Annual Report and Accounts 2013

Corporate Governance

COMPLIANCE STATEMENT

DP World Limited (the Company) is incorporated in the Dubai International Financial Centre (DIFC). The Company has a dual primary listing which requires compliance with the regulatory obligations of the Dubai Financial Services Authority (DFSA) and the UK Financial Conduct Authority (FCA). The Board reviews and monitors the policies and procedures that are in place to ensure compliance with the Corporate Governance principles of the UK Corporate Governance Code (the Code) and the DFSA Market Rules (the Market Rules).

The edition of the Code published in September 2012 applied throughout our financial year ending 31 December 2013, but the FCA has yet to change the Listing Rules and therefore requires that certain compliance statements are made in relation to the Code as it was published in 2010 by the Financial Reporting Council. Any reference throughout this Annual Report & Accounts to the application of, or compliance with the Code, refers to both versions of the Code, unless otherwise stated.

During the financial year ended 31 December 2013, the Company has applied the Corporate Governance principles of the Code and Market Rules.

Throughout the financial year, the Company complied with the provisions of the Code other than provision A.3.1 in that the Chairman did not meet the independence criteria laid out in provision B.1.1 of the Code at the time of his appointment. The Chairman, Sultan Ahmed Bin Sulayem, was Chairman of Dubai World and Port & Free Zone World FZE at the time that DP World was admitted to listing in Dubai and remains one of Port & Free Zone World FZE’s representatives on the DP World Board.

The Company appointed Sir John Parker as Joint Vice Chairman and Senior Independent Non-Executive Director. Sir John Parker chairs the Nominations and Governance Committee and, together with the Chairman, leads on governance matters and the annual performance review of the Board and its Committees. The Board believes that this support ensures that robust governance is maintained and that appropriate challenge to the executives is in place.

Directors

The Board of eight Directors manages the Company’s business. The primary responsibility of the Board is to foster the long-term success of the Company.

All Directors have access to the Board Legal Adviser and Company Secretary and independent professional advice at the Company’s expense, if required.

The Board met seven times during the year either in person or via telephone or video conference. In addition, written resolutions (as provided by the Articles) were used as required for the approval of decisions that exceeded the delegated authorities provided to Executive Directors and Committees.

Although there is a prescribed pattern of presentation to the Board, including matters specifically reserved for the Board’s decision (which include: strategy; the annual budget; dividends; major transactions; safety and environment policies; insurance and risk management; and internal controls), all Board meetings tend to have further subjects for discussion and decision taking. Board papers, including an agenda, are sent out in advance of the meetings. Board meetings are discursive in style and all Directors are encouraged to offer their opinions.

The Matters Reserved to the Board are available on DP World’s website.

The Board has delegated the following responsibilities to management: the development and recommendation of strategic plans for consideration by the Board that reflect the long-term objectives and priorities established by the Board; implementation of DP World’s strategies and policies as determined by the Board; monitoring the operating and financial results against plans and budgets; monitoring the quality of the investment process against objectives, prioritising the allocation of capital and technical resources; and developing and implementing risk management systems, subject to the continued oversight of the Board and the Audit Committee.

Details of the Directors of the Company are available in the Board of Directors section.

INDEPENDENT NON-EXECUTIVE DIRECTORS

In compliance with the Code, at least half the Board (excluding the Chairman) comprised of Independent Non-Executive Directors during 2013. David Williams, who has served as an Independent Non-Executive Director of DP World since 30 May 2007, will retire from his position on 28 April 2014. During the course of 2014, we intend to expand the Board in line with DP World’s commitment to best governance practices and in compliance with our corporate governance obligations.

In December 2013, the Company announced that effective 1 January 2014, Robert Woods will replace retiring director Cho Ying Davy Ho who has served as an Independent Non-Executive Director of DP World since 30 May 2007.

In order for the Independent Non-Executive Directors to contribute fully to the Board, and in particular to challenge the Executive Directors over strategic matters where appropriate, it is important that the Independent Non-Executive Directors bring experience, probity and independence to the Board. Accordingly, the independence of the Independent Non-Executive Directors is considered annually.

