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Concise Annual Report : Concise Annual Report 2012
CONCISE ANNUAL REPORT 2012 35 Remuneration report (audited) Introduction This Remuneration report outlines the remuneration policy and arrangements for Tabcorp's Directors, executives and senior management in accordance with the requirements of the Corporations Act 2001 and its Regulations. The information provided in this Remuneration report has been audited as required by section 308(3C) of the Corporations Act. The Remuneration report relates to the key management personnel (KMP) of the consolidated entity comprising the Company and its consolidated entities for the financial year ended 30 June 2012. KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, and comprises all the Directors of Tabcorp and certain members of the Executive Committee. The same group of individuals is regarded as KMP for both the Company and the Group. As detailed in this Remuneration report, the annual reward structure for the most senior managers comprises three components: a fixed base salary, a short term incentive and a long term incentive in the form of Performance Rights. For KMP who are executives, at least 50% of their total annual reward is 'at risk' in the form of short term or long term incentives tied to the achievement of specific Group, business unit and individual performance objectives and targets. For the year ended 30 June 2012, short term incentives were awarded to senior managers and will be paid in August 2012. With regard to long term incentives, during the year, an allocation of Performance Rights was made to 8 senior managers. In addition, an allocation of Performance Rights under the long term incentive plan was also made to the Managing Director and Chief Executive Officer following shareholder approval at the 2011 Tabcorp Annual General Meeting. Whether the allocated Performance Rights generate value for the senior managers will depend on the Company's Total Shareholder Return over a three year period. If, at the end of the three year period, the minimum performance hurdle is not met, all Performance Rights will lapse. The maximum number of Performance Rights will vest only if the highest performance threshold is met at the end of the three year period. The Board reviews the remuneration for Non Executive Directors each calendar year. The fees for the 2012 financial year are lower than the fees for the 2011 financial year, as the fees were adjusted to reflect the changes in Tabcorp following the demerger of Echo Entertainment Group Limited (Echo) from the Company pursuant to Tabcorp's Scheme Booklet dated 15 April 2011 (the Demerger). The details of Non Executive Director remuneration are included in Section 5.3. 1. Significant changes since 30 June 2011 1.1 Non Executive Directors Justin Milne, Elmer Funke Kupper and Steven Gregg commenced as Non Executive Directors on 1 August 2011, 25 June 2012 and 18 July 2012 respectively, following the receipt of all necessary regulatory approvals. 1.2 Senior Management Remuneration Framework As a result of Tabcorp's demerger of Echo and reorganisation of the Wagering and Gaming businesses, the use of a divisional performance multiplier to determine the STI pool available for these businesses has been discontinued. This change ensures senior managers who participate in the STI program are aligned to the achievement of Tabcorp's overall financial objectives whilst also ensuring business unit financial and non-financial targets are considered in determining individual STI outcomes. 2. Governance The main responsibilities of the Board Remuneration Committee are: ■ Establishing and maintaining fair and reasonable remuneration policies and practices that apply to the Group; ■ Reviewing and recommending to the Board the remuneration of KMP and the terms and conditions of any incentive plans; and ■ Agreeing benchmarks against which annual salary reviews are evaluated. In exercising its responsibilities, the Board Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of Directors and executives every year by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality and high performing Board and executive team. To assist in exercising its responsibilities, the Board Remuneration Committee receives independent advice on matters such as remuneration strategies, mix and structure, as appropriate. During the year ended 30 June 2012 and to the date of this report, no remuneration consultant provided a remuneration recommendation in respect of any KMP. The Board Remuneration Committee is governed by its Terms of Reference, which are available on Tabcorp's website at www.tabcorp.com.au under the About Us -- Corporate Governance section.
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