Rules of the Retail Food Group Limited Short Term Incentive Plan

Transcription

1 Rules of the Retail Food Group Limited Short Term Incentive Plan

2 Contents Page 1 PURPOSE ADMINISTRATION MEASUREMENT PERIODS ELIGIBILITY TO PARTICIPATE OFFERS ACCEPTANCE KEY PERFORMANCE INDICATORS WEIGHTINGS PERFORMANCE GOALS AWARD OPPORTUNITIES PERFORMANCE ASSESSMENT & AWARD CALCULATION PAYMENT OF AWARDS DEFERRAL TERMINATION OF EMPLOYMENT DURING A MEASUREMENT PERIOD PLAN GATE & BOARD DISCRETION CHANGE OF CONTROL INCLUDING TAKEOVER CHANGE OF POSITION WITHIN THE COMPANY FORFEITURE DUE TO FRAUD CLAWBACK FUNDING NOT EXCLUSIVE METHOD OF INCENTIVE NO RIGHT TO CONTINUED PARTICIPATION NO RIGHT TO CONTINUED EMPLOYMENT RELATIONSHIP TO OTHER PLANS NON-TRANSFERABILITY OF AWARDS AMENDMENT OF THE PLAN EFFECTIVE DATE DEFINITIONS SCHEDULE A EXAMPLE STIP STATEMENT... 10

3 1 1 Purpose The Retail Food Group Limited (RFG, the Company) short term incentive plan (STIP) forms part of the Company s Senior Executive remuneration strategy. The purposes of the plan are to: Increase the commitment of Senior Executives to delivery and out-performance of annual business plans and budgets; Align the interests of Senior Executives with those of shareholders; Reinforce a performance focussed culture and create a strong link between performance and reward; Encourage pursuit of sustainable improvements in the Company s performance; Encourage teamwork and co-operation among executive team members; and Maintain a stable executive team by helping retain key talent. These objectives aim to be achieved by a simple plan that rewards participants for performance relative to key performance indicators (KPIs) derived from annual business plans. Capitalised words and terms have the meanings attributed to them in the section titled Definitions. 2 Administration The responsibility for the ongoing administration of the STIP rests with the Board. The Board in its absolute discretion may delegate its authority under these Rules to an appropriate committee of the Board and/or to executive officers of the Company. The Board is authorised, subject to the rules of the STIP, to amend the Rules and establish and amend guidelines for the administration of the Plan as deemed appropriate, and to make determinations under the Plan as may be deemed necessary or advisable, which determinations shall be binding on all parties. 3 Measurement Periods The Plan will operate on the basis of a series of Measurement Periods. Each Measurement Period in relation to an STI Offer will be the Company s financial year which is from 1 July to the following 30 June. 4 Eligibility to Participate It is intended that Eligible Employees will be eligible to participate in the STIP. Non-executive directors are not eligible to participate in the STIP. 5 Offers Each Eligible Employee selected by the Board to be offered the opportunity to participate in a Measurement Period will be given a written invitation in such form as may be determined from time to time by the Board (Offer). The Offer will include an STIP Statement which will specify the following to the extent relevant to a given Offer: The Measurement Period; The Key Performance Indicators (KPIs) used to assess performance;

4 2 The weightings of the KPIs at Target performance; The Performance Goal for each KPI; The amounts of Award Opportunities at the Target level of performance; o If Performance Goals are expressed as a range, then the Threshold and Stretch Performance Goals and Award Opportunity; Any gates that apply to the Offer as a whole and/or to specified KPIs; and Any other features of the Offer that may apply such as the nature and timing of any deferral etc. An example STIP Statement is provided in Schedule A to these STIP Rules. 6 Acceptance Acceptance of an Offer will be in the form determined by the Board in relation to each Offer and Measurement Period. Acceptance of the Offer by Senior Executives constitutes an agreement by the individual to be bound by the Rules. 7 Key Performance Indicators For each Participant in respect of each Measurement Period the Company will select KPIs by following the following steps. 1. The broad assessment areas that are relevant to the Participants will be identified. These will typically be as follows for different categories of Participant, however the Board may determine to vary the application of this guideline as appropriate to the circumstances of the Company: Categories of Participant Managing Director and Other Group Gatekeepers Line Key Executives Functional Key Executives Company/Group Company/Group Company/Group Broad Assessment Area Optional: Individual/ Role Specific linked to Group strategy Business Unit Individual/Role Specific Individual/Role Specific 2. For each broad assessment area the key result areas (KRAs) will be identified. Examples of KRAs include profit, strategy, operations or individual contribution. They are broad concepts that may remain relevant from year to year. 3. For each KRA one or more KPIs will be selected. A KPI is an aspect of performance for which a Participant is accountable either alone or on a shared basis. Examples of KPIs include: EBITDA, achievement of a specific strategic objective or individual performance rating. These are specific aspects to be measured to determine whether an acceptable outcome in the KRA has been achieved. KPIs may change from time to time. The KPIs for each Participant will be advised on the STIP Statement for the relevant Measurement Period. KPIs may be different for each Participant.