The Board believes the Independent Non-Executive Directors have retained independent character and judgement. The Board considers that the varied and relevant experience of all the Independent Directors provides an exceptional balance of skills and knowledge which is of great benefit to the Company.

ROLES OF THE CHAIRMAN, GROUP CHIEF EXECUTIVE OFFICER AND SENIOR INDEPENDENT DIRECTOR

The positions of Chairman and Group Chief Executive Officer are held by separate individuals with separate roles and responsibilities which have been approved by the Board. The Chairman, in conjunction with the Senior Independent Director is responsible for leadership and effective management of the Board in all aspects of its role and its governance. The Chairman chairs the Board meetings ensuring, with the support of the Senior Independent Director, that the agendas are forward looking and that relevant business is brought to the Board for consideration in accordance with the schedule of matters reserved to the Board and that each Director has the opportunity to consider the matters brought to the meeting and to contribute accordingly. The Group Chief Executive Officer, as leader of the Company’s executive team, retains responsibility for the leadership and day-to-day management of the Company and the execution of its strategy as approved by the Board.

Sir John Parker has acted as Senior Independent Director since the initial public offering of the Company in 2007. His responsibilities include supporting the Chairman in the leadership of the Board and meeting with the Independent Non-Executive Directors at least once a year to appraise the Chairman’s performance and holding discussions with the Independent Non-Executive Directors without the executives present.

Board Performance

BOARD EVALUATION

The Board undertakes a formal and rigorous annual evaluation of its own performance and that of its Committees and individual Directors. In compliance with the UK Corporate Governance Code, the Board evaluation is facilitated by an external and independent reviewer every three years. An externally facilitated review was conducted for the 2012 financial year and in 2013 the Board evaluation was facilitated internally by the Board Legal Adviser and Company Secretary.

The 2013 review was carried out using questionnaires and the key areas of focus were strategy, succession planning, training and development, Board processes and structure, information flow and communication.

EVALUATION PROCESS

The following actions were taken as part of the 2013 evaluation process:

  • a questionnaire was sent to each Director;
  • the Senior Independent Non-Executive Director and Chairman held one-to-one interviews with each Director, using their questionnaire responses as a starting point for the interview;
  • questionnaires were also used to perform reviews of the Committees;
  • the questionnaire responses from the Board members and reviews of the Committees were shared with the Senior Independent Non-Executive Director (SID);
  • the SID subsequently met with each Director individually to discuss and review;
  • a paper discussing the key issues raised during the evaluation process was prepared and submitted for Board consideration; and
  • following consideration of the Board paper, an action plan for 2014 was set by the Board.
CONCLUSIONS

The review concluded that the Board continued to display commitment to good governance and adopting board best practice. Particular attention to board composition was noted, with an emphasis on achieving optimum board diversity.

TRACKING FROM PREVIOUS EVALUATION AND NEXT STEPS FOR 2014

As a result of the evaluation conducted of the Board’s performance during 2012, the Company enhanced the strategic planning decision and performance discussion. The Board ensured a constant improvement of its processes and procedures and quality of debate during 2013.

The actions arising from the 2013 Board evaluation have been incorporated into a Board action plan for 2014. The principal actions reflect the continued focus of the Board on board diversity, succession planning and strategic decisions.

RELATIONS WITH SHAREHOLDERS

The Company is committed to communicating its strategy and activities clearly to its shareholders and, to that end, maintains an active dialogue with investors through a planned programme of investor relations activities.

The Company’s full and half-year results and quarterly throughput announcements are reported to investors through a combination of presentations and conference calls. The full and half-year reporting is then followed by investor meetings in major cities in locations where the Company has or is targeting institutional shareholders. These locations may include Australia, Asia, Europe, North America and the UAE.

Regular attendance at Industry and Regional Investor Conferences provides opportunities to meet with existing and prospective shareholders in order to update them on performance or to introduce them to the Company. In addition, DP World frequently hosts investor and analyst visits to DP World’s ports around the world, offering analysts and shareholders a better understanding of the day-to-day business and the opportunity to meet regional and port management teams.

All presentations and related investor communications are available in a dedicated section of DP World’s website.

