The Stockland Board announced the key outcomes of a comprehensive review of the group’s executive remuneration policies.

 

The Board commenced a review last year to more closely align executive remuneration with the interests of securityholders and to ensure Stockland’s policies reflect best practice.

 

The key outcomes of the review, which are applicable to all Key Management Personnel (KMP), are:

  • Maximum potential Short Term Incentive (STI) reduced from 200% to 125% of Target STI
  • At least one-third of any STI awarded will be in Stockland securities with deferred vesting

– 100% of any STI awarded above Target performance will be deferred

– 50% of any deferred STI awarded will vest at the end of year two and 50% will vest at the end of year three

– to facilitate the introduction of STI deferral, the total reward mix for KMP (not the Managing Director) will be realigned by increasing Target STI by 10% of Fixed Pay and decreasing the Long Term Incentive (LTI) by 10% of Fixed Pay

  • For new LTI awards, vesting of 50% of LTI awarded will be extended from three to four years (with hurdles based on a three year performance period)
  • Three year EPS growth hurdle applicable for all employee LTIs will be set by the Board and communicated in advance in the Remuneration Report
  • New and broadly-framed clawback provisions will apply to all future unvested deferred STI and LTI awards

 

The total STI pool available for all employees will not exceed 5% of Underlying Profit and will be set by the Board based on its assessment of Company performance against a corporate balanced scorecard which will be set out in the company’s Remuneration Report.

 

All STI changes for KMP, including STI deferral, will be effective in FY12 with other changes effective in FY13.

 

Furthermore, subject to securityholder approval at the AGM in October, the Board and Managing Director have agreed the following changes to the Managing Director’s employment arrangements

 

  • No increase in Fixed Pay for FY13
  • No change in total reward mix of 34.5% Fixed Pay and 65.5% variable pay (STI and LTI)
  • Maximum possible STI reduced from 200% to 125% of Fixed Pay
  • Payment in the event of company-initiated termination reduced to 12 months Fixed Pay plus STI for his six month notice period (currently 1.5 times fixed pay plus 1.5 times STI)
  • Unvested deferred STI and LTI continue to original vesting dates post employment, subject to forfeiture in the event of clawback, compliance with new non-compete provisions and achieving applicable LTI performance hurdles

 

Stockland Chairman Graham Bradley said: “The changes we are announcing today represent a comprehensive restructure of our remuneration policies and practices. They demonstrate our commitment to ensuring Stockland’s executive pay is fair and competitive and properly reflects management’s achievements to create value for securityholders.”