INDEPENDENCE GROUP NL ANNUAL REPORT 2017

Directors' report 30 June 2017 (continued) Remuneration report (continued) FY17 Executive Management Remuneration (continued) At-risk remuneration - LTIs (continued) Share rights granted prior to 30 June 2014 (continued) Return on equity The vesting of the remaining 25% of the share rights at the end of the third year was 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 was calculated in accordance with the following formula: ROE = Net profit after tax / Total shareholders’ equity The target ROE used was 10%. The portion of share rights (25% of the total) that vested based on the comparative return on equity was: 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% LTI - Non-executive directors The EIP 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 EIP and any such issue would be subject to all necessary shareholder approvals. Developments for FY18 The Western Australian labour market in which the Company competes is expected to continue to strengthen in FY18, resulting in continuing competition for talent. The Board and Executive team appreciate the importance of competitive remuneration to ensure that the Company remains able to attract, motivate and retain the valued team of employees built in FY17. In FY18, the Company will continue to focus on alignment of employee performance and shareholder value. The Company reviews all remuneration practices annually. As a result of the review conducted in FY17, a number of changes have been actioned for FY18, with effect from 1 July 2017. Completed changes and/or progress towards remuneration objectives will be reported in more detail in the 2018 Remuneration Report, however a summary of the key elements of the FY18 program are provided below: Group-wide remuneration • review of operational rosters to ensure the Company maximises operational productivity while focused on market competitive terms and conditions for all employees; • LTI performance metrics were reviewed and for FY18 grants will incorporate two performance measures equally weighted: (i) relative TSR and (ii) absolute TSR; • further review, investigation and implementation of flexible work arrangements across the organisation; • review of group wide remuneration benchmarking and award of a group wide CPI increment (or consideration of) for all roles; • strengthening and extension of the Company wide investment in learning, development and training; and • continued revision of the STI program, with a particular focus on maximising shareholder value delivered by specific business units. Executive management remuneration • no increase in TFR for Managing Director; • increases in TFR for Executive KMPs in line with market benchmarking and to ensure that Executive fixed remuneration remains competitive within the comparator and broader industry groups for similar roles; • no change to STI levels; and Independence Group NL 23 54 — IGO ANNUAL REPORT 2017 DIRECTORS’ REPORT 30 JUNE 2017 (continued)