The Board receives regular updates on the views of shareholders through briefings from the Chairman, Group Chief Executive Officer and Chief Financial Officer as well as reports from the Company’s corporate brokers and investor relations team. In 2013 the Company maintained corporate broking relationships with Citigroup Global Markets Limited, Deutsche Bank AG and Nomura International PLC.

The Chairman, the Senior Independent Director and the chairmen of the Board’s Committees are available to meet major investors on request. The Senior Independent Non-Executive Director has a specific responsibility to be available to shareholders who have concerns, and for whom contact with the Chairman, Group Chief Executive Officer or Chief Financial Officer has either failed to resolve their concerns, or for whom such contact is inappropriate.

ACCOUNTABILITY

The Board is responsible for DP World’s system of internal control and for reviewing its effectiveness. The internal control system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material mis-statement or loss.

The system of internal control described in the Board Committees section has been in place throughout the year.

The following is an explanation of the Company’s corporate governance framework, including details regarding the principal Board Committees.

The Board’s principal Committees include the Remuneration, Audit and Nominations and Governance Committees, with formally delegated duties and responsibilities and written terms of reference. From time to time, additional committees may be set up by the Board to consider specific issues when the need arises.

BOARD COMMITTEES



AUDIT COMMITTEE

The Audit Committee assists the Board in discharging its responsibilities with regard to financial reporting and external and internal audits and controls. The ultimate responsibility for reviewing and approving the Annual Report and Accounts and the half-yearly reports remains with the Board.

For 2013, the membership of the Audit Committee was comprised of four Independent Non-Executive Directors and was chaired by David Williams, whom the Board considers has appropriate financial expertise to fulfil this role.

The Audit Committee meets formally at least four times a year and otherwise as required.

The full terms of reference of the Audit Committee can be found on DP World's website.

External and internal auditors are invited to attend the Audit Committee meetings, along with any other Director or member of staff considered necessary by the Committee to complete its work. The Committee meets with external auditors and internal auditors without Executive Directors or members of staff present at least once a year, and additionally as it considers appropriate.

In accordance with its terms of reference, the principal matters considered by the Audit Committee during 2013 included:

  • a review of the level and constitution of external audit and non-audit fees and the independence and objectivity of external auditors;
  • monitoring and reviewing the effectiveness of internal audit activities, including discussions with the Director of Internal Audit;
  • reviewing the effectiveness of the Group's financial reporting, internal controls and compliance with applicable legal requirements and monitoring risk and compliance procedures across the Group;
  • reviewing the Company's results statements, interim management statements and Annual Report and Accounts before publication and making appropriate recommendations to the Board following review;
  • reviewing accounting policies in light of developments to international accounting standards; and
  • receiving reports where appropriate in accordance with its terms of reference on business conduct issues, including any instances of alleged fraud and actions taken as a result of investigation.

With regards to the 2013 Accounts, the primary matters discussed by the Audit Committee included:

1. IMPAIRMENT TESTING OF GOODWILL AND PORT CONCESSION RIGHTS

The impairment testing of goodwill and port concession rights requires an estimation of the value in use of cash-generating units to which the goodwill is allocated or in which the port concession rights with indefinite life exist. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

The Committee reviewed management’s key assumptions to understand their impact on the cash generating unit’s recoverable amounts. The Committee was satisfied that the significant assumptions used for determining the recoverable amount had been appropriately scrutinised, challenged and were sufficiently robust. The Committee was further satisfied with the sensitivity analysis carried out by the management with regard to these impairment tests.

Impairment of assets of $75 million in the Middle East, Europe and Africa region and $24 million in the Asia Pacific and Indian subcontinent region was assessed. The impairment was mainly due to significant adverse effects in the market and economic conditions which were outside the control of the Group. Further information can be found under note 12 to the Consolidated Financial Statements.

2. TaxAtion

The Group recognises liabilities for anticipated tax claims based on estimates of whether additional taxes will be due. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine these amounts based upon the likely timing and level of future taxable profits together with future tax planning strategies.

3. PENSION AND POST-EMPLOYMENT BENEFITS

The cost of defined benefit pension plans and other post-employment benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.

4. LITIGATIONS AND CONTINGENT LIABILITIES

The level of provisioning for contingent and other liabilities is an issue where management and legal judgements are important.

