Picton Property Income Limited Annual Report 2023

Remuneration Report/Continued

The key performance highlights noted by the Committee included: ‒ The total property return was ahead of the MSCI UK Quarterly Property Index for the year, and our long- term record of outperformance has been maintained over one, three, five and ten years, and since inception; ‒ EPRA earnings rose by 0.5% compared to 2022/23, despite lower occupancy and higher costs; ‒ The portfolio ERV increased by 9% over the year; ‒ Net property income rose by 2.3% compared to the previous year; ‒ Good progress has been made against the net zero carbon pathway, including on-site renewable energy installation; ‒ Key climate-related risk management recommendations have been implemented; ‒ The proportion of the portfolio’s EPC ratings (A to C) has increased to 76% from 71% last year; and ‒ Scope 1 and 2 greenhouse gas emissions are 24% below the 2019 baseline. In light of this performance assessment, the Committee is satisfied that it is appropriate for the final stage of the transition to proceed. Accordingly, the base salaries of the Chief Executive and Finance Director will be increased by 15% to £380,219 and £258,549 respectively from 1 April 2023 and their annual bonus opportunity for 2023/24 will be reduced to 145% of salary (2022/23: 155%). Group performance and alignment We have set out on pages 22 to 25, 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. For both 2022/23 and 2023/24, the KPIs that we are using to determine variable remuneration are set out in the table above. The remaining 40% of the annual bonus is determined by corporate objectives.

Long-term Incentive Plan

Measure

Comparator

Annual bonus

Total return

Relative to comparator group (30% weighting)

Total property return

Relative to MSCI UK Quarterly Property index Relative to comparator group

(30% weighting)

(33% weighting)

Total shareholder return

(33% weighting)

EPRA EPS

Absolute target range

(33% weighting)

The Committee considered the formulaic bonus outcome in the context of the Group’s overall performance for the year. The key highlights of performance for the year are set out earlier in this Statement. The Committee concluded that it was satisfied the formulaic bonus outcome was a fair reflection of overall Group performance during the past financial year. Long-term Incentive Plan awards (performance period to 31 March 2023) The LTIP provides the link between the long-term success of the Company and the remuneration of the whole team. The awards made under the Long-term Incentive Plan (LTIP) in June 2020 were based on three performance conditions measured over the three-year period ended on 31 March 2023. The Committee has assessed the extent to which these three performance conditions have been met. The three equally weighted performance conditions were total shareholder return, total property return and growth in EPRA earnings per share. The actual outcomes for these conditions are set out in the Annual Remuneration Report and give rise to an overall award of 52.5% of the maximum granted. As explained above, the Committee concluded that it was satisfied the formulaic outcome was a fair reflection of overall Group performance over the performance period. As these awards were reduced by 30% at grant to avoid the potential for windfall gains on vesting, the Committee is satisfied that no further adjustments are required.

Annual bonus awards for 2022/23 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 two financial measures were total return and total property return. The actual outcomes are set out in the Annual Remuneration Report, but the overall result was that the Directors earned an estimated 49% of the maximum award available under these financial measures. The corporate objectives were set to ensure that specific key strategic targets were reached. These included targets relating to sustainability, including progress against the net zero carbon pathway, portfolio environmental measures and the implementation of climate-risk recommendations. The Committee considered the extent to which the Executive Directors had met the objectives, and concluded that good progress had been made against many, but the fall in occupancy and increased costs also had to be recognised. Overall the Committee considered that an outcome of 74% of the maximum award for each of the two Executive Directors were merited against the corporate objectives. In aggregate, annual bonus awards for the two Executive Directors are 59% of the maximum award (2021/22: 64% of maximum). The Committee considered the overall bonus awards against the reported financial results and determined that the proportion of the bonus deferred be increased to 60% from 50% for the Executive Directors, and therefore the cash element is reduced from 50% to 40%.

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Picton Property Income Limited Annual Report 2023

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