Corporate Governance B. Performance Bonus: Using the Balanced Scorecard (BSC) framework, the CLCT 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 at the start of the year and cascaded down throughout the organisation, thereby creating alignment across the CLCT Group. The performance measures and their relative weights in each dimension are reviewed annually to reflect the CLCT Group’s business priorities and focus for the relevant year. REIT Performance Preparing for Future Key Objectives This includes targets relating to profitability and distributions, capital structure, as well as financial and risk management. This includes targets relating to asset enhancements, capital recycling and financial health. 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. After the close of each financial year, the Board reviews the CLCT 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 CapitaLand China Trust Management Limited Restricted Unit Plan 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 Unit awards ensure ongoing alignment between remuneration and sustainable business performance. C. Long-Term Incentives: The Company has established the CapitaLand China Trust Management Limited Performance Unit Plan (PUP) and CapitaLand China Trust Management Limited Restricted Unit Plan (RUP), together the “Unit Plans”, to promote the alignment of Management’s interests 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. The NRC has approved ownership guidelines for senior management to instill stronger identification with the longterm performance and growth of the CLCT Group. Under these guidelines, senior management is 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 CLCT Group CapitaLand China 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 CLCT Group towards sustainability: (a) Returns: Relative Total Unitholder Return (TUR) of CLCT which is based on the percentile ranking of the TUR of CLCT 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 threeyear 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. 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. 64 CapitaLand China Trust
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