The Committee addresses the judgement and estimates relating to Taxation, Pension and Litigations through a range of reporting from senior management and a process of challenging the appropriateness of management’s views including the degree to which these are supported by professional advice from external legal and other advisory firms.

The above issues were discussed with management during the year and with the auditor at the time the Committee reviewed and agreed the auditors’ Group audit plan, when the auditor reviewed the half year interim financial statements in June 2013 and also at the conclusion of the audit of the financial statements.

EXTERNAL AUDITORS

The Audit Committee is responsible for recommending a firm of auditors of appropriate independence and experience and for the approval of all audit fees and terms of engagement. The Committee’s policy is to undertake a formal assessment of the auditors’ independence each year which includes:

  • a review of non-audit services provided to the Group and related fees;
  • discussion with the auditors of a written report detailing any relationships with the Company and any other parties that could affect independence or the perception of independence;
  • a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and
  • obtaining written confirmation from the auditors that, in their professional judgement, they are independent.

The Audit Committee has implemented the following policy relating to the provision of non-audit services by the Company’s auditors.

AUDIT RELATED SERVICES
These services are undertaken by the auditors:

  • review of interim financial information; and
  • formalities relating to borrowings, shareholder and other circulars.

PERMITTED NON-AUDIT SERVICES
The selection of providers of permitted non-audit services is subject to a tender process, where appropriate. Non-audit work and the fees involved are approved in advance by the Audit Committee. Below are examples of permitted non-audit services:

  • tax planning, advice and compliance assistance; and
  • mergers and acquisitions.

PROHIBITED NON-AUDIT SERVICES

  • bookkeeping or other services related to the accounting records;
  • financial information systems design and implementation; and
  • investment banking services.

Throughout the year, the Committee monitored the cost and nature of non-audit work undertaken by the auditors and is, therefore, in a position to take action if it believes that there is a threat to the auditors’ independence through the award of this work.

KPMG LLP are appointed as external auditors to the Company. The Committee has undertaken an annual review of the independence and objectivity of the auditors and an assessment of the effectiveness of the audit process, which included a report from the external auditors of their own internal quality procedures. It also received assurances from the Auditors regarding their independence. On the basis of this review, the Committee recommended to the Board that it recommend that shareholders support the re-appointment of the Auditors at the AGM on 28 April 2014.

RISK MANAGEMENT PROCESS

The Group risk management process has the following key features:

  • all major businesses within the Group identify risks to the achievement of their business objectives through a structured online risk assessment process. Appropriate risk management activity is determined and any required action plans are implemented. Risks are assessed on the basis of impact and likelihood to enable prioritisation of major and significant risks. This is a continual process, and may be associated with a variety of financial, operational and compliance matters including organisation structures, business strategies, disruption in information technology systems, competition, natural catastrophe and regulatory requirements;
  • the risks and associated controls are summarised in the risk portfolios and are presented to the Board for review; and
  • at the year-end, the regional management certifies that the risk management process is in place and an assessment has been conducted throughout their businesses and that appropriate internal control procedures are in place or in hand to manage the risks identified

Further details on the risk management process can be found under note 6 to the Consolidated Financial Statements. Details of the Group’s principal risks and uncertainties are set out in Principal Risks and Uncertainties

INTERNAL CONTROLS

The Board is responsible for maintaining a sound system of internal controls and has established a control framework within which the Group operates. The Audit Committee has undertaken a review of the effectiveness of internal controls and risk management in accordance with its remit. The core elements of DP World’s system of internal control are set out in Introduction to Our Approach to Risk. The key high level control procedures include:

  • an organisation structure which supports clear lines of communication and accountability and delegation of authority rules which specify responsibility;
  • business strategies prepared at regional level and approved by the Board. In addition, there are annual budgeting and strategic planning processes. Financial forecasts are prepared every quarter. Actual performance is compared to budget, latest forecast and prior year on a monthly basis. Significant variances are investigated and explained through normal monthly reporting channels;
  • key performance indicators produced to summarise and monitor business activity;
  • evaluation and approval procedures for major capital expenditure and significant treasury transactions;
  • regular reviews of the effectiveness of the Group’s health, safety, welfare, environment and security processes; and
  • the internal audit department providing additional independent assurance to the Board and the Audit Committee that key controls are operating as intended.

