Board Remuneration The Board acknowledges that MCCG 2021 emphasises that Directors’ remuneration, which is well structured, clearly linked to the strategic objectives of a company, and rewards contribution to the long-term success of the company is important in promoting business stability and growth. The REIT Manager has, in place policies and procedures regarding remuneration and aims to set remuneration at level that is sufficient to attract, motivate, and retain the Directors needed to achieve the Company’s long-term objectives, taking into consideration all relevant factors including the complexity of the Company’s business and its performance, the skills and experience of the relevant Director and his or her responsibilities, contribution and commitment to the Company. The Board Nomination and Remuneration policy is responsible to recommend and ensure the administration of a fair and transparent procedure for setting policy on the remuneration of directors and senior management. The remuneration packages are also designed on the basis of the directors’ senior management’s merit, qualification, and competence while having regard to the company’s operating results, individual performance, and comparable market statistics. As such, the Board complies with the remuneration policy set by the Johor Corporation Group of Companies. Practice 8.1 of the MCCG 2021 requires a disclosure on directors' remuneration, where “detailed disclosure on a named basis for the remuneration of individual directors and the remuneration breakdown of individual directors includes fees, salary, bonus, benefits-inkind, and other emoluments”. The REIT Manager explained that the Board’s nomination, and appointment remuneration is undertaken by the REIT Manager, a private company in the Johor Corporation Group, and not by the REIT. The appointment, re-appointment, and remuneration of a director of the Company are not subject to the approval by the unitholders of the listed funds. As such in this instance, the required disclosure does not apply to the REIT. Senior Management Remuneration The REIT Manager also adopts the DRMSB’s Employee Salary Scheme as a guiding principle to provide a competitive level of total compensation to attract and retain qualified and competent staff. It is also driven primarily based on performance as specified in its Performance Management Policy. With regard to application of Practice 8.2 which requires disclosure “on a named basis the top five senior management’s remuneration component including salary, bonus, benefits in-kind and other emoluments”, the Board is of the view that such disclosure is not applicable and mandatory because the REIT Manager is not a listed entity; and the senior management’s remuneration is paid by the REIT Manager. Nevertheless, the Board wishes to give assurance that the remuneration of Directors and Senior Management commensurate with their individual performance, taking into consideration of the REIT’s performance. The remuneration packages of Senior Management are based on experience, expertise, skills and industry benchmarking. Driving Sustainability The Board Sustainability Committee ("BSC") together with Senior Management takes responsibility for the governance of sustainability in setting the company’s sustainability strategies, priorities, and targets. Further, the Board is cognizant of the philosophy promoted by MCCG 2021, effective board leadership and oversight also require the integration of sustainability considerations in corporate strategy, governance and decision-making. As ESG is gaining importance, the BSC has been mandated with oversight functions on ESG including climate change risk. The REIT Manager has established the Sustainability Management Committee ("SMC") at the management level, which is led by the CEO and comprises the management team of the REIT Manager, the Property Manager, and its counterparts. The SMC is dedicated to managing sustainability strategically, including the integration of sustainability considerations in the operations. Further, the advocating sustainability initiatives have been embedded in the performance evaluations of the Board and senior Management in line with Practice 4.4 of the MCCG 2021. The Board also ensures that they stay abreast with and understand the sustainability issues, hence all Directors are required to attend the Mandatory Sustainability Onboarding Programme for Directors of PLCs by the end of 2024. 124 AL-SALĀM REIT ANNUAL REPORT 2023 CORPORATE GOVERNANCE OVERVIEW STATEMENT
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