Corporate Governance There are five key components of the remuneration for the Group CEO and KMP: (1) Salary: Includes the base salary, fixed allowances and compulsory employer contribution to an employee’s Central Provident Fund (CPF). The base salary is determined based on an employee’s competencies, experience, responsibilities and performance. It is typically reviewed on an annual basis to ensure market competitiveness. (2) Performance Bonus: Measured against a Balanced Scorecard approved at the start of the year and paid out in the form of a cash bonus and deferred share awards, with senior management grade employees receiving a greater proportion of their payout in deferred shares. Deferred share awards are time-based shares awarded pursuant to the CapitaLand Investment Restricted Share Plan 2021 (RSP) and vest in three equal annual tranches without further performance conditions. Recipients will receive fully paid shares, their equivalent cash value or combinations thereof. The share awards ensure ongoing alignment between remuneration and sustainable business performance. (3) Economic Value-Added (EVA) Bonus: Rewards sustainable value creation over the medium term achieved by growing profits, deploying capital efficiently and managing the risk profile and risk time horizon of the business. A variable portion of the EVA, depending on the actual residual economic profit attained, may be shared with employees. Separately, EVA bonus declared to each EVA-based Incentive Plan (EBIP) participant (mainly KMP) in the current year is added to the balance carried forward from the previous year, upon which onethird of the resulting total amount is paid out in cash, with the remaining two-thirds to be carried forward to the following year. To encourage continual improvement, a significant reduction in EVA in any year may result in a claw-back of the EVA bonus declared in preceding years. (4) Long-Term Incentives: The Company has established the CapitaLand Investment Performance Share Plan 2021 (PSP) and the RSP (together, the Share Plans), to promote the alignment of Management’s interests with that of the Company’s stakeholders. The obligation to deliver shares pursuant to awards granted under the Share Plans is intended to be satisfied primarily out of treasury shares. The ERCC has implemented share ownership guidelines for senior management grade employees to instill stronger identification with the long-term performance and growth of the Group. Under these guidelines, senior management grade employees are required to progressively build up and hold shares with an aggregate value of at least the equivalent to one, two or three times their annual base salary (depending on their seniority level). However, such awarded PSP or RSP shares may be clawed back in circumstances of misstatement of financial results, misconduct resulting in financial or other losses to the Company, or other misdemeanors. Pursuant to the PSP, share awards are granted to senior management grade employees and key talents and are conditional on the achievement of targets relating to the following key measurements of value creation for shareholders and longer-term ESG performance: (a) absolute total shareholder return (TSR) of the Group measured as a multiple of cost of equity; (b) relative TSR of the Group measured by the percentile ranking of the Group’s TSR relative to the constituents of a peer group comprising public-listed companies and real asset management firms of comparable scale, scope and/or business mix in Singapore and other countries; (c) return on equity (ROE) of the Group; and (d) carbon emissions intensity reduction of the Group. The final number of PSP shares released to recipients will depend on the achievement of pre-determined targets over a three-year qualifying performance period. No shares 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 shares than the baseline award may be delivered up to a maximum of 200% of the baseline award for the award for the financial year ended 31 December 2022 (FY 2022) and up to a maximum of 300% of the baseline award for awards for the financial year ended 31 December 2023 (FY 2023) and FY2024. The ERCC has the discretion to adjust the number of shares released, taking into consideration other relevant quantitative and qualitative factors. Recipients will receive fully paid shares, their equivalent cash value or combinations thereof. As previously disclosed in the corporate governance report for FY 2021 (FY 2021 Report), awards were granted under the PSP to certain employees of the Group and the Parent Group7 during FY 2021 (Replacement Awards) to replace awards previously granted to such employees pursuant to the performance share plans of the Parent Group. Further details on the Replacement 7 Refers to CapitaLand Group Pte. Ltd. and its subsidiaries (excluding the Group). 62 CapitaLand Investment Limited Awards can be found in the FY 2021 Report. Pursuant to the RSP, performance-based share awards are granted conditional on the achievement of targets relating to the following key measurements of operating business performance: (a) Operating Earnings Before Interest and Taxes of the Group; and (b) Operating ROE of the Group. The final number of RSP shares to be released will depend on the achievement of pre-determined targets at the end of the one-year qualifying performance period. The shares will then be released in equal annual tranches over a vesting period of three years. No shares will be released if the threshold targets are not met at the end of the qualifying performance period. On the other hand, if superior targets are met or exceeded, more shares than the baseline award may be delivered up to a maximum of 150% of the baseline award. The ERCC has the discretion to adjust the number of shares released, taking into consideration other relevant quantitative and qualitative factors. Recipients will receive fully paid shares, their equivalent cash value or combinations thereof. Time-vested awards may also be granted under the RSP, where the shares vest progressively over periods of up to three years, provided the recipient remains under employment of the Group. Such time-vested awards may be granted in the form of: (a) deferred shares for the recipient’s performance bonus, which will vest in three equal annual tranches (without further performance conditions) and with the first tranche delivered in the same year as the year of grant; or (b) time-vested restricted awards for the retention of critical talents, or recruitment of new senior executive hires to compensate for the share-based incentives that they may have had to forgo when they left their previous employer to join the Group. (5) Employee Benefits: The benefits provided are comparable with local market practices. Summary of FY 2024 Remuneration Outcomes Performance Bonus: Using the Balanced Scorecard (BSC) framework, the Group’s strategy and goals are translated into performance outcomes comprising both quantitative and qualitative targets as set out in the table below. The performance measures and their relative weights in each dimension are reviewed annually to reflect the Group’s business priorities and focus, and cascaded down throughout the organisation, thereby creating alignment across the Group. Balanced Scorecard Dimension Financial & Execution Future Growth People Sustainability Digitalisation & Innovation Key Objectives Driving sustainable growth Improving ROE Effective capital recycling Growing funds under management Growing feerelated income Motivating and retaining talents Engaging employees for commitment, productivity and performance Driving carbon emissions intensity reduction in line with our 2030 Sustainability Masterplan Benchmarking against global sustainability indices Ensuring workplace safety Driving operational efficiency Improving customer experience Weightage 60% 40% 63 Annual Report 2024
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