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Concise Annual Report : Concise Annual Report 2012
CONCISE ANNUAL REPORT 2012 41 S&P/ASX 100 index ■ Property trusts; ■ Infrastructure groups; and ■ Mining companies Represented by the S&P Global Industry Classification Standards of Metals & Mining, Transportation Infrastructure, Utilities and Real Estate Investment Trusts. The composition of the peer group may change as a result of specific external events, such as mergers and acquisitions, capital returns, delistings and capital reconstruction. The Board Remuneration Committee has agreed guidelines for adjusting the peer group following such events, and has the discretion to determine any adjustment to the peer group of companies. The table below sets out the percentage of Performance Rights that will vest depending on Tabcorp's relative TSR ranking as at the applicable test date: Below 50th percentile 0% At 50th percentile 50% Above 50th and below 75th percentile Pro-rata between 50% (at 50th percentile) and 100% (at 75th percentile) At or above 75th percentile 100% This testing schedule and vesting criteria are common practice adopted by the companies in the S&P/ASX100 index, which is consistent with Tabcorp's remuneration philosophy (refer to section 3) and senior management remuneration framework (refer to section 6.1). For Performance Rights which have vested, the Company will issue or transfer ordinary shares to the senior manager, with full voting and dividend rights corresponding to the rights of all other holders of ordinary shares. 18.104.22.168 Lapsing conditions Performance Rights that have not vested after testing will lapse. 22.214.171.124 Cessation of employment All unvested Performance Rights will lapse immediately upon cessation of employment. However, the Board Remuneration Committee has discretion in special circumstances to determine the number of Performance Rights retained and the terms applicable. Special circumstances include events such as retirement, redundancy, death and permanent disability. 126.96.36.199 Accounting treatment Performance Rights issued under the LTI are expensed on a straight line basis over a three year period, commencing from the grant date. Under Accounting Standards, Tabcorp is required to recognise an expense irrespective of whether the Performance Right ultimately vests to the senior manager. A reversal of the expense is only recognised in the event the Performance Rights lapse due to cessation of employment within the three year period. The 'Remuneration of KMP' tables at section 7.1 (Figures 11C & 11D) reflect the accounting expense recognised in the relevant financial year, not the total fair value of Performance Rights allocated to the executive during the year, which is disclosed in Figure 12E. 188.8.131.52 LTI performance In the 2012 financial year, there were three scheduled test dates for past allocations under the LTI (to the former Managing Director and Chief Executive Officer as outlined in section 5.1). The performance hurdle for vesting was not achieved for any allocations. 184.108.40.206 Prior year treatment of LTI under the Demerger In the prior year, as a result of the Demerger, the Board determined to collapse all existing Employee Share schemes prior to the implementation date of the Demerger. Under the LTI, in relation to Performance Rights and Performance Options retained by holders who were employees and former employees, the testing of relevant performance conditions was accelerated to the date on which the Scheme became effective. The acceleration applied only to the pro rata portion of the unvested Performance Rights that was equal to the proportion of the standard vesting period of three years that had elapsed at 3 June 2011. Any Performance Rights or Performance Options that did not vest upon testing lapsed, and any Performance Rights that did not qualify for testing on a pro rated basis were cancelled in the prior year. The fair value of all Performance Rights and Performance Options were fully expensed at the date of accelerated testing or cancellation. In relation to the former Managing Director and Chief Executive Officer, following the Demerger there were 232,136 Performance Rights left on foot (as referred to in section 5.1), which will continue to be tested at the respective test dates. The performance hurdles applying in respect of those Performance Rights that remained on foot were not adjusted to reflect the fact that following the Demerger, the TSR on Tabcorp Shares exclude (at least in part) the value of Echo Shares and distributions on such shares during the testing period.
Concise Annual Report 2013