Why were the
hurdles chosen?
The Board determined that these hurdles are appropriate as they, on balance, seek to reward:
• when profit grows in real terms – EPS hurdle
• when the Company achieves above average total shareholder returns relative to the performance of an appropriate peer
group of companies – relative TSR and
• when the business achieves returns from pursuing profitable projects and managing new and existing customers
efficiently and effectively – ROFE hurdle.
What if a Senior
Executive ceases
Where a Senior Executive ceases employment without cause (other than due to redundancy or retirement), those awards
will lapse within two months from exit.
Where redundancy or retirement applies, a pro-rata (based on service period) of the unvested awards may be retained and
vest in the ordinary course.
Performance rights will lapse immediately where a participant’s employment has been terminated by the Company with cause.
What happens in the
event of a change of
Prior to a takeover or change of control of the Company, the Board may exercise its discretion (having regard to relevant
executive and Company performance) and determine that part or all unvested awards vest.
C6. Shareholding policies
Minimum shareholding policy
On 19 August 2010, the Company adopted a minimum shareholding policy for Senior Executives. Under this policy, Senior Executives are encouraged to
acquire and maintain a shareholding in the Company equal in value (based on share acquisition cost) to 50 per cent (for the MD/CEO) and 30 per cent (for
other Senior Executives) of their individual total fixed remuneration. The timeframe to achieve this is over a five year period from the later of the date of
adoption of this policy and the appointment of the Senior Executive. The shareholding includes all the Company shares the Senior Executive and/or close
members of the family of the Senior Executive holds; or has control over or has a benefit in (eg superannuation, beneficiary of a trust). This policy is not an
enforced policy, however, Senior Executives are encouraged to comply.
Hedging and margin lending policies
The Company also has a policy on the use of financial products by employees, including Senior Executives, to limit the risk attaching to equity instruments
(commonly referred to as “hedging”) where those instruments are granted to them as part of their remuneration. Under this policy, Company securities must
not be hedged prior to vesting (ie prior to the relevant performance and/or service conditions being met).
In addition, the Company has a policy that prohibits Non-Executive Directors and Senior Executives from using the Company’s securities as collateral in any
financial transaction, including margin loan arrangements.
The Company treats compliance with these policies as a serious issue, and takes appropriate measures to ensure the policy is adhered to. Any employees
found to have breached this policy will be subject to appropriate sanctions.
C7. Other equity and legacy plans
TSI Fund Notional Securities Scheme
Steve MacDonald, the Chief Executive Officer of TSI Fund also participates in the TSI Fund Notional Securities Scheme (Scheme). Steve MacDonald is
seconded to TSI Fund by the Company and his remuneration is wholly paid by the Company.
The Scheme offers a notional investment in the securities of TSI Fund and is offered by the Company (with agreement from the TSI Fund Board). The
incentive provided under the Scheme can be delivered either in cash, TSI Fund securities or a combination of both, once vesting conditions have been met.
The Scheme is used, because under current Australian tax law, TSI Fund securities issued under a TSI Fund executive remuneration regime can only be
provided to TSI Fund employees, whereas Steve MacDonald is seconded from the Manager to TSI Fund. This notional investment in securities in TSI Fund is
a structure that emulates the performance of total securityholder return of TSI Fund securities.The terms and conditions of Steve MacDonald’s grant of TSI
Fund Notional Securities affecting remuneration in the previous, this or future reporting periods are set out below. The TSI Fund Notional Securities expire
on the earlier of ceasing employment or 180 days after the Vesting Date.
The performance hurdles were assessed on 30 June 2010 and as the threshold level of performance was not achieved, none of the notional securities under
the Scheme vested or delivered any benefits. Accordingly, the value per notional security at 30 June 2010 is nil.