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Whitehaven Coal Limited : Annual Report 2012
48 7. REMUNERATION REPORT (CONTINUED) 7.3 Introducing the new executive remuneration framework -- audited (continued) 7.3.4 Components of remuneration from FY2013 (continued) Long term incentive: Participation in the Company's LTI plan will be through the issue of performance rights, to a value of 80% of the executive's TFR. The allocation will be based on the volume weighted average share price of Whitehaven Coal shares over the 20 trading day period commencing 10 trading days prior to 30 June 2012. To facilitate transition to the new LTI scheme, initial grants of performance rights will be divided into three equal tranches capable of vesting after a 2, 3 and 4 year performance period. From 2014, it is likely the award will be divisible into two equal tranches capable of vesting after a 3 and 4 year performance period. Vesting will be subject to a performance measure linked to relative TSR, which compares the TSR performance of the Company with the TSR performance of each of the entities in a comparator group. The comparator group for the FY2013 grant comprises those entities within the ASX 100 Resources Index as at 24 September 2012. A TSR hurdle was considered an appropriate benchmark in light of the Company's focus on long-term developments and capital expenditure, which is intended to generate real long-term shareholder value. There is no re-testing of awards that do not vest. Participants will be required to comply with the Company's securities trading policy in respect of their performance rights and any shares they receive upon vesting. They will be prohibited from hedging or otherwise protecting the value of their performance rights. In September 2012, the Company made offers to grant performance rights over 364,963 ordinary shares to senior executives named in this Remuneration Report (excluding the Executive Directors) under the new LTI plan. 7.3.5 Remuneration governance Role of the Board and Remuneration Committee The Board is responsible for ensuring that the Company's remuneration structures are equitable and aligned with the long-term interests of the Company and its shareholders. Consistent with this responsibility, the Board has established a Remuneration Committee (previously the Remuneration and Nominations Committee), which is currently comprised entirely of independent directors. The role of the Remuneration Committee is to: • review and approve the remuneration of the senior executives; • review and approve the remuneration policies and practices for the Group generally, including incentive plans and other benefits; and • review and make recommendations to the Board regarding the remuneration of Non-executive Directors. Further information regarding the Remuneration Committee's role, responsibilities and membership is set out in the Corporate Governance Statement on pages 34 to 41 of this Annual Report. Use of external advisors The Remuneration Committee seeks and considers advice from external advisers when required. External advisors are engaged by and report directly to the Remuneration Committee. Such advice will typically cover Non-executive Director remuneration, senior executive remuneration and advice in relation to equity plans. With effect from FY2012, the Corporations Act requires companies to disclose specific details regarding the use of remuneration consultants. The mandatory disclosure requirements only apply to those advisers that provide a 'remuneration recommendation' as defined in the Corporations Act. The Remuneration Committee appointed Egan Associates to provide remuneration advice in FY2012. During this period, Egan Associates provided remuneration recommendations in connection with the review of the Group's remuneration framework, in particular regarding the appropriate remuneration structure and comparator group for the merged entity and remuneration quantum for both the Non-executive Directors and senior executives. DIRECTORS' REPORT
Annual Report 2011
Annual Report 2013