Corporate Governance The final number of PSSP Stapled Securities 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 Stapled Securityholders in the longer term and to deter short-term risk taking. No Stapled Security 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 Stapled Securities 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 Stapled Securities released taking into consideration other relevant quantitative and qualitative factors. Recipients will receive fully paid Stapled Securities, their equivalent cash value or combinations thereof. For FY 2024, the relevant award for assessment is the performance achieved by the Stapled 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 Stapled Group has exceeded the pre-determined performance targets for such performance period, the resulting number of Stapled Securities for the finalised award has been adjusted accordingly to reflect the performance level. In respect of the Stapled Securities awards granted pursuant to the PSSP in FY 2023 and FY 2024, the respective qualifying performance periods have not ended as at the date of this 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 Managers) 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 CLAS as CLAS is a key part of CLI’s business and ecosystem (and CLI is also the largest Stapled Securityholders of CLAS), and Management’s actions to grow CLAS and drive CLAS’ performance will also have a positive impact on CLI, thus reinforcing the complementary nature of the linked performance between CLAS and CLI. The cost of this one-time award will be borne by the Managers 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 Stapled Securities, which further incentivises the Management to take actions which are beneficial to the Stapled Securityholders. Accordingly, the Special PSP Award will not result in the Management prioritising the interest of CLI over that of CLAS given that the bulk of their remuneration is determined based on the evaluation of the performance of CLAS and a proportion of their remuneration comprises Stapled Securities. In addition, it should be further noted that under the SFA, the Managers and Directors of the Managers are required to act in the best interest of CLAS and give priority to the interest of CLAS over the interests of the shareholders of the Managers, and this would further mitigate any potential conflicts of interest. Save for the Special PSP Award, the NRC will continue to assess and reward the KMP based on the performance of CLAS. Accordingly, the Managers are 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 Stapled Securityholders. In respect of the Special PSP Award granted in FY 2021, the performance conditions required for interim vesting in the third year was partially met and CLI shares were released to the participants during the year. The next and final vesting, subject to performance conditions being met, will take place at the end of the qualifying performance period in 2026. There was no new Special PSP Award in FY 2024. Managers’ Restricted Stapled Security Plan (RSSP) Stapled Securities awarded pursuant to the RSSP may be conditional on pre-determined targets set for a one-year performance period. Prior to FY 2023, these targets were based on: (i) Profit After Tax and Minority Interests of the Stapled Group; and (ii) DPS of the Stapled Group. These performance measures were selected as they are the key drivers of business performance and are aligned to Stapled Securityholders’ value. The final number of Stapled Securities to be released will depend on the Stapled Group’s performance against the targets at the end of the one-year qualifying performance period. The Stapled Securities will be released in equal annual tranches over a vesting period of 3 years. No Stapled Securities 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 Stapled Securities than the RSSP baseline award can be delivered, up to a maximum of 150% of the baseline award. The NRC has the discretion to adjust the number of Stapled Securities released, taking into consideration other relevant quantitative and qualitative factors. Recipients will receive fully paid Stapled Securities, their equivalent cash value or combinations thereof. 78 CapitaLand Ascott Trust
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