Remuneration Remuneration of Executive Directors and Senior Managers AllianzGI expects companies to operate within the parameters of their remuneration policy as approved by shareholders. Both the structure and level of executive remuneration should be designed to promote long-term success of the company. The board and the Remuneration Committee should be able to explain and justify the structure and quantum of executive pay in the context of the company’s business environment and performance. AllianzGI does not approve of significant salary increases that are not linked to material changes in the business or in the role and responsibilities of executive directors. We do not consider it appropriate to offer contractual multi-year guarantees of salary increases, bonus payments and/or equity compensation. AllianzGI expects companies to pay no more than necessary on recruitment of executive directors and, whenever possible, to link recruitment-related awards to the company’s performance. Generally, we would like to see executive compensation comprising short-term and long-term elements that align executives with shareholders and where superior rewards can be achieved by attaining superior performance. However, we acknowledge that remuneration policies will differ depending on the company’s circumstances and are prepared to consider alternative arrangements. AllianzGI believes that executive directors should be encouraged to receive a proportion of their compensation in form of company shares. Therefore AllianzGI would generally support the use of well- designed share-based compensation plans, including appropriate deferrals. AllianzGI supports management incentive plans where: – Incentive awards are subject to relevant KPIs and robust performance targets; – The award opportunity is clearly defined; – Performance periods are of appropriate duration (eg, no less than three years for a long-term incentive award); – For primary KPIs, vesting under relative performance metrics is linked to robust performance against that of the selected peer group; and – The vesting scale is designed to encourage higher levels of performance. We are generally willing to accept small-scale share awards that are not conditional on performance (eg, restricted shares or time-vested shares) up to a limit of 100% salary. Any larger share-based awards should be subject to robust performance targets as stated above, although we acknowledge that there may be exceptional circumstances (eg, turnaround/recovery situations) where a larger restricted share award will be appropriate. In the United States we would accept restricted or time-vested shares up to 50% of share-based pay. AllianzGI encourages all companies to require that the management build substantial shareholding in the company in order to align their interests better with the interests of investors. Only shares that are beneficially owned by executives should be counted towards formal share ownership requirements. AllianzGI favours share-based incentive schemes over stock options due to concerns over potentially disproportionate incentive for executives to drive shorter-term share price performance at the expense of the longer-term health of the business, as well as excessive shareholder dilution (the latter can be mitigated through the use of Share Appreciation Rights (ie, SARs)). AllianzGI expects clear disclosure of all KPIs and performance targets under all management incentive plans, with a view to enabling investors better to assess the link between executive compensation and corporate strategy and performance. We are keen to understand both annual and long- term targets set by the board for executives, as well as performance against these targets. Particular importance is placed on the following considerations: – The link between performance KPIs and targets, and the mid- and long- term goals of the company; – A healthy mixture of KPIs to ensure there is no over-reliance on a single dimension of performance or key indicator; – Incorporation of risk considerations so that there are no rewards for taking inappropriate risks at the Global Corporate Governance Guidelines 16