Abacus Property Group – Annual Financial Report 2018

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ABACUS PROPERTY GROUP DIRECTORS’ REPORT 30 June 2018 REMUNERATION REPORT (audited) (continued) Current variable remuneration Table 3: Summary of the current variable remuneration plan What is current variable remuneration? A cash incentive plan linked to specific annual targets. What were the outcomes for executives this year and last year? For the 2018 financial year current variable remuneration awards of $1,760,000 have been accrued and will be paid in September 2018. The awards made to each executive and their achievements against the maximum potential payment are set out in table 6. What is the purpose of current variable remuneration? To link the achievement of Abacus’ operational targets to the remuneration received by all the executives charged with meeting those targets. This is designed to encourage the executives to work as a team to achieve the underlying profit target range. What are the performance conditions? For each financial year, the Board specifies an underlying profit target range. The lower end of the target range operates as a gateway that must be passed if current variable remuneration awards are to be generally payable. The profit target range for the 2018 financial year was $128m to $135m. If the gateway is passed, the value of the award for each executive is determined having regard to achievement against pre-determined key performance indicators or KPIs. The target levels of performance set by the Board are challenging, and 100% payments require a high level of consistent performance. The KPIs for the year ended 30 June 2018 are set out below: KPI Proportion of current variable remuneration award measure applies to Managing Director Other executives Financial measure: - Contribution to Abacus underlying profit - Contribution to sustainability of distribution - Contributions to projects expected to grow security value Non-financial measures: 60% 20-80% (dependent on role) 40% 20-80% - Quality of analysis and recommendations - Transaction and project management - Key growth activities - Risk management - Other performance measures focused on achieving business imperatives Account is also taken of qualitative indicators of effectiveness, performance and behaviour. 22
DIRECTORS’ REPORT 30 June 2018 ABACUS PROPERTY GROUP REMUNERATION REPORT (audited) (continued) Current variable remuneration (continued) Table 3: Summary of the current variable remuneration plan (continued) Why were these measures chosen? An underlying profit target range was chosen because, of several financial performance measures considered by the Board, underlying profit demonstrated the closest correlation to security-holder value creation (measured by total security-holder return). Underlying profit reflects the statutory profit as adjusted in order to present a figure that reflects the Directors’ assessment of the result for the ongoing business activities of Abacus, in accordance with the AICD/Finsia principles for reporting underlying profit. The other financial and non-financial KPIs were chosen as they represent the key drivers for the short-term success of the business and provide a framework for long term securityholder value. How is the total current variable remuneration pool determined? The current variable remuneration pool is linked directly to, and contingent on, the achievement of the underlying profit gateway for the assessment year. How is performance assessed? The Nomination & Remuneration Committee considers the performance of the executives against their KPIs and other applicable measures and has regard to independent benchmarking information. The Committee then recommends current variable remuneration payments, if any, to the Board for its approval. What discretions does the Board have? If the underlying profit gateway is missed, the Board retains the discretion to make the current variable remuneration pool, or a reduced pool, generally available if it determines the circumstances warrant such action. If performance has been exceptionally strong the Board may increase the total pool size to provide additional current variable remuneration awards reflective of the above target performance. If the underlying profit gateway is missed, the Board also retains the discretion to pay current variable remuneration awards to selected individuals to reward them for their personal above target performance. When approving awards for individual executives, the Board has the discretion to consider each executive’s total contribution to the group in addition to the specific KPIs selected for the relevant year. The board will disclose the exercise of any of these discretions. No discretions have been exercised in respect of the reporting year. What happens on cessation of employment? An executive will generally not be entitled to be paid a current variable remuneration award if they resign or if their employment is terminated with cause. 23
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Abacus Property Group Level 34 Aust
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Abacus Property Group – Annual Financial Report 2018

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