REMUNERATION REPORT Continued Gateway and performance measures Is there a The Board considers it critical that the Company should achieve a minimum acceptable level of profit before any performance payments are made under the STI plan, to reflect the focus on returns to shareholders. No STI is awarded to ‘gateway’ and any participants if minimum performance across the Company does not reach the pre-determined threshold how is it NPAT level. determined? The NPAT gateway is determined by the Board each year, with reference to the annual business plan, economic conditions and other relevant factors. What were the To incentivise performance against the transformation agenda, the FY2018STI was structured around two key FY2018 components: performance measures? • NPAT, weighted at 45 percent of the total potential award; and • Individual objectives, including key financial measures related to the executive’s role, weighted at 55 percent of the total potential award. While each measure is assessed in isolation, any payment is subject to the achievement of the NPAT gateway. Why were the Overall performance measures are selected to align with annual and long term business plans. Details of the performance FY2018performance measures, and the strategic objectives theyare aligned to, are set out in Section 3. measures selected? TheBoard believes that the largest component of an executive’s STI award should be driven by the financial performance ofthe Company, and accordingly 45percent of the STI is linked to Company NPAT, providing close alignment with shareholder outcomes. Otherfinancial and strategic objectives in the performance scorecard are set by the CEO (and approved by the Committee and the Board), and, combined with the Company NPAT measure, are intended to drive our strategy and deliver our financial results. These objectives and their targets align with our key financial metrics and strategic goals, and the measures selected for each executive are determined by reference to the specific objectives of the executive’s role for the financial year. Given that STI rewards are contingent on performance across a range of measures, maximum STI rewards can only be achievedwhen performance is superior across all measures. Are the STI The disclosure of prospective STI measures and targets would provide the market and our competitors with our performance financial forecasts, and it is for this reason thatwe do not disclose them in advance. We will disclose outcomes measures and and/or performance against targets in instances where the disclosure would notinvolve the release of targets commercially sensitive information. disclosed? Governance When are Performance objectives and targets are set at the beginning of the financial year, while performance against performance these targets is reviewed following the end of the financial year. targets set and reviewed? How is The Committee determines whether, or the extent to which, each target is satisfied following the end of the performance financial year, once the Company’s annual accounts are audited and have been approved by the directors. measured? If the hurdle is satisfied, an STI may be paid to participating KMP and other executives. Thequantum of any STI reward provided will depend on the extent to which the maximum reward is achieved. A minimum threshold is also set, below which no STI reward will be provided. Once it has been determined whether each objective has been satisfied, the Committee will make a recommendation to the Board for approval of the STI awards to be paid to the CEO and executives. The Committee is responsible for assessing whether the performance criteria are met. To help make this assessment, the Committee receives reports on the Company’s performance from management. All proposed STI awards are only made once the Company’s financial performance has been verified by internal and external audit. The Committee has the discretion to recommend to the Board an adjustment to any award in light of unexpected or unintended circumstances. When are The component of the STI awards approved by the Board that is not subject to deferral is paid to participating incentives paid? KMP and executives in the month following the releaseof the Company’s results to the ASX. When eligible to participate, the deferred component of the CEO’s STI is provided as Restricted Shares, which the CEO will not be able to deal with during the 12 month deferral period. The deferred component of other Group Executives is paid in cash following the end of the 12 month deferral period. 34 Myer Annual Report 2018