REMUNERATION REPORT Continued 6. EXECUTIVE REMUNERATION Remuneration for executives is delivered through a mix of fixed and variable (or ‘at risk’) pay, and a blend of short and longer term incentives. As executives gain seniority within the Company, the balance of this mix shifts to a higher proportion of ‘at risk’ pay. As outlined in the diagram in Section 3,executive remuneration is made up of threecomponents: • Total Fixed Compensation; • Short-Term Incentives; and • Long-Term Incentives. The combination of these components comprises an executive’s total remuneration. 6.1.TOTAL FIXED COMPENSATION TFCprovides the base level of reward and is set at a level to attract and retain high calibre executives. Features of Total Fixed Compensation What is TFC is structured as a total fixed remuneration package, made up of base salary, superannuation, other included in benefits and Fringe Benefits Tax, where applicable. Some of the benefits include the opportunity to receive a TFC? portion of their fixed remuneration in a variety of forms, including fringe benefits such as motor vehicles, or to make additional contributions to superannuation or retirement plans (as permitted by relevant legislation). How is TFC TFC levels for each executive are set with reference to the market, the scope and nature of each role, the reviewed? incumbent’s experience and individual performance. The Committee typically reviews and makes recommendations to the Board regarding TFC for KMP and senior executives annually in July, having regard to Company and individual performance and relevant comparative remuneration in the market. However, given current financial performance the Board decided not to undertake a review in FY2018. The Board may also consider adjustments to executive remuneration outside of this as recommended by the CEO, such as on promotion or as a result of additional duties performed by the executive.Where new senior executives join the Company or existing executives are appointed to new roles, a review and benchmarking of fixed and total remuneration is conducted prior to the offer and execution of a new employment contract. Which Remuneration for KMP is considered in the context of the skills and experience being sought and the global benchmarks are senior retail market, as well as in relation to the other industries where we are increasingly seeking talent. used? Benchmarking is also undertaken against local industry peer groups and companies with a similar market capitalisation to Myer where relevant for the roles under review. 6.2.SHORT TERM INCENTIVE Myer’s STI plan for KMP and other senior executives operates on an annual basis subject to Board review and approval. The FY2018 STI applied to all eligible executives, including KMP, subject to certain conditions and performance criteria being met which are reviewed and approved annually by the Board. Form and purpose of the plan What is the STI The STI plan is an annual, at risk component of an executive’s reward opportunity, designed to put a plan? meaningful part of the executive’s remuneration at risk. Payment under the STI is subject to achieving pre- determined Company and individual performance criteria.All senior managers, includingKMP and Group Executive,participate in the STI, with the exceptioninitiallyof the new CEO. What is the STI targets are set as a percentage of the executive’s TFC. The current maximumlevels for KMP are set out value of the STI below. opportunity? CEO (J King)–Not participating in FY2018 or FY2019. • • Previous CEO (R Umbers) –90percentof TFC. • Other KMP –60 percent of TFC. Does the STI 40 percent of any award payable to members of the Group Executive is deferred for 12 months following the include a end of the Performance Period. deferred The deferred component of the CEO’s STI (when eligible)is provided as Restricted Shares while the deferred component? component for other Group Executives is paid in cash following the end of the deferral period. Myer Annual Report 2018 33