2010 Annual Report - Grange Resources

DECEMBER 2010 ANNUAL REPORT 31
Executive Pay
Objective
The Group aims to reward executives with a level and
combination of remuneration commensurate with their position
and responsibilities within the Group so as to:
◆ ◆ reward executives for Group and individual performance
against targets set by reference to appropriate benchmarks;
◆ ◆ align the interests of executives with those of shareholders;
and
◆ ◆ ensure total remuneration is competitive by market
standards.
Structure
In determining the level and components of executive
remuneration, the Remuneration and Nomination Committee
considers recommendations from senior executives which are
based upon the prevailing labour market conditions. In addition,
independent advice is sought from external consultants as
needed in the form of reports detailing market levels of
remuneration for comparable executive roles.
Remuneration consists of the following key elements:
◆ ◆ Fixed remuneration (base salary, superannuation and
non-monetary benefits)
◆ ◆ Variable remuneration
◆ ◆ short term incentive
◆ ◆ long term incentive
The proportion of fixed remuneration and variable remuneration
(potential short term and long term incentives) for each executive
is set out on page 35.
Fixed Remuneration
Objective
Fixed remuneration is reviewed annually by the Remuneration
and Nomination Committee. The process consists of a review of
Group and individual performance, relevant comparative
remuneration externally and internally and, where appropriate,
external advice on policies and practices. As noted above, the
Remuneration and Nomination Committee has access to
external consultants’ advice independent of management.
Variable Remuneration – Short Term Incentive (“STI”)
Objective
The objective of the STI is to link the achievement of the
Company’s annual operational targets (usually reflected in the
approved budgets) and an individual’s personal targets with the
remuneration received by the staff members responsible for
meeting those targets. Payments are made as a cash incentive
payable after the financial statements have been audited and
released to the Australian Securities Exchange (“ASX”). 50% of
the STI for an employee relates to company performance goals
and 50% relates to personal performance goals.
Variable Remuneration - Long Term Incentive (“LTI”)
- Rights and Options
Objective
a) Rights to Grange Shares
The Board will review regularly and reserves the right to vary from
time to time the appropriate hurdles and vesting periods
for Rights to Grange shares.
The objective for the issue of Rights under the LTI program is to
reward selected senior employees in a manner that aligns this
element of their remuneration package with the creation of long
term shareholder wealth while at the same time securing the
employee’s tenure with the Company over the longer term. The
LTI grants Rights to the Company’s shares to selected senior
employees, and these Rights vest in several equal tranches over
the timeframe stipulated in the LTI Plan (currently they vest in
three equal tranches over 24 months). 50% of the LTI for an
employee relates to company performance goals and 50%
relates to personal performance goals. Rights are allocated using
a share price that is based on the volume weighted average price
of the Company’s shares. For the six month period ended
31 December 2010 the share price is based on the volume
weighted average price of the Company’s shares for the first two
months of the performance period (i.e. the volume weighted
average price of the Company’s shares from 1 July 2010 to
31 August 2010 will be used).
Structure
Executives are given the opportunity to receive their fixed
(primary) remuneration in a variety of forms including cash and
fringe benefits. It is intended that the manner of payment chosen
is optimal for the recipient without creating any undue cost for
the Group.
DirectorS’ Report
Financial Statements
Shareholder information