After the close of each financial year, the Board reviews the CLCT Group’s achievements against the targets set in the Balanced Scorecard 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 payout quantum for each key management personnel under the PBP, the NRC considers the overall business and individual performance as well as the affordability of the payout to the Manager. The PBP is delivered in a combination of cash and deferred Units with employees in senior management grades receiving a greater proportion of their PBP payout in deferred Units. These time-based Units are awarded pursuant to the CapitaLand China Trust Management Limited Restricted Unit Plan (RUP) and will vest in three equal annual tranches without further performance conditions. Recipients will receive fully paid Units, their equivalent cash value or combinations thereof, at no cost. These Units awards ensure ongoing alignment between remuneration and sustainable business performance. C. Long-Term Components: The long-term components comprise CapitaLand China Trust Management Limited Performance Unit Plan (PUP) and CapitaLand China Trust Management Limited Restricted Unit Plan (RUP), together the “Unit Plans”. Unit awards were granted in FY 2023 pursuant to the PUP. The Manager believes that the Unit-based components of the remuneration for key management personnel serve to align the interests of such key management personnel with that of Unitholders and CLCT’s long-term growth and value. The obligation to deliver the Units is satisfied out of existing Units held by the Manager. To promote the alignment of Management’s interests with that of Unitholders in the longer term, senior members of Management are subject to Unit ownership guidelines to instill stronger identification with the longer-term performance and growth of the CLCT Group. Under these guidelines, senior members of Management are required to retain a prescribed proportion of the 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 CLCT Group. CapitaLand China Trust Management Limited Performance Unit Plan In FY 2023, the NRC granted awards which are conditional on targets set for a three-year performance period. A specified number of Units will only be released to the recipients at the end of the qualifying performance period, provided that minimally the threshold target is achieved. Under the PUP, an initial number of Units (PUP baseline award) is allocated conditional on the achievement of pre-determined targets for Unitholder returns and sustainability (included with effect from the FY 2023 award). In respect of Unitholder returns, Management is measured by the Relative Total Unitholder Return (TUR) of the CLCT Group based on the percentile ranking of the TUR of the CLCT Group relative to the constituent REITs in the FTSE ST REIT Index. In respect of sustainability, Management is measured on outcomes such as green building certification. The above performance measures have been selected as a key measurement of wealth creation for Unitholders and the commitment of the CLCT Group towards sustainability. The final number of Units to be released will depend on the CLCT Group's performance against the pre-determined targets over the 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 Units will be released if the threshold target is not met at the end of the qualifying performance period. On the other hand, if superior targets are met, more Units than the PUP baseline award can be delivered, up to a maximum of 200% of the PUP 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, at no cost. For FY 2023, the relevant award for assessment of the performance achieved by the CLCT Group is the award granted in FY 2021 where the qualifying performance period was FY 2021 to FY 2023. Based on the NRC’s assessment that the performance achieved by the CLCT Group has partially met the pre-determined performance targets for such performance period, the resulting number of Units for the finalised award has been adjusted accordingly to reflect the performance level. ANNUAL REPORT 2023 129 Financials Framework Portfolio Performance Leadership Overview
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