INDEPENDENCE GROUP NL ANNUAL REPORT 2017

Directors' report 30 June 2017 (continued) Remuneration report (continued) Remuneration and Rewards Philosophy The Board recognises that, as a mid-tier diversified mining company, there is an added complexity to the business that depends upon the quality of its Directors, Executives and employees. To ensure the Company continues to succeed and grow, it must attract, motivate and retain highly skilled Directors, Executives and employees. To this end, the Company has adopted the following Remuneration and Reward Philosophy: • Remuneration policy is transparent with information communicated to all employees to create a high level of understanding of the link between pay, performance and delivery against Company objectives and values; • “At Risk” components, such as short-term incentives (STIs) and long-term incentives (LTIs) are designed to motivate and incentivise for high performance and are aligned with the Company’s strategic and business objectives to create short and long-term shareholder value; • Learning and development is a quantifiable and essential component of all roles; • Career planning is a valued component of the total reward philosophy and forms part of all development plans; and • Work/life programs aim to provide balance and additional value for people at all levels of the organisation. Remuneration components Component Vehicle Objective Link to performance Total fixed remuneration (TFR) Base salary and superannuation contributions. • To provide competitive 'guaranteed' remuneration with reference to role, market and experience. Annual performance of individuals towards the achievement of specific roles. Short-term incentive (STI) 50% cash and 50% equity (service rights) targeted at a percentage of TFR. The equity component will be subject to service and deferred for 12 months (50%) and 24 months (50%). • To provide an ‘at risk’ incentive to reward Executives and key personnel for current year performance. • To provide a deferred benefit to encourage the retention of Executives and key personnel. STIs are a combination of Company and Individual KPIs to drive individual performance that deliver stretch outcomes. STIs aim to align an individual's performance with the achievement of the overall strategic plan and are measured against annual KPIs. Long-term incentive (LTI) Performance rights based on a percentage of TFR. • To provide an ‘at risk’ grant to incentivise and motivate Executives to pursue the long-term growth and success of the Company; and • To provide a deferred benefit to support the retention of Executives and key personnel over time. LTIs are clearly focused on the achievement of mid to long-term shareholder value and the Company's long-term strategic objectives. Developments for FY17 FY17 was a year of transition for the Company with completion of manning up at the Nova Operation, increased focus on attracting and developing additional skills and better structuring and formalisation of the Company’s Remuneration and Rewards policies. In parallel, changes to the local labour market and the availability of high quality skills and experience in some professional and trade groups required careful consideration when setting remuneration policy and the acquisition of talent. The Board and Executive team understand that access to talented people, for all roles in the organisation, is a critical factor for ongoing success of the Company and its ability to grow. Anticipating the need for transition in FY17, the Committee undertook a significant review of the Company’s Remuneration and Rewards policies in 2016, to ensure continued alignment of employee performance and shareholder value in the changing labour market. As a result of the review, a number of changes were made which had effect from 1 July 2016. A summary of the key elements of the implemented changes is provided below: Independence Group NL 16 IGO ANNUAL REPORT 2017— 47 DIRECTORS’ REPORT 30 JUNE 2017 (continued)