33 2022 ANNUAL REPORT 12. REMUNERATION REPORT (AUDITED) (cont.) 12.4 EXECUTIVE REMUNERATION FRAMEWORK AND COMPONENTS (cont.) LTI The following table outlines the FY22 LTI arrangements in detail: What is the purpose? \ \ To promote the alignment of interest between executives and shareholders through the holding of equity. As such, LTI awards are generally granted to executives and management who are able to influence the future of Red 5, and/or in a position to contribute to shareholder wealth creation; \ \ Ensure that executives have commonly shared goals related to producing relatively high return for shareholders; \ \ Encourage share ownership among senior roles; \ \ Provide a component of remuneration to enable the Company to compete effectively for the calibre of talent required for it to be successful on a long-term basis; and \ \ Help retain employees, thereby minimising turnover and providing a stable workforce. How is it paid? LTI awards are paid in Performance Rights for nil cash consideration. What is the LTI opportunity The LTI opportunity is set as a percentage of TFR. Subject to performance the MD was entitled to an opportunity of up to 60% and other executive KMP were entitled to an opportunity of up to 45%. What is the performance period The LTI is considered annually and is measured over a 3-year performance period. How is performance assessed? LTI awards are granted at the beginning of performance period and vest based on: \ \ Total Shareholder Return (TSR) compared to that of S&P/ASX All Ordinaries Gold Index (70%); and \ \ Growth of the Company’s proved and probable ore reserves (30%). Retesting after 12 months (following the end of performance period) is available on the relative TSR hurdle. What is the gateway? The following gateways must be satisfied in order for the awards to vest: \ \ A positive TSR; and \ \ 90% budgeted gold production level. How the LTI vesting is determined? LTI vesting is subject to the following sliding scale: Relative TSR (70%) Performance level to be achieved Percentage vesting =< S&P/ASX All Ordinaries Gold Index (Index) 0% Target: Outperform the Index by 10% 50% Performance between Target and Stretch Sliding scale vesting Stretch: Outperform the Index by 20% 100% Growth in ore reserves (30%) Performance level to be achieved Percentage vesting <15% 0% Threshold =15% 25% Target = 20% 50% Stretch = > 35% 100% What are the restrictions of the equity components of the LTI awards? There are no further restrictions to the vested awards following the end of the performance period. DIRECTORS’ Report (cont.)
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