Group performance and alignment We have set out on pages 30 to 33 the key performance indicators (KPIs) that we currently use to monitor the success of the business. In order to appropriately align executive remuneration with business performance we incorporate KPIs within our incentive schemes. In both 2020/21 and 2021/22 the KPIs that we are using to determine variable remuneration are: ӱ Total return ӱ Total property return ӱ Total shareholder return ӱ Growth in EPRA earnings per share The precise application of these measures to both the annual bonus and the Long-term Incentive Plan is set out later in the Report. Annual bonus awards for 2020/21 The Executive Directors were set a number of challenging targets for this year, comprising a combination of financial measures and corporate and personal objectives. The three financial measures were total return, total property return and growth in EPRA earnings per share. The actual outcomes are set out in the Annual Remuneration Report, but the overall result was that the Directors earned an estimated 77% of the maximum award available under these financial measures.
ӱ Despite consistent
ӱ Salaries will be increased by 15% in 2021/22 for both Executive Directors and, subject to the aforementioned Committee review, there will be further 15% increases in 2022/23 and 2023/24. The Executive Directors received no pay rise in 2020/21. ӱ The maximum annual bonus potential will be reduced by 10% to 165% of salary in 2021/22 with further 10% decreases in 2022/23 (155% of salary) and 2023/24 (145% of salary) if the salary increases outlined above are enacted. This will result in a more market standard remuneration mix. ӱ As a consequence of these changes, we intend for the Executive Directors’ total remuneration potential at the end of the three-year policy period in 2023/24 to be positioned slightly below the 2019/20 lower quartile of similar sized UK-listed REITs – we believe that this conservative market positioning is appropriate in the current circumstances. We have consulted with our major shareholders on the above proposals and we received positive responses from consultees. We have also given careful consideration as to how these proposals will be received by employees and, in my role as designated Non-Executive Director with responsibility for employee engagement, I have consulted with them as part of this stakeholder engagement process.
outperformance, our Executive Directors are being paid significantly below the levels of most of their peers and with more at risk (due to a more significant skew in their remuneration mix towards annual bonus than most of our peers). This raises an issue of fairness about the current arrangements. ӱ The Committee is concerned that the extent of the gap between our Executive Directors and their peers enhances the risk that one of these individuals could be attracted elsewhere to receive a considerably higher pay package with the replacement cost for either most likely to be considerably higher to attract the right calibre of candidate. Both of these issues stem from our decision not to adjust salaries to more fairly reflect the scale and responsibilities of the Executive Directors’ roles when we transitioned to a UK REIT. We, therefore, have concluded that it is the right time to make sensible adjustments to the Executive Directors’ remuneration packages to more fairly reflect their responsibilities as Directors of a listed company. We are acutely aware that this is a particularly sensitive environment in which to be making changes to pay arrangements and the planned salary transition has been structured accordingly: ӱ The salary transition will be phased over a three-year period with changes in the second and third years being conditional on the Committee being satisfied that they remain appropriate in the context of prevailing business performance and economic circumstances.
81
Powered by FlippingBook