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Washington H. Soul Pattinson and Company Limited
Annual Report 2016
34
Directors' Report
– Remuneration Report
LTIs
Executive KMP participate, at the Board’s discretion, in the LTI plan comprising annual grants of performance rights
as follows.
Structure of LTIs for the KMP of the Parent Company
Feature
Description
Opportunity/
Allocation
50% of Managing Director’s fixed remuneration
40% of Finance Director’s fixed remuneration
20% of Company Secretary’s fixed remuneration
The above amounts are divided by the VWAP of WHSP shares for the 30 trading days prior to 1 August
each year to determine to number of rights issued.
TSR rights
50% of rights issued are subject a TSR performance condition
EPS rights
50% of rights issued are subject an EPS performance condition
TSR
performance
hurdle
TSR is initially assessed over a 3 year period and compared to the ASX All Ordinaries Accumulation
Index (Index). Vesting will occur based on the company’s positioning relative to the Index. If less than
100% of the rights vest, performance is reassessed over a 4 year period.
This incentive is designed to focus executives on delivering sustainable long-term shareholder returns.
TSR performance per annum
Rights to vest
TSR% < Index
Nil
TSR% = Index
50%
Index < TSR% < (Index + 3% per annum)
Progressive pro-rata from 50% to 100%
TSR% = (Index + 3% per annum) or higher
100%
EPS
performance
hurdle
EPS movement is initially assessed over a 3 year period and compared to the target set out below.
Vesting will occur based on the company’s achievement of that target. If less than 100% of the rights
vest, performance is reassessed over a 4 year period.
This incentive is designed to align the interests of executives with shareholders.
Regular EPS
Regular EPS is the regular profit after tax of the consolidated WHSP Group,
divided by the weighted average number of WHSP shares on issue across the
measurement period.
Regular profit after tax is a non-statutory profit measure and represents profit
from continuing operations before non-regular items. A reconciliation to statutory
profit is included in the Consolidated Financial Statements – Note 3, Segment
information.
Regular EPS CAGR over measurement period
Rights to vest
Regular EPS CAGR < 5%
Nil
Regular EPS CAGR = 5%
50%
5% < Regular EPS CAGR < 10%
Progressive pro-rata from 50% to 100%
Regular EPS CAGR = 10% or higher
100%
Payable by
participants
Nil
No amounts are payable by the participants upon the granting or the exercising
of the rights.
Delivery of
LTI
Rights vest over the 3 years following the 3 year performance period unless retesting applies. Refer to
item 7 ‘Share-based Compensation’below for further details.