130 AL-SALAM REIT d) Review of the Limit of Authority relating to HR Matters In this regard, the BNRC has performed its duties independently in accordance with good corporate governance principles to make the recruitment and remuneration processes transparent and build the confidence of shareholders and all stakeholders. Evaluation of the Functioning and Performance of the Board of Directors and its Committees It is a standard practice for the Board of Directors to distribute an annual questionnaire at the end of each financial year through the Secretariat of the Board which, amongst other sections, includes a self-assessment, with a series of questions that also enable compliance with the various annual reports of the Committee and the Board. The Board of Directors performed the annual questionnaire and the self-assessment for this financial year 2022, in order to analyse the Board’s effectiveness and composition and to identify opportunities for improvement to ensure proper compliance with the existing obligations or recommendations in this area. The questionnaire used a Self-assessment approach on subjective and objective information related to the functioning of the Board of Directors and its Committees, among other aspects, among others; a) Functioning of the Board of Directors, with questions related to the Board’s effectiveness and internal functioning. b) Structure and composition of the Board of Directors, comprising questions to obtain the Directors’ opinion on the Board’s structure and composition, and the capacities, professional profile of its members, and areas of competencies in order to perform their duties on the Board. c) Board of Directors Committees, where the Directors are asked to evaluate the performance of the functions of the BARC, the Board Investment, and the BNRC. d) Board of Director’s agenda, where the Directors are asked about the Board’s performance in areas or matters within its scope, such as the current corporate governance model, environmental, social, and corporate policy ("ESG"), involvement in the design and approval of strategy in financial and investment policies, monitoring of the risk map (in all its areas), dividend policy and capital structure and their participation in decision-making in significant transactions, among other matters. e) Chairman of the Board Directors and CEO, where the Directors are asked for their views on the performance of these two positions and fulfilment of responsibilities. f) Other areas, with questions relating to the Board’s response to the industry crisis and improvement opportunities or aspects to be developed in the future. The responses are generally positive and supportive, without prejudice to the Chairman and the CEO, taking into consideration going forward some of the suggestions made regarding the functioning of the Board. From the feedback received from the Directors, a few significant points and recommendations on areas that could be discussed by the Board for potential improvements, which are as follows: • Identification of issues relating to stakeholder management, in terms of identification of the stakeholders and the materiality of their influences on REIT Manager and the REIT • Achievement of targets relating to gender diversity in the Board’s and Board Committees’ • Enhancement of better communication and engagement channels between the Board and the management team in terms of strategic direction, performance benchmarking, achievement of targets, and accountability on achievement of those targets. • Identification of ESG initiatives and the assimilation of ESG elements in all aspects of the REIT’s business operations. The above issues, if deemed appropriate, to the definition of an action plan for the 5-year strategic planning. For better transparency and in order for the Board of Directors to evaluate any potential conflict of interest, each Director reports to the Committee through an annual declaration, the list of listed companies in which they serve as Directors and/or other positions and a Declaration of Interest in Securities (stocks, bonds, notes, unit trusts or other securities). BOARD NOMINATION AND REMUNERATION COMMITTEE REPORT
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