5 3 8 Weightings Each KPI will be allocated a weighting for each Measurement Period that relates to the Target level of performance and reward. The total of the weightings at Target must add to 100% and the weightings should reflect the relative importance of each KPI for the Measurement Period. The weightings may be changed from Measurement Period to Measurement Period. 9 Performance Goals There are broadly two types of Performance Goals: Binary goals where the potential result is either achieved or not achieved. These goals will be set at the Target level only with no possible variation in outcomes other than achieved or not achieved; and Scalable goals where the potential results may be presented as a range. Scalable goals are to be set at three levels being Threshold, Target and Stretch, to the extent appropriate to the KPI. 10 Award Opportunities Target award opportunities will be set for each level of Participant or category of employees. They will be expressed as percentages of Base Package. The total target Award Opportunity will be spread amongst the KPIs having regard to their weightings. For KPIs with scalable Performance Goals the award opportunities will have Threshold and Stretch award opportunities, below and above Target, respectively, where possible and appropriate. The Threshold and Stretch award opportunities for a KPI will be set depending upon the elasticity of the potential outcomes and the potential benefit to the Company of achieving each level of performance outcome. Individual Award Opportunities will be determined by the Board and specified in Offers. If an executive is offered the opportunity to participate for part of a Measurement Period then the Award Opportunity that would otherwise have been offered shall be reduced on a pro-rata basis unless otherwise determined by the Board. Award Opportunities may vary between Participants and from Measurement Period to Measurement Period. The Stretch Award Opportunity for a KPI will also be the maximum Award Opportunity available for the Measurement Period, unless otherwise determined by the Board. In the case of binary goals (see previous section) if the target for the KPI is not reached, the award for that KPI will be nil. In the case of scaled goals, if the outcome is less than the threshold level for the KPI, the award for that KPI will be nil. 11 Performance Assessment & Award Calculation Following completion of auditing of the Company s accounts for the Measurement Period, the Board will determine the extent to which each Performance Goal has been achieved and the award earned in respect of each KPI. For KPIs which are scaled and have numeric expressions the awards shall be calculated by applying a formula to pro-rate the outcome between specified performance levels.

6 4 12 Payment of Awards If a Participant is not employed by the Company (including by a Group Company) on the date of cash payments being made, they will forfeit all entitlements to the award for the Measurement Period. STI awards may be paid in the form of cash, Equity or satisfied by the fulfilment of salary sacrifice arrangements entered into by the Participant. Offers will specify the portions of STI awards that will be paid in cash (which may be 100%), and Equity (which may be nil). Portions of awards specified as part of an Offer as being paid in Equity will be subject to deferral, unless otherwise determined by the Board. See section titled Deferral, below. The awarding of STI in the form of Equity may be subject to shareholder approval, in which case an Invitation to apply for Rights may be issued until such approval has been obtained. If shareholder approval is not obtained, the Board has discretion to withhold the cash value of the STI that would have been deferred into equity and to pay it in the form of cash at the time the equity would have ceased to be subject to deferral. The Board may determine that the deferred cash component is subject to some or all of the same terms as if the award had been made in the form of equity, including adjusting the value of the deferred amount downwards in relation to a fall in the price of the Company s shares, unless otherwise determined by the Board. The portion of an award that is specified as payable in the form of cash may be reduced in accordance with the application of salary sacrifice arrangements entered into by the Participant (which may include arrangements to voluntarily sacrifice cash into additional Equity units). Portions of awards specified as being payable in the form of Equity cannot be satisfied in an alternative form and may not be the subject of salary sacrifice arrangements. 13 Deferral The Board may determine, as part of an Offer, that part of the STI award will be deferred for a specified period. STI will be deferred by granting the participant Equity of equivalent value to the deferred component of the STI award. The deferred Equity component may be subject to conditions such as service based vesting conditions, disposal restrictions, or both. When such conditions are to apply, they will be specified as part of the Offer. Deferral into Equity will occur via any such plan as implemented by the Board from time to time for this purpose, such as via the Company's Rights plan. Such plans will be separate from this Plan and will typically involve an "Invitation" and "Acceptance", as well as terms and plan rules that will be binding on participants, separate from this Plan. If such Invitations are not accepted, the associated deferred component of the STI award will not be provided in another form. The Company may develop an equity holding policy from time to time, and deferred incentives provided in the form of Equity may contribute to assessments of compliance with the holding policy. The Board has discretion to determine that deferral of STI awards will be increased to a level that is higher than the level specified in an Offer, in respect of a given Participant, if that Participant is deemed not to be complying with the holding policy, at the time the award is calculated.

