Our key performance indicators (KPIs) measure the principal metrics that we focus on to run the business, and they, along with the key measures that drive them, help determine how we are remunerated. Over the longer term, we aim to outperform our benchmarks through successfully executing our strategy. Over the last 12 months, the challenging macroeconomic environment impacted absolute property returns and real estate share prices. However, our strong operating performance helped us outperform many of our benchmarks.

Financial KPIs

Total Shareholder Return % (TSR)

Total Shareholder Return % (TSR)

TSR

Rationale
TSR is a standard measure of shareholder value creation over time. It measures the movement in a company’s share price plus dividends expressed as an annual percentage movement.

Commentary
TSR of the Group has been benchmarked against the TSR of the FTSE 350 Real Estate Index (excluding agencies). The TSR of the Group was -27.3%1 for the year, compared to -28.5% for the benchmark following the repricing of real estate shares given the impact of rising global interest rates.

Alignment with remuneration: LTIP

Total Accounting Return % (TAR)

Total Accounting Return % (TAR)

TAR

Rationale
TAR is measured as absolute EPRA NTA per share growth (the industry standard measure of a real estate company’s success at creating value) plus any ordinary dividends paid, expressed as a percentage of the period’s opening EPRA NTA.

Commentary
This year we compared our TAR to a target year on year growth of 3% or more. TAR was -7.8% for the year. The TAR underperformance was driven by the impact of rising interest rates on the property valuation.

Alignment with remuneration: LTIP and Exec Bonus

Total Property Return % (TPR)

Total Property Return % (TPR)

TPR

Rationale
TPR measures a company’s performance at driving value from its property portfolio. It is calculated as the net capital growth of the portfolio plus the net rental income plus profit or loss on disposals expressed as a percentage return on the period’s opening value as calculated by MSCI.

Commentary
TPR has been compared to a benchmark of around £50 billion of similar assets included in the MSCI central London annual benchmark. Relative to the annual benchmark of -8.1%, the Group generated a portfolio TPR of -4.1%. The outperformance of 4.0% was driven by our greater than benchmark weighting to the West End, along with GPE delivering a record leasing year.

Alignment with remuneration: Exec Bonus

Growth of committed Flex space

Growth of committed Flex space

Rationale
Growth of our Flex offer is an integral part of the Group’s strategy and a near-term strategic priority designed to enhance our valuation and income growth. We are targeting to grow our Flex space to more than one million sq ft over the next five years.

Commentary
During the year, we increased our committed Flex space to 414,000 sq ft, exceeding a targeted 341,000 sq ft, with the outperformance supported by the acquisition of, and commitment to refurbish, 6/10 Andrew Street, EC4.

Alignment with remuneration: Exec Bonus

Non-Financial KPIs

Given the growing importance of sustainability, and our wider stakeholders to the success of our business, we introduced five new non-financial KPIs for 2020/21. Each of these KPIs are performance criteria for senior executive remuneration (see key below), with performance against our sustainability KPIs measured in aggregate.

Energy Consumption % reduction

Energy Consumption % reduction

Energy consumption reduction

Rationale
Lowering our energy intensity is an essential part of delivering our Roadmap to Net Zero.

Commentary
Our target is to reduce energy intensity by 40% by 2030, when compared to our 2016 baseline. For this year, the benchmark was 199.0 kWh/m2 and we delivered 158.5 kWh/m2 across all occupied buildings. A number of projects were undertaken during the year to improve energy intensity, with our performance improving despite increased occupancy levels as workers returned to the office following the pandemic.

Alignment with remuneration: Exec Bonus

Customer Satisfaction (NPS)

Customer Satisfaction (NPS)

Rationale
High levels of customer satisfaction are critical to both attracting and retaining businesses in our buildings.

Commentary
The Net Promoter Score (NPS) of the Group is compared to the office industry average, expressed as a number between -100 and +100, with a minimum target of the industry average. Our NPS of +44.0 significantly outperformed the office industry average of +3.8.

Alignment with remuneration: Exec Bonus

Employee Engagement % (EII)

Employee Engagement % (EII)

Employee engagement

Rationale
Maintaining high levels of employee engagement, and an inclusive culture, is key to motivation, productivity and ultimately the delivery of our business plans.

Commentary
From the 2022/23 financial year, we compare a blended Employee Engagement Index and Employee Inclusion Index (EEII) score of the Group to a 65% hurdle. At 78% we outperformed the benchmark, and aim to improve performance as we progress our diversity and inclusion initiatives.

Alignment with remuneration:Exec Bonus