that the Company complies with the requirements of the Companies Act. The Company’s Articles of Association(“Articles”) provide that the appointment or removal of the Company Secretary is subject to approval of the Board.The directors, whether as a group or individually, seek independent professional advice relating to the Group’s affairs when necessaryin the furtherance of their duties, at the Group’s expense.Nomination Committee (“NC”)Principle 4: Formal and transparent process for appointment of new directorsPrinciple 5: Formal assessment of the effectiveness of the Board and contribution of each directorThe Nomination Committee is set up in January 2008 and had one meeting since then. It is chaired by Mr. Ang Kong Hua. The otherNC members are Mr. Brian Chang and Mr. Sum Soon Lim. The NC has a written Terms of Reference endorsed by the Board that setsout its duties and responsibilities.The appointments and re-appointments of directors are done through a transparent process. The NC ascertains whether all nonexecutivedirectors are independent and that directors have devoted sufficient time and attention to the Group’s affairs. The NCevaluates the Board’s performance as a whole, and the performance of individual directors, based on certain performance criteria,including qualitative and quantitative factors such as performance of principal functions and fiduciary duties, level of participation inmeetings, guidance provided to management, and attendance at meetings.Under the Articles, each director is required to retire at least once in every three years by rotation and all newly appointed directors haveto retire at the Annual General Meeting (“AGM”) following their appointment. The retiring directors are eligible to offer themselvesfor re-election.The NC is also responsible for determining annually, the independence of the directors. In doing so, the NC takes into account thecircumstances set forth in Guideline 2.1 of the 2005 Code and any other salient factors. Following the annual review, Mr. Ang KongHua, Mr. Francis James Reidy and Mr. Sum Soon Lim are endorsed to be independent.The NC is satisfied that sufficient time and attention are being given by the directors to the affairs of the Group, notwithstandingthat some of the directors have multiple board representations, and there is no need to implement internal guidelines to address theircompeting time commitments. The matter is reviewed on an annual basis by the NC.30 YANTAI RAFFLES SHIPYARD LIMITED
CORPORATE GOVERNANCE REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007Remuneration Committee (“RC”) and Disclosure on remunerationPrinciple 7: Formal and transparent procedures for fixing remuneration package of directorsPrinciple 8: Appropriate remuneration to attract, retain and motivate directorsPrinciple 9: Clear disclosure of remuneration policy, level and mixThe RC was set up in March 2007 and comprises three non-executive and independent directors. It is chaired by Mr. Ang Kong Hua.The other RC members are Mr. Francis James Reidy and Mr. Liu Chee Ming.The principal responsibilities of RC are:• Recommending to the Board for endorsement, a framework of computation of Board’s fees, as well as remuneration of executivedirectors and senior management to ensure that they are competitive and sufficient to attract, retain and motivate key executivesof the required quality to run the Group successfully;• Recommending the specific remuneration package for each director and for senior management of the Group; and• Administering the Yantai Raffles Executive Share Option Scheme (“ESOS”).The RC reviews and determines the remuneration packages of the executive directors and key executive to ensure that directors areadequately remunerated. The RC also considers, in consultation with the Chairman, key executives’ responsibilities, skills, expertiseand contribution to the Group’s performance and whether remuneration packages are competitive to ensure that the Group is able toattract and retain the best available executive talent. No individual director is involved in fixing his own remuneration.Non-executive directors are paid fees annually on a standard fee basis. The fees proposed to the paid to the non-executive directorsfor the current financial year are determined based on the following formula:Proposed Fee (FY2007)SGDChairman MemberRetainer fee for non-executive directors NA 45,000Audit Committee 30,000 20,000Remuneration Committee 10,000 10,000Nomination Committee 10,000 10,000If a Board or committee member occupies a position for part of the financial year, the fee or allowance payable will be proratedaccordingly. Such fees will be approved by the shareholders of the Company as a lump sum payment at the AGM.The level and mix of each executive director’ remuneration package for the current financial year is as follows:Fees(%)Basic salary(%)Variablebonus / profitsharing(%)Benefits inkind(%)Fair value ofstock options(%)Executive directors<strong>Above</strong> S$1,000,000Brian Chang - 23 77* - - 100Julian Chang 33 3 5 59 100Total(%)Between S$500,000 to S$999,999Michael Lindsay Sharp - 53 4 23 20 100Chang Yee Meng, Malcolm - 30 2 3 65 100* Subject to approval of the Remuneration Committee.Three immediate family members of certain directors have employment relationships with the Group and have received remunerationaggregating less than S$250,000 in those capacities during the financial year.ANNUAL REPORT 2007 31
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NOTICE OF THE ANNUAL GENERAL MEETIN
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