87 Annual Report 2024 For FY 2024, the relevant award for assessment is the performance achieved by the CICT Group for the award granted in FY 2022 where the qualifying performance period was FY 2022 to FY 2024. Based on the NRC’s assessment that the performance achieved by the CICT Group has exceeded the pre-determined performance targets for such performance period, the resulting number Units for the finalised award has been adjusted accordingly to reflect the performance level. In respect of the Units awards granted pursuant to the PUP in FY 2023 and FY 2024, the qualifying performance period has not ended as of the date of this annual report. In FY 2021, a one-time Special CLI Founders Performance Share Plan (Special PSP Award) was granted by the CLI Group to selected senior executives within the group (including the Manager) to commemorate its listing, foster a “founders’ mindset” in driving transformation, and retain talent. The grant has a five-year performance period with defined performance parameters which are linked to CLI. Subject to the performance achieved, the award may vest at the end of the third and/or fifth year. Such compensation is in the long-term interests of CICT as CICT is a key part of CLI’s business and ecosystem (and CLI is also the largest Unitholder of CICT), and Management’s actions to grow CICT and drive CICT's performance will also have a positive impact on CLI, thus reinforcing the complementary nature of the linked performance between CICT and CLI. The cost of this one-time award will be borne by the Manager and it is not expected to form a significant part of the KMP’s remuneration over a five-year period. In addition, a proportion of the Management’s remuneration is paid in the form of Units, which further incentivises the Management to take actions which are beneficial to the Unitholders. Accordingly, the Special PSP Award will not result in the Management prioritising the interest of CLI over that of CICT given that the bulk of their remuneration is determined based on the evaluation of the performance of CICT and a proportion of their remuneration comprises Units. In addition, it should be further noted that under the SFA, the Manager and Directors of the Manager are required to act in the best interest of CICT and give priority to the interest of CICT over the interests of the shareholders of the Manager, and this would further mitigate any potential conflicts of interests. Save for the Special PSP Award, the NRC will continue to assess and reward the KMP based on the performance of CICT. Accordingly, the Manager is of the view that there would not be any conflicts of interest arising from the arrangement, nor would the arrangement result in any misalignment of interest with those of Unitholders. (3) Long-Term Incentives: The Manager has established the CapitaLand Integrated Commercial Trust Management Limited Performance Unit Plan (PUP) and RUP, together the “Unit Plans”, to promote the alignment of Management’s interests with that of the Unitholders and CICT’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 instill stronger identification with the long-term performance and growth of the CICT 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 CICT Group. CapitaLand Integrated Commercial Trust Management Limited Performance Unit Plan Pursuant to the PUP, Units are awarded to senior management which are conditional on the achievement of targets relating to the following key measurements of wealth creation for Unitholders and commitment of the CICT Group towards sustainability: (a) Returns: Relative Total Unitholder Return (TUR) of CICT which is based on the percentile ranking of the TUR of CICT relative to the constituent REITs in the FTSE ST REIT Index; (b) Portfolio Growth: Net Asset Value per Unit; and (c) Sustainability: Performance outcomes such as green building certification. The final number of PUP Units to be released will depend on the achievement of pre-determined targets over a three-year qualifying performance period. This serves to align Management’s interests with that of Unitholders in the longer term and to deter short-term risk taking. No Unit will be released if the threshold targets are not met at the end of the qualifying performance period. If superior targets are met or exceeded, more Units than the baseline award can be delivered up to a maximum of 200% of the baseline award. The NRC has the discretion to adjust the number of Units released taking into consideration other relevant quantitative and qualitative factors. Recipients will receive fully paid Units, their equivalent cash value or combinations thereof.
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