38 2022 ANNUAL REPORT 12. REMUNERATION REPORT (AUDITED) (cont.) 12.7 PLANNED REMUNERATION APPROACH FOR FY23 During FY22 the Company’s executive remuneration framework was reviewed considering feedback from shareholders, market insights on incentive structure from external remuneration consultants and the Company’s circumstances. As a result, the following key changes to executive remuneration arrangements are planned for FY23 to ensure a strong alignment with business need, shareholder feedback and contemporary market practice. Further details will be provided in the FY23 Remuneration Report. Remuneration Element FY23 Approach TFR \ \ As per the Red 5 Remuneration Framework, the Remuneration and Nomination Committee (RNC) will review TFR levels and recommend necessary adjustments to the Board for approval. \ \ Any remuneration changes for KMP during FY23 will consider independent market benchmarking outcomes, changes in executive responsibilities and trends in market for executive talent locally. STI \ \ Simplify the equity component (representing 50% of STI award) including removing the Deferred Rights component of the STI and simplify the 50% equity award in the form of a Service Right (subject to a one-year service-based vesting hurdle). This change ensures a greater alignment with market practice, the attractiveness of the incentive package and will reduce the administrative burden / tax complexity. \ \ Rebalance the KPI weightings so that each is weighted at 20%. In light of the importance of culture and executive behaviours in establishing the tone from the top, the individual effectiveness weighting of 10% was lifted to 20% and the EBITDA KPI has reduced from 30% to 20%. PIO \ \ PIO discontinued. The PIO was granted in FY22 as a one-off initiative to meet the unique demands the Company faced at the time (in a strong development and growth phase where incentive opportunity offered is low in relation to market). The program is no longer required considering the objectives of the program can be managed / achieved through the enhanced STI and LTI structures in FY23 and onwards. LTI \ \ Remove design elements not aligned to market including the 12-month retesting mechanism (in relating to the relative TSR hurdle) and the 90% gold production gateway (which is already assessed annually in the STI). \ \ No change to the relative TSR assessment approach. The Board has considered alternative methodologies of measuring TSR performance (i.e. comparison of outperformance on a percentage versus absolute basis). To ensure smooth implementation of other planned changes, the Board determined to retain current approach and reassess the position in FY24. DIRECTORS’ Report (cont.)
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