84 CapitaLand Ascendas REIT Corporate Governance Under the Remuneration Framework, a significant proportion of the total remuneration for the KMP, including the CEO is in the form of variable compensation, awarded in a combination of short-term, deferred and long-term incentives, to ensure alignment of the CEO’s and KMP’s interests with those of the Unitholders, with an emphasis on linking pay to business and individual performance. Performance targets are hence set at realistic yet stretched levels each year to motivate a high degree of business performance with emphasis on both shorter-term and longer-term quantifiable objectives. There are four key components of the remuneration for the CEO and KMP: (1) Salary: Includes the base salary, fixed allowances and compulsory employer contribution to an employee’s Central Provident Fund (CPF). The base salary is remunerated based on an employee’s competencies, experience, responsibilities and performance. It is typically reviewed on an annual basis to ensure market competitiveness. (2) Performance Bonus: Using the Balanced Scorecard (BSC) framework, the CLAR Group’s strategies and goals are translated to performance outcomes comprising both quantitative and qualitative targets in the dimensions of REIT Performance, Preparing for Future, Sustainability and Manager’s Financial Health. These BSC targets are approved by the Board and cascaded down throughout the organisation, thereby creating alignment across the CLAR Group. The performance measures in each dimension and their relative weights are reviewed annually to reflect the CLAR Group’s business priorities and focus for the relevant year. Business Alignment REIT Performance Preparing for the Future Key Objectives This includes targets relating to profitability and distributions, investor outreach and communication, capital structure, as well as financial and risk management. This includes targets relating to asset performance, asset enhancements and capital recycling. Sustainability Manager’s Financial Health Key Objectives This includes targets relating to ESG such as environmental sustainability, talent retention, succession planning and sustainable corporate practices (including workplace safety). This includes targets relating to the Manager’s financial viability and efficiency. After the close of each financial year, the Board reviews the CLAR Group’s achievements against the BSC targets and determines the overall performance taking into consideration qualitative factors such as the quality of earnings, operating environment, regulatory landscape and industry trends. In determining the Performance Bonus payout quantum for each KMP, the NRC considers the overall business and individual performance as well as the affordability of the payout to the Manager. The Performance Bonus is paid out in the form of a cash bonus and deferred Unit awards with senior management grade employees receiving a greater proportion of their payout in deferred Units. Deferred Unit awards are awarded pursuant to the Manager’s Restricted Unit Plan (RUP) and vests in three equal annual tranches without further performance conditions, with the first tranche vesting in the year of grant. Recipients will receive fully paid Units, their equivalent cash value or combinations thereof. The Unit awards ensure ongoing alignment between remuneration and sustainable business performance. (3) Long-Term Incentives: The Manager has established the CapitaLand Ascendas REIT Management Limited Performance Unit Plan (PUP) and the RUP, together the “Unit Plans”, to promote the alignment of Management’s interests with that of the Unitholders and CLAR’s long-term growth and value. The obligation to deliver the Units is satisfied out of existing Units held by the Manager. The NRC has approved Unit ownership guidelines for senior management to instil stronger identification with the long-term performance and growth of the CLAR Group. Under these guidelines, senior management are required to retain a prescribed proportion of Units received under the Unit Plans worth up to at least one year of basic salary. Units vested pursuant to the Unit Plans may be clawed back in circumstances where the relevant participants are found to be involved in financial misstatement, misconduct, fraud or malfeasance to the detriment of the CLAR Group.
RkJQdWJsaXNoZXIy NTM2MDQ5