104 STRATEGICALLY ADVANCING REMUNERATION MATTERS Principle 6: Procedures for Developing Remuneration Policies The composition of the NRC has been set out in Principle 4 above. The NRC has instituted a formal and transparent procedure in developing remuneration policies and framework relating to Directors and the KMP, as well as fixing the remuneration packages of individual Directors and the KMP. The NRC will review, on a periodic basis (or as and when there is a significant change to the structure of the Manager), and make recommendations to the Board on the framework of remuneration for the Board and the KMP, as well as the specific remuneration packages for each Director and the KMP. In its deliberations, the NRC will take into consideration all aspects of remuneration, including termination terms, industry practices and benchmarks against relevant industry players to ensure that its remuneration and employment conditions are competitive and fair. No Director is involved in any decision of the Board relating to his/her own remuneration. In FY2024, Aon Singapore (“Aon”) was engaged as an independent remuneration consultant to provide professional advice on employee remuneration, including the remuneration packages of the KMP. Aon was also engaged in FY2022 to develop a compensation framework (the “Total Compensation Framework”) for the employees of the Manager. The remuneration consultant is not related to the Manager, its controlling shareholder, its related entities or any of its directors. Principle 7: Level and Mix of Remuneration The NRC seeks to ensure that the level and mix of remuneration for the Board and the Manager remains competitive, aligned with Unitholders’ interests and promote ESR-REIT’s long-term success, as well as appropriate to attract, retain and motivate the Directors to provide good stewardship of the Manager and the KMP to successfully manage ESR-REIT for the long term. Remuneration for Non-Executive Directors The Manager has adopted a policy that no directors’ fees shall be paid to the CEO or any Non-Independent Non-Executive Directors who are representatives of the Manager’s shareholders. All Directors are appointed for an initial term of 3 years and such term can be renewed for a further 3 years at the discretion of the Board or as otherwise determined by the shareholders of the Manager. Accordingly, the Directors’ fees are established once every 3 years. Key Information Regarding Directors The key information regarding the Directors are set out in pages 26 to 31 of the Annual Report, which covers academic and professional qualifications, Board Committees served on (as a member or chairman), date of first appointment as a Director, date of last reappointment as a Director, directorships both present and those held over the preceding three years in other listed companies, and other principal commitments. Principle 5: Board Performance The Board has in place a formal process to annually assess the contributions by each individual Director (including the Chairman) as well as the effectiveness of the Board as a whole and that of each of its board committees and individual Directors. The review, which is conducted internally, includes individual Directors completing an evaluation questionnaire that covers both the Board and Board Committees composition, access to information, attendance and ability to contribute effectively and have meaningful participation and rigorous decision making during the meetings, strategic planning, risk management, accountability and oversight, directors’ development and management. Each Director is allowed to individually express their personal and confidential assessment of the Board’s overall effectiveness in accomplishing its goals and discharging its responsibilities. The evaluation results are consolidated (with no specific Directors’ contribution mentioned) and presented to the Board for review by both the Chairperson of the Board and Chairman of NRC. The NRC recommends for the Board’s approval the objective performance criteria and process for the evaluation of the effectiveness of the Board and Directors as a whole, and of each board committee separately. Action plans will be implemented for areas which the Board is of the view that improvements are required to enhance the overall effectiveness of the Board and each Board Committee. For FY2024, the outcome of the evaluation was satisfactory. No external facilitator was engaged in the evaluation process.
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