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REMUNERATION REPORT (Audited) (continued)

2. Principles Used to Determine the Nature and Amount of Remuneration

2.1 The Remuneration Committee

The Board has established a Remuneration Committee that is comprised of four Non-Executive Directors. The Committee is responsible for determining and reviewing remuneration arrangements for the Directors and Executives.

The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of Executives on a periodic basis by reference to relevant employment market conditions and the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality, high performing Director and Executive team.

The Committee meets at least annually and the Chief Executive Officer attends its meetings by invitation when required to report on, and discuss, Executive performance and remuneration matters. The Chief Executive Officer is excluded from Committee deliberations relating to his position.

2.2 Remuneration Philosophy

The performance of the Consolidated Entity depends upon the quality of its Directors and Executives. To ensure compliance with the objective of maximising stakeholder benefits, the Consolidated Entity attempts to attract, motivate and retain highly skilled Directors and Executives. To this end, the Consolidated Entity is in the process of developing appropriate performance hurdles for variable Key Management Personnel remuneration (excluding Non-Executive Directors).

2.3 Remuneration Structure

In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive remuneration is separate and distinct.

2.4 Non-Executive Director Remuneration

The Board seeks to set aggregate remuneration at a level that provides the Consolidated Entity with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost

that is acceptable to Shareholders.

The aggregate remuneration of Non-Executive Directors is determined from time to time by a General Meeting. The amount of aggregate remuneration sought to be approved by Shareholders and the fee structure is reviewed annually. The Board considers advice from external consultants as well as the fees paid to non-executive directors of comparable

Directors’ Report

For the year ended 30 June 2009

companies when undertaking the annual review process.

Two Non-Executive Directors, Mr S Cheong and Mrs E Sam, do not receive fees, however the Consolidated Entity pays a consulting fee to the Ultimate Parent Entity SC Global Developments Limited.

The remaining Non-Executive Directors received an annual base fee of $50,000. An additional fee of $10,000 was paid to the Chairman of the Audit Committee in recognition of the additional time commitment required by this Non-Executive Director, who served as Chairman of the Audit Committee.

With the exception of superannuation contributions payable for Australian Directors in accordance with Superannuation Guarantee Legislation, Non-Executive Directors do not receive any retirement benefits. They do not participate in any incentive programs.

The remuneration of Non-Executive Directors for the years ended 30 June 2009 and 30 June 2008, is detailed on page 22 of this Report.

2.5. Executive Remuneration

The Consolidated Entity aims to reward its Executives with a level and mix of remuneration commensurate with their position and responsibilities so as to:

  • i)

    Reward the Executives for the Consolidated Entity, business unit and individual performance against targets set by reference to appropriate benchmarks;

  • ii)

    Align the interests of Executives with those of Shareholders; and

  • iii)

    Ensure total remuneration is competitive by market standards.

Executive Directors and KMP Executives receive a mix of fixed and variable remuneration. The proportions vary at different levels within the Consolidated Entity reflecting the capacity of these managers to influence the overall outcome of the Consolidated Entity’s operations and returns to Shareholders. In addition, the Chief Executive Officer receives share-based compensation.

With the exception of the share-based compensation for the Chief Executive Officer, the Consolidated Entity has no other Long Term Incentive (LTI) scheme in place.

AVJennings Limited ABN 44 004 327 771 19

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