KEPPEL Corporation's chief executive Loh Chin Hua took a pay cut last October in a financial year when the group was hit by the proverbial perfect storm.
Mr Loh voluntarily reduced his monthly base salary by 10 per cent with effect from Oct 1, 2016, Keppel's FY2016 annual report said.
His base or fixed salary was S$1.16 million for 2016. And his total remuneration for the year, which included the base pay, was S$5.95 million, a fall of 11.6 per cent. Also included in the total remuneration were paid performance-related bonuses of S$1.2 million, S$1.51 million performance-related bonuses categorised as "deferred and at risk", and contingent awards of shares.
The annual report said Keppel Corp directors, key management personnel and the group's senior management collectively volunteered for cuts in fees and base pay.
All non-executive directors volunteered for a 10 per cent reduction in their total fees for FY2016.
The group also undertook several right-sizing measures, in particular in the offshore and marine (O&M) business which saw continued uncertainties.
Keppel Corp said the measures were to exemplify solidarity across the group and to signal the importance of maintaining a flexible cost structure.
In FY2016, the group's once flagship O&M division slipped into its first quarterly loss in years.
Keppel O&M, erstwhile the largest profit contributor to Keppel Corp, slipped into the red in Q4 with a net loss of S$138 million after some S$270 million in provisions.
In a published interview with the CEO in the annual report, Mr Loh said: "Although the winter in the offshore business is expected to persist for some time, we remain confident of the longer term fundamentals of the sector."
"Projects that are well-designed and executed in a smart and cost-effective way will be in demand. There will also be other markets to explore such as for gas and production solutions, as well as opportunities to re-purpose and maximise our offshore technologies for other non-drilling applications," he said.
Mr Loh also emphasised that Keppel O&M had stayed above water for 2016 with an operating profit of S$412 million before impairments, despite its Q4 loss, due to prudent cost-cutting and rightsizing measures.
As a diversified group with multi-business exposure, Keppel Corp delivered a net profit of S$784 million after impairments for FY16. Keppel's property division overtook O&M as the largest profit contributor, accounting for 79 per cent of the group's net profit for FY16.
Keppel's shares closed at S$6.89, down eight cents, on Thursday.
This article was first published on March 31, 2017.
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