IAS discussion on board policy for determining the nature and amount of emoluments of board members and senior executives of the company and the relationship between such policy and the company’s performance is provided in the Directors’ Report section of the Annual Report...

The Board has established a Nominations and Remuneration Committee. The Committee has a Nominations & Remunerations Committee Charter.

The principal functions are to:

• assess the skills required to discharge competently the Board’s duties having regard to the Group’s performance, financial position and strategic direction, including specific qualities or skills that the Committee believes are necessary for one or more of the Directors to possess
• assess and make recommendations to the Board regarding the membership of the Board, including proposed new appointments
• develop and implement the process for the evaluation of Board, Committee and individual Director performance and effectiveness.;.
• review and make recommendations to the Board regarding the remuneration policies and practices for the Group; and
• regularly update the Board about Committee activities and make appropriate recommendations.

With respect to Nominations:

• non-executive Directors are subject to re-election by rotation at least every three years and must be re-elected at each Annual General Meeting following his or her 72nd birthday;
• where appropriate, independent consultants may be engaged to identify possible new candidates for the Board;
• if the Board appoints a new Director during the year, that person will stand for election by shareholders at the next annual general meeting. Shareholders are provided with relevant information on the candidates for electionand
• it is the Board’s policy to determine the terms and conditions relating to the appointment and retirement of non-executive Directors on a case-by-case basis and in conformity with the requirements of the ASX Listing Rules and the Corporations Act 2001.

With respect to Remuneration:

• the remuneration of non-executive Directors is determined by the Board having regard to the level of fees paid to non-executive Directors by other companies of similar size and stature;
• the aggregate amount payable to non-executive Directors must not exceed the maximum amount approved by the Company’s shareholders at the Annual General Meeting; and
• a Director absents himself from the meetings before any discussion by the Committee in relation to his individual remuneration.

The current members of the Nominations and Remuneration Committee are Barry Coulter (Chair), Peter Woodhead and Mark Read.

The remuneration policy, which sets the terms and conditions for the Chief Executive Officer and other senior executives, was developed by the Nominations and Remuneration Committee after seeking professional advice from independent consultants and approved by the Board. All executives are entitled to receive a base salary, superannuation, fringe benefits, performance incentives and retirement benefits. The Nominations and Remuneration Committee reviews executive packages annually by reference to company performance, executive performance, comparable information from competitors and other listed companies and independent advice.

The performance of executives is measured against agreed criteria, which is based on the forecast growth of the company’s profits and shareholders value. The policy is designed to attract the highest calibre executives and reward them for performance, which results in long-term growth in shareholder value.

Executives are also entitled to participate in the employee share and option arrangements.

The amount of remuneration for all directors and the five highest paid continuing executives, including all monetary and non-monetary components, are detailed in the directors’ report. All remuneration paid to executives is valued at the cost to the company and expensed. Shares given to executives are valued as the difference between the market price of those shares and the amount paid by the executive. Options are valued using the Black-Scholes methodology.

The Board expects that the remuneration structure implemented will result in the Company being able to attract and retain the best executives to run the economic entity. It will also provide executives with the necessary incentives to work to grow long-term shareholder value.

The payment of bonuses, stock options and other incentive payments are reviewed by the Nominations and Remuneration Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses, options and incentives must be linked to predetermined performance criteria and KPIs. The Board can exercise its discretion in relation to approving incentives, bonuses and options and can recommend changes to the committee’s recommendations. Any changes must be justified by reference to measurable performance criteria.

The Nominations and Remunerations Committee has approved the employee Performance Incentive Program (P.I.P.). The program clarifies the bonus structure, which awards bonuses only if budget performance is exceeded and must be used in conjunction with the performance evaluation policy. The performance bonus initiative is recognition by the Board of the value of all the Company’s staff, encouraging all to contribute to, and share in, the continued growth and profitability of the Company.