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Annual Report 2016 51
DIRECTORS’ REPORT
Directors' report
30 June 2016
(continued)
Remuneration report (continued)
2016 Executive remuneration (continued)
Variable remuneration - LTIs (continued)
Shares rights granted prior to 30 June 2014
Vesting of the share rights granted to executive KMP prior to 30 June 2014 is subject to a combination of the
Company’s shareholder return and return on equity. The performance rights will vest if, over the three year
measurement period, the following performance hurdles are achieved:
Shareholder return
The vesting of 75% of the share rights at the end of the third year will be based on measuring the actual shareholder
return over the three year period compared with the change in the S&P ASX 300 Metals and Mining Index (Index) over
that same period. The portion of share rights (75% of the total) that will vest based on the comparative shareholder
return will be:
Shareholder return
Level of vesting
100% of the Index
25%
Between 100% and 115% of the Index
Pro-rata straight line percentage
115% of the Index or greater
100%
Return on equity
The vesting of the remaining 25% of the share rights at the end of the third year will be based on the average return on
equity over the three year period compared with the average target return on equity as set by the Board for the same
period.
Return on equity (ROE) for each year will be calculated in accordance with the following formula:
ROE = Net profit after tax / Total shareholders’ equity
The target ROE will be set each year by the Board as part of the budget approval process for the following year. The
target ROE used in previous financial years was 10%. The portion of share rights (25% of the total) that will vest based
on the comparative return on equity will be:
Actual ROE
Level of vesting
100% of average target ROE
25%
Between 100% and 115% of average target ROE
Pro-rata straight line percentage
115% of average target ROE or greater
100%
Long term incentive - Non-executive directors
The PRP permits non-executive directors to be eligible employees and therefore to participate in the plan. It is not
currently intended that non-executive directors will be issued with share rights under the PRP and any such issue would
be subject to all necessary shareholder approvals.
Developments for FY17
FY16 has been a year of continued development for the Company. During this period the Committee has continued to
focus on the employee remuneration to ensure that the Company remains market competitive and can attract, motivate
and retain the diverse range of skilled people that are essential to achieve its strategic objectives and maximise the
alignment of employee performance and shareholder value.
Following a review of the Company’s Remuneration and Rewards policies a number of changes have been made which
will have effect from 1 July 2016. The completed changes will be reported in more detail in the 2017 Remuneration
Report, however a summary of the key elements has been provided below:
Independence Group NL
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