33
Ascott Residence Trust
Annual Report 2015
Overview
Sustainability
Business
Review
Portfolio
Details
Corporate
Governance &
Transparency
Financials &
Additional
Information
(B) REMUNERATION MATTERS
Procedures for Developing Remuneration Policies
Principle 7:
There should be a formal and transparent procedure for developing policy on executive remuneration
and for fixing the remuneration packages of individual directors. No director should be involved in
deciding his own remuneration.
Level and Mix of Remuneration
Principle 8:
The level and structure of remuneration should be aligned with the long-term interest and risk policies of
the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good
stewardship of the company, and (b) key management personnel to successfully manage the company.
However, companies should avoid paying more than is necessary for this purpose.
Disclosure on Remuneration
Principle 9:
Every company should provide clear disclosure of its remuneration policies, level and mix of
remuneration, and the procedure for setting remuneration, in the company’s Annual Report. It should
provide disclosure in relation to its remuneration policies to enable investors to understand the link
between remuneration paid to directors and key management personnel, and performance.
The Manager is a subsidiary of CL. For FY 2015 and before, the Manager adhered to the remuneration policies and
practices of CL; this was after careful consideration of the remuneration policies and practices of CL and being
satisfied that such policies and practices would provide the Manager with a suitable remuneration policy. The
Manager therefore did not have a remuneration committee. In its decision to adhere to the remuneration policies
and practices of CL, the Manager also took into account the belief that a framework of remuneration for the Board
and key executives should not be taken in isolation; it should be linked to the building of management bench
strength and the development of key executives. This would ensure continual development of talent and renewal
of strong and sound leadership for a sustainable business and an enduring company in the best interests of Ascott
Reit. The other additional factors the Manager also considered were:
(a) by tapping on the compensation framework of CL, the Manager is placed in a better position to attract better
qualified management talent, who may otherwise not be attracted to a standalone REIT manager; and
(b) the Manager being a subsidiary of CL provides an intangible benefit of allowing its employees to associate
themselves with an established corporate group which can offer them depth and breadth of experience and a
career horizon and this enables the Manager to attract and retain qualified individuals.
As part of its commitment towards improving its corporate governance, the Board recently undertook a review of
the matter and has determined that it shall undertake the functions of a remuneration committee. The following
considerations were taken into account:
(a) the Manager is a dedicated manager to only Ascott Reit and in general, REITs (including Ascott Reit) have a
more focused scope and scale of business compared to those of listed companies. For this reason, the Board’s
capacity would not be unduly stretched by reason of it undertaking the responsibilities of a remuneration
committee and the Board would be able to give adequate attention to such issues relating to remuneration; and
(b) that IDs form at least half of the Board and the Chairman is an ID demonstrate that the IDs play a substantive
role and assures the objectivity and independence of the decision making process concerning remuneration.
This also mitigates any concerns of conflict which can be managed by having the conflicted directors abstain
from the decision making process. Further, conflict situations are less likely to arise in matters of remuneration.
