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McPHERSON’S LIMITED

 ANNUAL REPORT 2015

(K) REMUNERATION REPORT (CONTINUED)

The following fees applied for the year ended 30 June 2015 and continue to apply at the date of this report:

FROM 1 JULY 2014

FROM 1 OCTOBER 2014

Base fees

Chairman

$127,310

 $131,130 

Other non-executive Directors

$66,840

 $68,845 

Additional fees

Audit Risk Management & Compliance Committee – Chairman

$8,490

 $8,745 

Audit Risk Management & Compliance Committee – Member

$5,300

 $5,460 

Nomination & Remuneration Committee – Chairman

-

   $8,745

*

* Payment to the Nomination & Remuneration Committee Chairman commenced on 27 April 2015

The above amounts exclude company superannuation guarantee contributions payable on behalf of Directors at a rate of 9.50% on the base fees 

and additional fees.

Executive remuneration

The executive remuneration and reward framework has five components:

 

•Base pay and benefits;

 

•Short-term performance incentives;

 

•Long-term incentives; 

 

•Superannuation; and

 

•Performance assessment.

Base pay and benefits

Base pay is structured as a package amount which may be delivered as cash, prescribed non-cash financial benefits including motor vehicles and 

additional superannuation contributions at the executive’s discretion. Base pay is reviewed annually to reflect increases in responsibility and to 

ensure that the executive’s pay is competitive in the market for a comparable role. There are no guaranteed base pay increases included in any 

senior executives’ contracts. 

Short-term performance incentives (STI)

Short-term incentives in the form of cash bonuses are available to senior executives providing the Company, operating division or business most 

closely aligned with the executive’s area or areas of responsibility achieve or exceed pre-determined profit targets because this ensures that 

variable reward is only available when value has been created for shareholders and when profit and other targets are consistent with or exceed 

the business plan. For senior executives the maximum target bonus opportunity is usually 50% of the base package amount. 
Each year the Nomination and Remuneration Committee considers the appropriate targets and key performance indicators together with the level of 

payout if targets are met or exceeded. The 2015 STI targets were primarily based on the Group’s earnings per share outcome for the financial year.
An assessment regarding eligibility for a cash bonus is made by reference to actual performance outcomes when these are known following the 

conclusion of the financial year. Short-term incentives are normally payable in September following the end of the financial year to which the 

incentive relates. Based on the Group’s profit performance in the current year the Nomination and Remuneration committee has determined that 

no senior executive is eligible for a cash bonus relating to the profit performance component for the current year.
From time-to-time additional short-term cash bonuses are paid to senior executives in relation to the achievement of specific outcomes 

associated with certain significant non-recurring events. Examples of such events may include, among others, achieving a required divestment 

outcome, completing a significant restructure project or completing a refinancing of the business. The Nomination and Remuneration Committee 

is responsible for determining when such bonus payments are applicable and the amount to be paid. During the year, certain senior executives 

were deemed eligible for a cash bonus as a result of meeting a number of restructuring related objectives, including achieving the divestment of 

51% of the Group’s Housewares business.  
Subject to the discretion of the Nomination and Remuneration Committee, the maximum likely short-term incentive payable to a senior executive 

in future years is 50% of the executive’s base salary package amount. The minimum payable would be zero in cases where the specified 

performance targets are not achieved.

Long-term incentives (LTI)

Long-term incentives are provided to executives to focus them on delivering long-term shareholder returns.  During the current year the Company 

continued with its performance rights plan (The McPherson’s Limited Employee Performance Rights Plan) to provide long-term incentives to 

executives.  Under this plan, participants are granted performance rights which only vest if certain performance conditions (relating to compound 

annual growth in earnings per share – refer to page 32 for further information) are met and the executive is still employed by the Group at the end 

of the vesting period.  Participation in the plan is at the discretion of the Nomination and Remuneration Committee and no individual has a 

contractual right to receive any guaranteed benefits.  The maximum LTI opportunity for the Managing Director and other selected senior 

executives is 50% and 20% of the base package amount respectively.
Further information regarding share-based compensation in the form of performance rights is contained later in the Remuneration Report on 

pages 32 to 33.

DIRECTORS’ REPORT  

CONTINUED