annual report - Harvey Norman Company Reports & Announcements

DIRECTOR‟S REPORT (CONTINUED)
Remuneration Report (Audited) (continued)
Company in general meeting approved the grant of 3,000,000 options to subscribe for 3,000,000 fully paid ordinary shares in
the Company to each of David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith, subject to terms and conditions
("2010 Share Option Plan"). The terms and conditions included the following provisions:
(i) up to one third of the options will be granted within seven (7) days of the meeting and will be exercisable between 1
January 2014 and 30 June 2016 (the “First Tranche”);
(ii) up to one third of the options will be granted within seven (7) days of the first anniversary of the meeting and will be
exercisable between 1 January 2015 and 30 June 2017 (the “Second Tranche”); and
(iii) up to one third of the options will be granted within seven (7) days of the second anniversary of the meeting and will
be exercisable between 1 January 2016 and 30 June 2018 (the “Third Tranche”).
For the 2012 financial year, the Company used a combination of financial and non-financial performance measures for the
share option awards pursuant to the 2010 Share Option Plan (“LTI”). During the 2012 financial year, the performance
hurdles for the 2012 grant of options pursuant to the 2010 Share Option Plan were partially met and 25.0% of the relevant
options in respect of the 2012 financial year was determined to meet the performance conditions, subject to the terms and
conditions of the 2010 Share Option Plan, including service conditions.
The remuneration of non-executive directors of the Company consists only of directors‟ fees. Director fees were maintained
at a similar level to the prior year.
Board Oversight of Remuneration
Remuneration Committee
The remuneration committee is responsible for making recommendations to the board on the remuneration arrangements
for executive directors and NEDs.
The remuneration committee assesses the appropriateness of the nature and amount of remuneration of NEDs and
executives on a periodic basis by reference to relevant employment market conditions, with the overall objective of
ensuring maximum stakeholder benefit from the retention of a high performing director and executive team. In determining
the level and composition of executive remuneration, the remuneration committee has not engaged external consultants
to provide independent advice or make any remuneration recommendation.
The remuneration committee comprises three NEDs, two of whom are independent NEDs. Further information on the
committee‟s role, responsibilities and membership can be seen at www.harveynormanholdings.com.au.
Remuneration Approval Process
The board approves the remuneration arrangements of the CEO and executives and all awards made under the LTI,
following recommendations from, and certain determinations by, the remuneration committee. The board sets the
aggregate remuneration of NEDs, subject to shareholder approval.
The remuneration committee approves, having regard to the recommendations made by the CEO, the level of the
consolidated entity STI pool, in the form of PCI, for executive directors.
No director may participate in deliberations about, or decisions, in respect of the remuneration of that director.
Remuneration Strategy
The remuneration strategy of the consolidated entity is designed to attract, motivate and retain employees and NEDs by
identifying and rewarding high performers and recognising the contribution of each employee to the continued growth
and success of the consolidated entity.
To this end, key objectives of the reward framework of the consolidated entity are to ensure that remuneration practices:
are aligned to the business strategy of the consolidated entity
offer competitive remuneration benchmarked against the external market
provide strong linkage between individual and consolidated entity performance and rewards
align the interests of executive directors with shareholders through the LTI
Remuneration Structure
In accordance with best practice corporate governance, the structure of NED and executive remuneration is separate and
distinct.
Non-Executive Director Remuneration Arrangements
Remuneration Policy
The board seeks to set aggregate remuneration at a level that provides the consolidated entity with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
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