The risk management process and the system of internal control are subject to continuous improvement.

GUIDELINES REGARDING INSIDER TRADING

The Company takes all reasonable steps to avoid the risk of insider trading. The Company has adopted processes to keep all members of staff informed about their duties with respect to the handling of inside information, as well as dealings in DP World’s shares.

The Company has adopted a share dealing code which sets out the restrictions and “close” periods applicable to trading in securities. Memoranda and guidelines regarding dealings (either selling or buying) in shares have been circulated within the Group.

FRAUD

DP World has a fraud policy and a fraud incident response plan, which takes effect in the event of serious incidents to oversee case management and to ensure appropriate actions are taken. Fraud risk assessments are conducted across the Group to identify potential fraud risk scenarios in core business processes and to monitor the internal controls in place to mitigate such risks.

The Audit Committee receives an update at each meeting on any material frauds. The Audit Committee has reviewed DP World’s “whistle blowing” procedures to ensure that arrangements are in place to enable Company employees to raise concerns about possible improprieties on a confidential basis.

ANTI-BRIBERY AND CORRUPTION

DP World has an anti-bribery and corruption policy with supporting processes and procedures to meet the requirements of the UK Bribery Act 2010. During 2013, online training on the importance of compliance with the anti-bribery and corruption policy was completed by selected members of management and key employees across the Group.

NOMINATIONS AND GOVERNANCE COMMITTEE

The Nominations and Governance Committee assists the Board in discharging its responsibilities relating to the size and composition of the Board. It is also responsible for periodically reviewing the Board’s structure and identifying potential candidates to be appointed as Directors as the need may arise. The Nominations and Governance Committee is responsible for evaluating the balance of skills, knowledge, experience and diversity on the Board and, in particular:

  • identifying individuals qualified to become Board members;
  • recommending individuals to be considered for election at the next Annual General Meeting of the Company or to fill vacancies; and
  • preparing a description of the role and capabilities required for a particular appointment.

The full terms of reference of the Nominations and Governance Committee can be found on DP World’s website.

The Nominations and Governance Committee is comprised of six members, four of whom are Independent Non-Executive Directors. The Chairman of the Nominations and Governance Committee is Sir John Parker.

The Nominations and Governance Committee meets formally at least twice a year and otherwise as required.

2013 ACTIVITIES

  • identified and nominated candidates for Board approval to replace Cho Ying Davy Ho who retired effective 1 January 2014;
  • reviewed the Board composition, with particular consideration given to the Board Diversity policy; and
  • reviewed the adequacy of the Group’s succession plan.

EXECUTIVE COMMITTEE

The Executive Committee has primary responsibility for the day-to-day management of DP World’s operations and strategic policy implementation (such policies being established and approved by the Board). The Executive Committee is comprised of the Executive Directors and certain senior managers.

The Executive Committee meets regularly as required.

REMUNERATION COMMITTEE

The Remuneration Committee determines and agrees with the Board the framework and broad policy for the remuneration of the Group Chief Executive Officer and Chief Financial Officer and other members of senior management. The policy of the committee is to review remuneration based on independent assessment and market practice. The remuneration of Independent Non-Executive Directors is a matter for the Chairman and executive members of the Board. No executive is involved in any decisions as to their own remuneration. The Remuneration Committee:

  • determines and agrees with the Board, the Company’s framework for remuneration;
  • recommends and monitors the level and structure of remuneration to senior management;
  • keeps under review its own performance, constitution and terms of reference; and
  • considers other matters as referred to it by the Board.

The full terms of reference of the Remuneration Committee can be found on DP World’s website.

The membership of the Remuneration Committee is comprised of four members, all of whom are Independent Non-Executive Directors. The Chairman of the Remuneration Committee is Sir John Parker.

The Remuneration Committee meets formally at least twice a year and otherwise as required.

