Corporate Governance 86 CapitaLand Integrated Commercial Trust MOTIVATE RIGHT BEHAVIOUR • Pay for performance – align, differentiate and balance rewards according to multiple dimensions of performance. • Strengthens line-of-sight linking rewards and performance. EFFECTIVE IMPLEMENTATION • Maintains rigorous corporate governance standards. • Exercises appropriate flexibility to meet strategic business needs and practical implementation considerations. • Facilitates employee understanding to maximise the value of the remuneration programmes. Under the Remuneration Framework, a significant proportion of the KMP’s, including the CEO’s, total remuneration 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 CICT 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 CICT Group. The performance measures and their relative weights in each dimension are reviewed annually to reflect the CICT Group’s business priorities and focus for the relevant year. After the close of each financial year, the Board reviews the CICT 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 Units awards with senior management grade employees receiving a greater proportion of their payout in deferred Units. Deferred Units awards are awarded pursuant to the CapitaLand Integrated Commercial Trust Management Limited Restricted Unit Plan (RUP) and vests in three equal annual tranches without further performance conditions. Recipients will receive fully paid Units, their equivalent cash value or combinations thereof. The Units awards ensure ongoing alignment between remuneration and sustainable business performance. REIT Performance Preparing for 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 and occupancy, asset enhancements and capital recycling. Sustainability Manager’s Financial Health Key Objectives This includes targets relating to talent retention, succession planning and sustainable corporate practices (including workplace safety). This includes targets relating to the Manager’s financial viability and efficiency.
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