Remuneration Report/Continued
Annual bonus for 2022/23 The annual bonus for the year ended 31 March 2023 for the Executive Directors was based on a combination of financial metrics (60%) and corporate objectives (40%). The targets set for the year ended 31 March 2023 and the assessment of actual performance achieved are set out in the table below. The financial metrics comprised two equally weighted components: total return relative to a comparator group of similar companies, set out later in this report; and total property return compared to the MSCI UK Quarterly Property Index. At the date of this report not all of the companies in the total return comparator group had announced their results to 31 March 2023 and the Committee has estimated, based on the results to date, that this condition will not be met, resulting in an award of 0%. The Committee will determine the actual outcome of this condition once all companies have reported, and any adjustment required between the estimate and actual will be made in next year’s Remuneration Report. There will be no payout of the bonus until a finalised result can be confirmed.
Awarded (% of maximum)
Awarded (% of salary)
Performance condition
Basis of calculation
Range
Actual
Total return versus comparator group Bonus weighting: 30% Total property return versus MSCI Index Bonus weighting: 30%
Less than median – 0% Equal to median – 50% Equal to upper quartile – 100% Less than median – 0% Equal to median – 50% Equal to upper quartile – 100%
Not yet available
(13.9)%
0% (estimate)
0% (estimate)
Median (12.9)% Upper quartile (8.5)%
(8.7)% 98.0% 45.6%
The corporate objectives for the Executive Directors for the year to 31 March 2023 were determined by the Remuneration Committee and accounted for 40% of the maximum award. The corporate objectives applying to both Executives, and the assessment of performance against these, are as follows:
Awarded (% of maximum)
Awarded (% of salary)
Performance condition
Assessment
Improve occupancy and income profile Bonus weighting: 8% Make progress against net zero carbon pathway Bonus weighting: 4% Improve portfolio environmental factors Bonus weighting: 4% Improve level of net property income and operational expenses Bonus weighting: 6% Implementation of TCFD recommendations Bonus weighting: 4%
The Committee considered that income metrics, including passing rent, estimated rental value and net property income under IFRS, had all improved over the year. However occupancy has decreased from 93% to 91% and therefore assessed this objective as 50% met. The published net zero carbon pathway set out a number of short-term objectives. The Committee assessed the progress made against these objectives and this is set out in the Being Responsible section on page 64. The Committee assessed performance against a series of key environmental metrics, including EPCs, GHG emissions and intensity, and green lease clauses, as well as other environmental initiatives that had been implemented during the year. The Committee noted that all key metrics had shown improvement over the year. EPRA earnings have remained stable at 3.9 pence per share, and the reported cost ratio is still at 1.0%. However both EPRA cost ratios have increased this year.
50% 6.2%
90% 5.6%
85% 5.3%
40% 3.7%
The progress made against TCFD recommendations is set out in detail in the TCFD Statement on pages 47 to 55.
85% 5.3%
Positive stakeholder engagement Bonus weighting: 6%
Occupier surveys were carried out in the year, with 80% of respondents satisfied with the level of service provided. Supportive shareholder feedback has been received via the Company’s brokers. Employee satisfaction remains high at 82%. A key objective for the Executive Directors was to identify growth opportunities. In addition to asset acquisitions a number of key corporate opportunities were considered and progressed during the year.
90% 8.4%
Identify and evaluate growth opportunities Bonus weighting: 8%
90% 11.2%
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Picton Property Income Limited Annual Report 2023
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