2013 ACTIVITIES

  • reviewed salary structures;
  • reviewed the Company’s Performance Delivery Plan; and
  • reviewed remuneration disclosure in the Annual Report and Accounts.
REMUNERATION

EXECUTIVE REWARD POLICY
The reward policy for Executive Directors and senior management (Executive Committee and other experienced managers) is guided by the following key principles:

  • business strategy support: aligned with our business strategy with focus on both short-term goals and the creation of long-term value ensuring alignment to shareholders’ interests;
  • competitive pay: ensures competitiveness against our target market;
  • fair pay: ensures consistent, equitable and fair treatment within the organisation; and
  • performance-related pay: linked to performance targets via short and long-term incentive plans and the pay review process.

The reward policy for Executive Directors and senior management consists of the following key components:

Market benchmark:

  • the target market position is between median and upper quartile on a total remuneration basis;
  • for Executive Directors and senior management based in Dubai, practice and policy reflect the structure of the Dubai pay market, whilst at the same time ensuring competitiveness on an international basis. Variable pay is also reviewed and balanced against the total remuneration package; and
  • DP World engages the services of Hay Group as the main provider of market information and as advisers on particular remuneration matters. This is subject to periodic review.

Base salary:

  • fixed cash compensation based on level of responsibility as determined by the application of a formal job evaluation methodology;
  • reflects local practice in each of the geographies in which DP World operates, but is also set against common market policy positions; and
  • reviewed annually on 1 April to take into account market pay movements, individual performance, relativity to market on an individual basis and DP World’s ability to pay.

ALLOWANCES AND BENEFITS

  • Can either be cash or non-cash elements based on level of responsibility as determined by the application of a formal job evaluation methodology.
  • Reflects local practice in each of the geographies in which DP World operates, but are also set against common market policy positions.
  • For Executive Directors and senior management based in Dubai, cash allowances are a normal component of the package and typically cover accommodation, utility, transport and club elements in line with Dubai market practice. Benefits include the provision of children’s education assistance, travel assistance, medical and dental insurance and post-retirement benefits.
  • Reviewed annually to ensure that DP World remains competitive within the market place and that it continues to provide the reward mechanisms to aid retention in line with its ability to pay.

PERFORMANCE DELIVERY PLAN (PDP)

  • Cash-based incentive plan to motivate, drive and reward performance over an operating cycle of one year.
  • The PDP combines business financial performance and individual performance objectives. Levels of awards, financial and personal measures and weightings will vary depending on the role, geography and level of responsibility of the individual. For individuals outside the Executive Directors and senior management category, the principle is then typically cascaded throughout the business units’ organisational levels in line with local policies.
  • Appropriateness of the levels of awards, financial and personal measures and weightings are reviewed on an annual basis to ensure they continue to support our business strategy.
  • Payment is in cash and is expected to be made in April each year for performance over the previous financial year, subject to review and sign-off by the Remuneration Committee.

LONG-TERM INCENTIVE PLAN (LTIP)

  • Cash-based rolling incentive plan to motivate, drive and reward sustained performance over the long-term operating cycle of three years.
  • The LTIP reflects business financial performance only. Levels of awards, financial measures and weightings will vary depending on the role, geography and levels of responsibility of the individuals. In addition to the Executive Directors and senior managers, employees performing the top 100 jobs (as determined by job size) are also eligible to participate in the LTIP in line with the same financial metrics as described for Executive Directors and senior managers with varying levels of award in line with their job size.
  • Appropriateness of the levels of awards, financial measures and weightings are reviewed on an annual basis to ensure they continue to support our business strategy.
  • Payment is in cash and is expected to be made in April each year for performance over the previous three financial years, subject to review and sign-off by the Remuneration Committee.

INCENTIVE PLANS

As described above, the Company has adopted a short-term and a long-term incentive plan for its Executive Directors and senior managers. Details of these plans are outlined below.

The Performance Delivery Plan (PDP) for the financial year ended 2013 (award to be paid in 2014) and 2012 (award paid in 2013) is worth a maximum of 75% of annual base salary. It is made up of two components; a financial component worth 70% of the overall award value and a personal component worth 30% of the overall award value.

The financial component is based on performance assessed against a budgeted Profit After Tax (PAT) measure. Payout on the financial component is triggered if the Company achieves 95% of its target. Maximum payout on the financial component will occur if the Company achieves 105% of its target. The payout for performance between the 95% and 105% of target is on a straight-line basis.

