REMUNERATION REPORT Continued 6.3. FY2018LONG TERM INCENTIVE PLAN Features of the LTIPapplicable in respect of FY2018 are outlined in the table below. In FY2018the Board granted performance rights under the LTIP to KMP and other senior executives. Form and purpose of the plan What is the LTIP? The LTIP is an incentive that is intended to promote alignment between executive and shareholder interests over the longer term. Under the LTIP, performance rights may be offered annually to the CEO and nominated executives, including KMP. The employees invited to participate in the plan include executives who are considered to play a leading role in achieving the Company’s long term strategic and operational objectives. Each right offered is an entitlement to one fully paid ordinary share in the Company, subject to adjustment for capital actions, on terms and hurdles determined by the Board, including hurdles linked to Company performance and service. How is the LTIP The LTIP is delivered via a grant of performance rights. The number of performance rigsatest is not delivered? determined until after the end of the Performance Period. The performance right will therefore not provide any value to the holder between the dates the performance right is granted and the end of the Performance Period, and then only if the performance hurdles are satisfied. Performance rights do not carry entitlements to ordinary dividends or other shareholder rights until the performance rights vest and shares are provided. Accordingly, participating executives do not receive dividends during the Performance Period. How is the The number of performance rights for each executive is determined as part of the calculation of total number of remuneration for an executive role. The Committee determines LTIP awards byassessing the quantum performance required to provide a market competitive total remuneration level, for on target performance. rights determined? The exact number of performance rights allocated depends on each executive’s LTIP target. The value of the performance rights at the time they are granted is calculated based on the Volume Weighted Average Price (VWAP) of the Company’s shares for the five trading days up to and including the closing date of the offer, which generally falls within 10 days of the Company’s Annual General Meeting. Vesting and performance hurdles What is the The Performance Period commences at the beginning of the financial year in which the performance rights are Performance granted. For the performance rights granted under the FY2018LTIP, the PerformancePeriod started on 30 Period? July 2017and ends after three years on 25 July 2020. Following the end of the Performance Period and after the Company has lodged its full year audited financial results for FY2020with the ASX, the Board will test the performance hurdles that apply to the FY2018LTIP offer and will determine how many performance rights (if any) are eligible to vest. What are the The performance measures approved by the Board for the FY2018LTIP offer were ROFE, EPS and relative performance TSR: hurdles? • 50 percent of the Award is subject to the ROFE hurdle • 25 percent of the Award is subject to the EPS hurdle • 25 percent of the Award is subject to the TSR hurdle Why were the The hurdles were chosen to align shareholder returns with executive reward outcomes over the three year performance Performance Periodand to complement the STI plan measures. hurdles chosen? The ROFE Hurdle was introduced to reflect the significant investment in additional capital, and an increase in short term costs that wererequired in the first three years of the New Myer plan.The measure ensures that executives are only rewarded if there is sufficient return on the funds raised from shareholders. The Board considers EPS the most effective measure for determining the underlying profitability of the business. The TSR Hurdle was selected to ensure alignment between comparative shareholder return and reward for executives. This measure also provides a direct comparison of the Company's performance over the Performance Periodagainst a comparator group of companies that would, broadly, be expected to be similarly impacted by changes in market conditions. As there are few direct department store competitors listed in the Australian market, the peer group is focused on companies with similar impacts and scope. 36 Myer Annual Report 2018