CORPORATE GOVERNANCE The compensation policy for non-executive Directors is based on a scale of fees divided into basic retainer fees for serving as Director and additional fees for serving on Board Committees. The non-executive Directors’ fee structure and Directors’ fees are reviewed and benchmarked against the REIT industry, appropriate to the level of contribution and taking into account the effort, time spent and demanding responsibilities on the part of the non-executive Directors in light of the scale, complexity and geographic scope of the Stapled Group’s business. The remuneration of non-executive Directors is reviewed from time to time to ensure that it is appropriate to attract, retain and motivate the non-executive Directors to provide good stewardship of the Managers and CLAS. The CEO, who is an executive Director, is remunerated as part of the key management personnel of the Managers and does not receive any Director’s fees for her role as an executive Director. The non-executive Directors who are employees of the CLI Group also do not receive any Directors’ fees. The non-executive Directors’ fees are paid in cash (about 80%) and in the form of Stapled Securities (about 20%), save that (i) a non-executive Director (not being an employee of the CLI Group) who steps down from the Boards during a financial year will be paid fees fully in cash and; (ii) Mr Ong Su Kiat Melvyn’s fees are paid fully in cash to a government agency, The Directorship & Consultancy Appointments Council. The Managers believe that the payment of a portion of the non-executive Directors’ fees in Stapled Securities will serve to align the interests of non-executive Directors with the interests of Stapled Securityholders and CLAS’ long-term growth and value. The payment of non-executive Directors’ fees in Stapled Securities is satisfied out of the Stapled Securities held by the Managers. No individual Director is involved in any decision of the NRC relating to his or her own remuneration. In order to encourage the alignment of the interests of the non-executive Directors with the interests of Stapled Securityholders, a non-executive Director is required to hold the number of Stapled Securities worth at least one year of the basic retainer fee or the total number of Stapled Securities awarded to him or her, whichever is lower, at all times during his or her Board tenure. As with previous years, an independent remuneration consultant, Willis Towers Watson, was appointed in FY 2023 to provide professional advice on Board remuneration, with a view to ensuring the fee structure is market competitive and consistent with industry practices. ACCOUNTABILITY AND AUDIT Principle 9: Risk Management and Internal Controls The Managers maintain adequate and effective systems of risk management and internal controls (including financial, operational, compliance, information technology (IT) and sanctions-related controls) to safeguard Stapled Securityholders’ interests and CLAS’ assets. The Boards have overall responsibility for the governance of risk and oversee the Managers in the design, implementation and monitoring of the risk management and internal controls systems. The ARC assists the Boards in carrying out the Boards’ responsibility of overseeing the risk management framework and policies for CLAS and ensuring that Management maintains sound systems of risk management and internal controls. Under its terms of reference, the scope of the ARC’s duties and responsibilities includes: (a) making recommendations to the Boards on the Risk Appetite Statement (RAS) for CLAS and CLAS’ risk profile; (b) assessing the adequacy and effectiveness of the risk management and internal controls systems established by the Managers to manage risks; (c) overseeing the formulation, updating and maintenance of an adequate and effective risk management framework, policies and strategies for managing risks that are consistent with CLAS’ risk appetite and reports to the Boards on its decisions on any material matters concerning the aforementioned; 118 CAPITALAND ASCOTT TRUST
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