MIRVAC gRoup AnnuAl RepoRt 2012 - Mirvac - Mirvac Group

DIReCtoRs’ RepoRt
4 ReMuneRAtion coMponents AnD outcoMes foR the elt / continueD
strategic driver Aligned sti measure(s) explanation of measure weighting % Rationale for using
employee
engagement
hSe&S
excellence
employee engagement
survey outcomes
Balanced scorecard
of hSe&S excellence
For each performance measure on the STI scorecard:
— a threshold, target and stretch goal is set at the start
of the financial year;
— 75 per cent of the target opportunity is awarded for
achieving threshold performance;
— 100 per cent of the target opportunity is awarded for
achieving target performance;
— 150 per cent of the target opportunity is awarded for
achieving stretch performance; and
— a sliding scale operates between threshold and target,
and between target and stretch.
Following an assessment of Group performance:
— the operating earnings result is assessed to determine
whether the gateway performance level has been achieved;
— if the operating earnings gateway has been achieved,
each performance measure is assigned an STI score
ranging from zero per cent (for performance below
threshold) to 150 per cent (for performance at or above
stretch) of target;
— the STI scores for each component are then converted
into an overall STI score for Group performance;
— the hRC then has an opportunity to exercise discretion to
adjust the Group STI score up or down in order to ensure
payments are consistent with Mirvac’s remuneration strategy,
and to prevent any anomalous remuneration outcomes;
— the STI score is used to determine the STI pool; and
— STI scores are also assigned to divisions, based on an
assessment their contribution to the Group result.
To calculate an individual’s STI award:
— each participant is awarded an individual STI score of
between zero and 150 per cent of their STI target based
on an assessment of their personal performance for
the year against objectives linked to Mirvac’s strategic
drivers; and
— the final STI outcomes are then calculated by scaling
each individual’s STI score up or down based on the
overall STI score for Group performance, adjusted,
as appropriate, for divisional performance scores.
14 mirvac group annual report 2012
employee engagement is
a measure of employees’
intellectual and emotional
commitment to their
organisation and its success.
It has been shown to be
linked to an organisation’s
financial performance.
Aon hewitt conducted an
anonymous survey of Mirvac’s
employees, and reported
back to Mirvac with a score
for the Group out of 100.
The ‘balanced scorecard’
of hSe&S grades a suite of
measures, such as lost time
injury frequency rate and
proportion of waste reused or
recycled using a traffic light
system. Mirvac looked at what
proportion of those measures
were rated ‘green’, which
corresponds to an industry
leading level of performance.
Group performance for FY12
10 There is a strong correlation
between high levels of
employee engagement and
total securityholder return.
10 Mirvac is committed to
providing a safe workplace
for all of its employees and to
ensuring its activities do not
have an adverse impact on
the environment.
c) the sti component: how was reward linked to
performance this year?
stI pool in fy12
The Group operating earnings gateway was achieved in Fy12
which meant that an STI pool was formed. The STI pool in
Fy12 was larger than the STI pool in Fy11. This was largely due
to Mirvac exceeding threshold performance levels on the RoA
and customer and investor satisfaction measures in Fy12. The
following graph summarises Mirvac’s performance against
each of the measures on the balanced scorecard for the year
ended 30 June 2012:
Weighting: 50%
% of target awarded = 102%
Financial
performnace
(Operating earnings)
Weighting: 20%
% of target awarded = 84%
Capital
efficiency
(ROA%)
Weighting: 10%
% of target awarded = 82%
Customer
and investor
satisfaction
(Improvement
against external
benchmark)
Weighting: 10%
% of target awarded = 92%
Employee
engagement
(Aon Hewitt
engagement score)
Stretch
Weighting: 10%
% of target awarded = 110%
Target
Threshold
HSE&S
excellence
(HSE&S scorecard)
In light of Mirvac’s performance against these five measures
for the year ended 30 June 2012, the Board approved
an STI pool equivalent to 96 per cent of target, compared
to a maximum potential pool of 150 per cent of target.