The personal component is based on performance assessed against Specific, Measurable, Achievable, Relevant & Timebound (SMART) objectives. The objectives are particular to each individual role and can include financial based objectives and more qualitative ones.

The LTIP for the 2011-2013 (award to be paid in 2014), 2012-2014 (award to be paid in 2015) and 2013-2015 (award to be paid in 2016) performance cycles is based on performance over three years assessed against two budgeted measures with 70% of the award linked to a Return On Capital Employed measure and 30% linked to an Earnings Per Share measure.

The LTIP for the cycles described above is worth a maximum of 100% of average annual base salary for the Executive Directors and the Chief Operating Officer and a maximum of 75% of average annual base salary for other senior managers.

EXECUTIVE DIRECTORS’ SERVICE CONTRACTS AND REMUNERATION

As mentioned above, the Executive Directors’ remuneration structure follows the market practice in the UAE, and all payments are made tax free reflecting the UAE’s status.

Each of the Executive Directors is employed pursuant to a service agreement.

Mohammed Sharaf
Mohammed Sharaf’s service agreement is with DP World FZE (a subsidiary of the Company). It can be terminated on six months’ notice by either party. In addition, DP World FZE can terminate the agreement, without notice, on payment of six months’ base salary.

Mohammed Sharaf is entitled to receive a base salary and certain other benefits under his service agreement.

He was also granted a Performance Delivery Plan award of 71.25% (out of a maximum of 75%) for performance linked to the 2012 financial year and a Long-Term Incentive Plan award of 75.30% (out of a maximum of 100%) for performance linked to the 2010-2012 cycle.

His total remuneration for the year ended 31 December 2013 (which includes his base salary and these other benefits) was $1,542,638.

Yuvraj Narayan
Yuvraj Narayan’s service agreement is with DP World FZE. It can be terminated on six months’ notice by either party. In addition, DP World FZE can terminate the agreement, without notice, on payment of six months’ base salary.

Yuvraj Narayan is entitled to receive a base salary and certain other benefits under his service agreement.

He was also granted a Performance Delivery Plan award of 75% (out of a maximum of 75%) for performance linked to the 2012 financial year and a Long-Term Incentive Plan award of 75.30% (out of a maximum of 100%) for performance linked to the 2010-2012 cycle.

His total remuneration for the year ended 31 December 2013 (which includes his base salary and these other benefits) was $1,269,520.

POST RETIREMENT BENEFITS
Mohammed Sharaf participates in the government pension scheme in accordance with local labour law. Yuvraj Narayan participates in an end of service benefit scheme in accordance with local labour law.

NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT AND FEES
The Non-Executive Directors do not have service contracts with the Company. Their terms of appointment are governed by letters of appointment. The Company has no contractual obligation to provide any benefits to any of the Non-Executive Directors upon termination of their directorship.

Each Non-Executive Director’s letter of appointment is with the Company and is envisaged to be for a period of three years, subject to annual re-appointment by the shareholders at each AGM. It can be terminated on six months’ notice by either party.

For the year ended 31 December 2013, the fees and other remuneration payable to each of the Non-Executive Directors, which includes remuneration for their services in being a member of, or chairing, a Board Committee are set out below:

  • Sir John Parker received a Non-Executive Director fee of $515,955
  • David Williams received a Non-Executive Director fee of $146,047
  • Cho Ying Davy Ho received a NonExecutive Director fee of $114,787
  • Deepak Parekh received a Non-Executive Director fee of $114,785

The Chairman, Sultan Ahmed Bin Sulayem, and Non-Executive Vice Chairman, Jamal Majid Bin Thaniah are not remunerated by the Company.

DIRECTORS’ INTERESTS IN SHARES
The following is a table of the Directors’ shareholdings:

  $2.00 ordinary
shares held
as at
1 January 2013
$2.00 ordinary
shares held
as at
31 Dec 2013
Change
Mohammed Sharaf 28,221 28,221 -
Yuvraj Narayan 14,668 14,668 -
Sir John Parker 7,262 7,262 -