Manulife US REIT - Annual Report 2021

MANULIFE US REIT 126 Corporate Governance Certain key management personnel are subject to a claw-back policy which requires repayment of all or a portion of the incentive awards that have already been paid and/or cancellation of some or all of the vested or unvested awards, if fraud, theft, embezzlement or serious misconduct has been committed, whether or not there is a financial restatement. No long-term incentives in the form of Stock Option Plans, which permit the option holder to purchase shares in MFC, were granted by MFC to the Non-Independent Non-Executive Directors, Mr Michael Floyd Dommermuth and Mr Stephen James Blewitt for FY2021. Stock options granted in previous years pursuant to the Stock Option Plans will vest over a period of four years and expire 10 years later. Deferred Share Units have been granted by MFC to Mr Hsieh Tsun-Yan for FY2021. While such Deferred Share Units vest in full upon granting, eligible Directors may only exchange their Deferred Share Units for cash or shares in MFC within one year after stepping down from the Board of MFC. Where an eligible Director chooses to receive MFC shares in exchange for their Deferred Share Units, the MFC shares shall be issued from treasury shares and/or shares purchased from the open market. Therefore, no new shares in MFC are or will be issued to satisfy the grant of MFC shares in exchange for Deferred Share Units. The Stock Option Plans and the Deferred Share Units granted by MFC to Mr Dommermuth, Mr Blewitt and Mr Hsieh have been granted as part of their remuneration packages as employee and Director of the Manulife Group respectively. Mr Dommermuth, Mr Blewitt and Mr Hsieh’s holdings in MFC shares are non-material. Accordingly, the Stock Option Plans and the Deferred Share Units will not result in a misalignment of interests of the Directors with the long-term interests of the Unitholders given that Mr Dommermuth and Mr Blewitt are employed by the Manulife Group and Mr Hsieh is currently an Independent Director of MFC. Furthermore, there is unlikely to be any potential misalignment of interests given that Mr Dommermuth, Mr Blewitt and Mr Hsieh act as Non-Independent Non-Executive Directors and do not hold executive positions in the Manager. As Non-Independent Directors, they would in any event have to abstain from approving and recommending any Interested Person Transactions and Interested Party Transactions (Related Party Transactions) with an entity within the Manulife Group, mitigating any potential misalignment of interests with those of Unitholders. There are no termination, retirement and post-employment benefits granted to the Directors, CEO and key management personnel over and above what have been disclosed. The Manager is cognizant of the requirements under MAS’ Notice to All Holders of a CMS Licence for REIT Management to disclose: (a) the remuneration of the CEO and each individual Director on a named basis; and (b) the remuneration of at least the top five executive officers (which shall not include the CEO and executive officers who are Directors), on a named basis, in bands of S$250,000. The Manager has assessed and decided not to disclose the dollar remuneration of the CEO and the aggregate total remuneration paid to the top five executive officers (which shall not include the CEO and executive officers who are Directors) for the following reasons: • remuneration matters are highly confidential and sensitive; • with keen competition for the limited talent pool in the Singapore REIT management industry, such disclosures may result in talent retention issues; • the Manager is of the view that such non-disclosure will not be prejudicial to the interests of Unitholders as the information provided regarding the Manager’s remuneration policies, structure and composition of remuneration and procedures for determining remuneration is sufficient to enable Unitholders to understand the alignment of remuneration paid to the CEO and the key executive officers with the performance of MUST and value creation for Unitholders; and • remuneration of the Manager’s CEO and the key executive officers is paid out of the fees which the Manager receives from MUST and not by MUST. The Directors’ fees consist of a base retainer fee as a Director and an additional fee for serving on the Board Committees. This serves to compensate the Directors according to the level of responsibility, time and effort required for their role. The Directors’ compensation package is benchmarked to the market to ensure competitiveness and is reviewed annually. There were no changes in the Directors’ Fees framework for FY2021. All fees are paid for directly by the Manager, not by Unitholders.