Principle 9: Disclosure on remuneration

As MIIF is an externally-managed fund, it has no employees or executive officers. One of the responsibilities of the manager is, at its cost, to make available employees (including senior executives) to discharge their obligations to MIIF. This means that MIIF is not liable for expenses referable to staff or its executive directors. Only MIIF’s independent director fees are paid by MIIF in its personal capacity.

On this basis, it is not considered necessary to establish a framework of remuneration for key executives or to disclose the remuneration of such senior or key executives as they are neither employed nor remunerated by MIIF.

The board has appointed an RC which comprises only independent directors, being Heng Chiang Meng (chairman), Robert Mulderig, Michael Hamer and Lee Suet Fern. The RC has adopted a formal charter which sets out written terms of reference.

The role of the RC is to recommend to the board the framework for remuneration for the independent directors. The fees to be paid to the independent directors are subject to an overall cap of US$400,000 per annum in total, as set out in the MIIF bye-laws.

The independent directors are each paid a fixed annual fee of US$72,500, which encompasses all board and committee related matters that they participate in. This fee is benchmarked to market based on external advice and may be reviewed annually.

The independent directors are not entitled to any MIIF options, nor shares, nor any retirement benefits as part of their remuneration package. It is considered that the remuneration of the independent directors is appropriate for the level of contribution, taking into account their responsibilities and the effort and time spent.

The breakdown of the remuneration of the directors for the financial period ended 31 December is set out below:

⁽¹⁾ In the case of Macquarie executive directors, remuneration earned in connection with their roles as MIIF directors is paid by Macquarie Group Limited. No remuneration is paid by MIIF to any Macquarie executive directors on the board.

The manager is entitled to a fixed base fee under the management agreement in respect of its role as manager of the day-to-day operations of MIIF. The manager is responsible for enabling staff (including senior executives) to perform day-to-day management functions for MIIF. The manager is entitled to be reimbursed for the reasonable costs of consultants, advisers and out-of-pocket expenses.

In addition, the manager is entitled to a performance fee should MIIF’s total return to shareholders exceed an annualised return of 8% per annum. The performance fee represents 20% of the outperformance and is payable to the manager quarterly in arrears. Should the manager underperform the benchmark of an annualised return of 8% per annum, then a deficit is created which will have to be overcome before any future performance fee is paid.

During the period ended 31 December 2009, the manager earned a management fee of S$4.182 million.

No performance fee was earned during calendar year 2009. As at 31 December 2009, there is a performance fee deficit of S$822.47 million. This deficit must be made up with returns to shareholders before the manager may become entitled to further performance fees.

There are no employee share schemes currently in place in relation to MIIF.

There are no immediate family members of the directors who are employees of MIIF.

Principle 8	Principle 10