C2. Fixed remuneration
Table 7 – Summary of fixed remuneration
What is fixed
remuneration?
The terms of employment of all Senior Executives contain a fixed remuneration component expressed as a dollar amount.
This amount is not ‘at risk’.
Depending on the country in which the executive is employed, the fixed remuneration component is structured as a total
employment cost package (which includes company superannuation contributions and benefits, including fringe benefits tax)
or as a salary plus benefits package.
How is fixed
remuneration set?
Fixed remuneration for Senior Executives is set by the HR Committee to reflect the market for comparable roles in companies
of similar complexity and size, targeted at market median (for local geographic market) using external benchmark data. The
Company also uses a job evaluation methodology to manage internal pay relativities.
Did the Company
review fixed
remuneration during
the year?
The Board placed a freeze on fixed remuneration for all Senior Executives during FY 2008/09. On 1 January 2010, the freeze
was lifted and the Company implemented average salary increase of approximately two per cent.
While some Senior Executives received increases in their fixed remuneration on 1 January 2010, these increases were in line
with the average or were intended to keep the Company’s base salary rates in line with its stated market positioning. The
MD/CEO did not receive an increase on 1 January 2010.
From FY 2010/11 onwards, annual salary reviews will occur each 1 September (previously 1 July).
C3. Short-term incentive (STI)
Table 8 – Summary of STI Plan
What is the STI Plan
and what is its
purpose?
The STI Plan is an “at risk” payment linked to achieving specific annual KPI targets. It is designed to put a significant
proportion of Senior Executive remuneration at-risk against meeting:
• financial targets linked to annual KPIs; and
• non-financial targets linked to KPIs that drive long-term sustainability.
Who participates in
the STI Plan?
Executives and selected individuals who can materially impact the financial and operational performance of the Company, a
region or a business unit.
Are both target and
stretch performance
conditions imposed?
Yes, if financial performance exceeds targets, the STI Plan will deliver higher rewards to executives.
What percentage of
fixed remuneration
does the STI Plan
represent?
Senior Executives have target reward of 40 – 75 per cent of total fixed remuneration. The CEO of TSI Fund has a target
reward of 100 per cent of his total fixed remuneration.
What are the
performance
measures?
STI performance measures vary depending on the individual executive’s position, and include both financial and non-financial
measures:
Financial measures include:
• earnings before interest, taxation and amortisation (EBITA) at group, regional and business unit levels
• EBITA margins
• capital management
• leveraging ratios and
• cost reduction.
Non-financial measures include:
• safety performance
• project deliverables
• succession planning, and
• strategy development.
Senior Executives’ KPIs are split 70 per cent into financial measures and 30 per cent non-financial measures.
Why were these
measures chosen?
These STI performance measures have been selected because they are directly linked to the short-term financial performance
and strategic direction of the Company and promote continued profitability that is sustainable over the long-term.