Picton Property Income Limited Annual Report 2023

Governance

Strategic Report

Financial Statements

Additional Information

Employee remuneration and engagement As in prior years, the Committee received an independent benchmarking report covering each of the roles, which detailed market trends. Having considered the report, the Committee determined that, for the team as a whole (excluding the Executive Directors), there would be an overall average rise of 9.4% in base salaries with effect from 1 April 2023. The average employee bonus (excluding the Executive Directors) fell by 5.9%, reflecting our continued outperformance but also the more difficult economic and property market conditions. I have met informally with the team on a number of occasions this year, and we have also carried out our annual employee engagement survey. This is discussed in more detail elsewhere, but the results continue to demonstrate a high level of satisfaction among the team. UK Corporate Governance Code We have considered the provisions of the Code in respect of remuneration and believe that our approach remains compliant. In particular, we operate a consistent level of pension provision across our workforce; LTIP awards are only released to Executive Directors five years after award; and malus and clawback provisions apply to all incentive awards. We have provisions in the rules of our remuneration share plans that prevent, other than in exceptional circumstances, accelerated vesting of awards when an employee leaves Picton. We also have post-employment shareholding guidelines in place. The remuneration arrangements provide alignment with shareholders through the use of financial metrics and corporate objectives. All members of the team participate in the annual bonus and LTIP, not just the Executive Directors. The Remuneration Policy and its components are clearly set out in this report and the rules of the variable remuneration schemes are available to the whole team. We use standard performance metrics, which are also key performance indicators for the business, to determine awards. There are clear target and maximum levels for each metric.

The Committee believes that the variable remuneration schemes in place are fair and proportionate and align the remuneration of the team with the Group’s performance. We are also satisfied that the remuneration structure does not encourage inappropriate risk-taking. The Committee does retain discretion over formulaic outcomes if it considers that these are not a fair reflection Our remuneration structure will be in accordance with the Policy for the year to 31 March 2024. The bonus deferral policy for Executive Directors will continue, with a minimum of 50% of any annual bonus award being deferred into Picton shares for a period of two years before vesting. The maximum annual bonus potential for 2023/24 will fall to 145% from 155% of base salary for the Executive Directors as outlined above. As in previous years the annual bonus will be determined 60% by financial metrics and 40% by corporate objectives. For 2023/24 we will continue to use two financial metrics, being total return, relative to a comparator group, and total property return, relative to the MSCI UK Quarterly Property Index. The awards under the Long-term of the Group’s performance. Implementation of Policy Incentive Plan have been reduced this year by 25% to reflect the lower share price and discount to net asset value, and to avoid any windfall gains arising on vesting. For the awards to be made in June 2023 for the three-year period to 31 March 2026 we will retain the three performance measures used previously, being: ‒ Total shareholder return, compared to a comparator group ‒ Total property return, compared to the MSCI UK Quarterly Property Index ‒ Growth in EPRA earnings per share For the growth in EPRA earnings per share, we intend to use an absolute range of targets based on forecasts over the performance period.

The Committee is satisfied that the significant deferral element to the annual bonus combined with the Long-term Incentive Plan opportunity plus shareholding guidelines ensures that Executive Directors are aligned with and focused on delivering long-term growth. Following a review of market trends, time commitment and role responsibilities, fee levels for the Chair and Non-Executive Directors have been increased by an average of 4.6% from 1 April 2023. As a Committee, we are committed to ongoing dialogue with our shareholders and welcome any feedback regarding our remuneration practices either ahead of the Annual General Meeting or in the year ahead, as we undertake our regular triennial Remuneration Policy review. We look forward to receiving your continued support at the forthcoming Annual General Meeting. Maria Bentley Chair of the Remuneration Committee 24 May 2023

 Picton Property Income Limited  Annual Report 2023

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