MIRVAC gRoup AnnuAl RepoRt 2012 - Mirvac - Mirvac Group

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DIReCtoRs’ RepoRt 2 AlignMent of ReMuneRAtion stRAtegy AnD business stRAtegy / continueD DiRectly Affects whAt eXecutives ARe pAiD so MiRvAc’s ActuAl peRfoRMAnce… AnD lti peRfoRMAnce MeAsuRes… ouR stRAtegic DRiveRs… ARe ReflecteD in sti peRfoRMAnce MeAsuRes… from fy10-fy12 — Mirvac’s TSR was ranked at the 63rd percentile relative to its comparison group. — Average annual return on equity was 4.8%. Relative total securityholder return (“tsR”) Measures the performance of Mirvac securities over time, relative to other entities in a comparison group. Return on equity (“Roe”) Measures Mirvac’s profitability relative to securityholders’ investment in the Group. capital efficiency and financial performance Deliver top 3 A-ReIT returns. 10 mirvac group annual report 2012 Managing Director STI outcome in Fy12 = 96% of target in fy12: — operating earnings were $366.3m, up 2.2% from $358.5m in Fy11. — Fy12 RoA result represented a significant improvement from Fy11, and was in line with growth required to achieve Fy14 targets. operating earnings Reflects how much revenue the business has generated for the year, less operating costs. Return on assets (“RoA”) Measures Mirvac’s profitability relative to its total assets. It is calculated by dividing the Group’s annual earnings by its total assets. Average STI in Fy12 for other eLT members = 82% of target in fy12: — Mirvac achieved a significant improvement against the external investment community confidence benchmark relative to Fy11 results. improvement in investment community confidence Measures Mirvac’s year-onyear improvement against an independant external benchmark of investment community confidence. customer and investor satisfaction Provide customers and investors an experience that delivers excellence, consistently exceeds expectations and engenders loyalty. LTI vesting outcome in Fy12 = 38% of target in fy12: — Mirvac’s employee engagement score was 59, up 14% from Fy11. Aon hewitt engagement survey outcomes A measure of employees’ commitment to their organisation and its success. Aon hewitt surveys Mirvac employees and calculates a score for the Group out of 100. employee engagement have an engaged and motivated workforce with superior skills and capabilities. in fy12: — 92% of the measures on the hSe&S scorecard were assessed as ‘green’. hse&s excellence “scorecard” The hSe&S priorities are graded using a traffic light system. Mirvac looks at what proportion of those measures are rated ‘green’. hse&s excellence Be recognised as a leader in sustainability. Provide workplaces free from harm and supported by a culture where safety remains an absolute priority.
2 AlignMent of ReMuneRAtion stRAtegy AnD business stRAtegy / continueD The following table sets out the actual value of the remuneration receivable by the eLT members during the year. The figures in this table are different from those shown in the accounting table in section 4(f). The main difference between the two tables is that the accounting table includes an apportioned accounting value for all LTI grants on foot during the year (some of which remain subject to satisfaction of performance and service conditions and may not ultimately vest). The table below, on the other hand, shows the LTI value based on the awards that actually vested and delivered value to eLT members. Fixed employee Termination remuneration STI 1 LTI 2 loans 3 benefits other Total executive year $ $ $ $ $ $ $ Nicholas Collishaw 2012 1,500,000 1,080,000 1,058,378 773,283 — 24,735 4,436,396 2011 1,875,000 735,000 — 600,523 — 27,465 3,237,988 Andrew Butler 2012 618,000 308,876 — 604,279 — 8,918 1,540,073 2011 604,815 205,800 — 511,980 — 11,414 1,334,009 Brett Draffen 2012 1,000,000 464,800 238,584 810,080 — 15,231 2,528,695 2011 1,000,000 269,500 — 638,693 — 17,129 1,925,322 Gary Flowers 2012 648,900 433,790 126,608 266,158 — 8,962 1,484,418 2011 630,000 216,100 — 216,652 — 10,211 1,072,963 Justin Mitchell 2012 700,001 470,400 88,023 604,279 — 11,403 1,874,106 2011 700,001 240,100 — 511,980 — 11,374 1,463,455 1) STI values reflect payments to be made in September 2012 in recognition of performance during Fy12. 2) LTI amounts represent the value to the participant during Fy12 arising from performance rights whose performance period ended 30 June 2012. 3) Amount reported includes amounts forgiven during the year, imputed interest and related fringe benefits tax (“FBT”). 3 MiRvAc’s AppRoAch to eXecutive ReMuneRAtion Design the board and hRc are responsible for designing remuneration arrangements that support the business strategy. Remuneration arrangements are designed to enable Mirvac to derive maximum value from its remuneration spend, by attracting, motivating and retaining the individuals who are best equipped to successfully execute the business strategy. a) how remuneration decisions are made Board and HRC oversight and accountability The Board, with assistance from the hRC, is ultimately responsible for ensuring that remuneration at Mirvac is consistent with the business strategy and aligned with the creation of sustainable securityholder value. The hRC, consisting of five independent Non-executive Directors, has been delegated responsibility for reviewing the remuneration strategy annually and advises the Board on remuneration policies and practices generally. It also makes specific recommendations to the Board on remuneration packages, incentives and other terms of employment for Non-executive and executive Directors, including the Managing Director, and approves the remuneration packages, incentives and other terms of employment for other KMP. The hRC regularly reviews the at-risk components of executive remuneration (that is, the STI and LTI schemes) to ensure that executive remuneration continues to be appropriately aligned with securityholders’ interests, while also serving to attract, motivate and retain suitably qualified people. The hRC also reviews and approves the performance targets set for the STI and LTI schemes, as well as the assessment of Mirvac’s performance against those targets, which ultimately determines the size of the STI and LTI pools. expert input from management and external advisors To ensure it has the necessary information to make remuneration decisions, the hRC seeks advice and input from Mirvac’s Group General Manager, human Resources. In addition, the hRC has appointed ernst & young as its external remuneration advisor. ernst & young’s role in this regard is to provide both information on current market practice and independent input into key remuneration decisions. mirvac group annual report 2012 ernst & young’s terms of engagement include specific measures designed to protect its independence. The hRC recognises that, to effectively perform its role, it is necessary for ernst & young to interact with members of Mirvac management, particularly those in the human Resources team. however, to ensure ernst & young remains independent, members of Mirvac’s management are precluded from requesting services that would be considered to be a ‘remuneration recommendation’ as defined by the Corporations Amendment (Improving Accountability on Director and executive Remuneration) Act 2011. During the year ended 30 June 2012, ernst & young provided the hRC with: — guidance in the review and design of executive remuneration strategy; — assistance in drafting of remuneration disclosures; — relative TSR performance calculations; and — market remuneration information which was used as an input to the annual review of KMP and selected executives’ remuneration. No remuneration recommendations were provided by ernst & young or any other advisor during the year. b) Remuneration principles The Board and hRC have developed six remuneration principles to ensure remuneration continues to support Mirvac’s business strategy and create value for securityholders through all stages of the business cycle. These principles underpin remuneration decision making at Mirvac and provide a consistent framework to ensure maximum value is derived from remuneration decisions. Remuneration at Mirvac should: 1 align and contribute to Mirvac’s key strategic business objectives and desired business outcomes; 2 align the interests of employees with those of securityholders; 3 assist Mirvac in attracting and retaining the employees required to execute the business strategy; 4 support Mirvac’s desired performance based culture; 5 encompass the concept of pay parity and be fair and equitable; and 6 be simple and easily understood. 11
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MIRVAC gRoup AnnuAl RepoRt 2012 - Mirvac - Mirvac Group

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