7 5 14 Termination of Employment during a Measurement Period In the event of termination of employment the following shall apply: Nature of Termination of Employment Treatment of STIP Entitlement for the Measurement Period in which the Termination Occurs Deferred STI Awards With Vesting Conditions (Rights) Deferred STI Awards Without Vesting Conditions (Rights and Restricted Shares) Bad Leaver: termination for cause or as determined by the Board in its sole discretion. Good Leaver: terminations not classified as Bad Leaver Forfeit all unpaid and ungranted entitlements in relation to the Measurement Period. Forfeit all unpaid and ungranted entitlements in relation to the Measurement Period. Any unvested Rights related to prior STI awards are forfeited Unvested Rights related to prior STI awards are unaffected by the Termination. Any service test/ condition will be deemed to have been met, unless otherwise determined by the Board. Unexercised Rights related to STI deferral will be forfeited. 50% of the number of any Shares subject to disposal restrictions related to the deferral of STI will cease to be subject to such restrictions as at the date of termination. Unexercised Rights related to STI deferral will be automatically exercised. 50% of the number of any Shares subject to disposal restrictions related to the deferral of STI will cease to be subject to such restrictions as at the date of termination. The Board retains discretion to trigger or accelerate payment or vesting of incentives in the case of a termination, provided that the limitations on termination benefits as outlined in the Corporations Act are not breached. 15 Plan Gate & Board Discretion For each Measurement Period the Board will have the discretion to; Abandon the STI plan for that Measurement Period; or Adjust award payouts; if the Company s overall performance during the Measurement Period was substantially lower than expectations and resulted in significant loss of value for shareholders. A specified Gate may apply to offers of STI such that no award will be payable in relation to the Measurement Period if the Gate is not met or exceeded. Gates may also be specified that apply to specified classes of KPIs such that no award will be payable in relation to the specified KPIs if the Gate is not met or exceeded. Gates are separate to Thresholds. The Board has discretion to waive any Gate, either in respect of an individual, a group of individuals or all participants, for a given Measurement Period.

8 6 16 Change of Control Including Takeover In the event of a Change of Control including a takeover the Board may in its discretion decide to: a) Terminate the STIP for the Measurement Period and pay pro-rata awards in cash based on the completed proportion of the Measurement Period and taking into account performance up to the date of the Change of Control; or b) Continue the STIP but make interim non-refundable pro-rata awards in cash based on the completed proportion of the Measurement Period and taking into account performance up to the date of the Change of Control; or c) Allow the STIP to continue. If a payment is made and the STIP continues in relation to the Measurement Period, only the excess of the award calculated at the end of the Measurement Period, compared to the amount already paid, would be payable. If the award calculated at the end of the Measurement Period is less than the payment already made in relation to the Measurement Period, no payment will be made, and no portion of the amount already paid is refundable to the Company, except as otherwise provided for in relation to any applicable clawback policy. Any applicable Gates, disposal restrictions or service tests applicable to Shares or Rights specified as part of the Offer may be removed at the discretion of the Board. Any specified proportions of awards to be deferred as outlined in an Offer may be deemed not to be subject to deferral, and any portions of awards specified in an Offer to be payable in the form of Equity may be deemed to be payable in cash, at the discretion of the Board. 17 Change of Position Within the Company If a Participant s role is changed during a Measurement Period then: A pro-rata award will be payable after the end of the Measurement Period based on performance for the full Measurement Period but pro-rated for the period in the relevant role; and A substitute STIP Statement may be agreed with the Participant for the remainder of the Measurement Period. If termination of employment occurs before the end of the Measurement Period then entitlement to awards will be governed by the termination of employment rule. 18 Forfeiture Due to Fraud A Participant, who in the opinion of the Board based on reasonable grounds, commits any fraud, dishonesty or defalcation in relation to the Company or any subsidiary or related company or the affairs of any of these companies shall cease to participate in the Plan and will forfeit all entitlements to unpaid awards and unvested Rights related to previous STI awards. 19 Clawback In the event that the Company has a policy governing clawback of incentive remuneration, it may apply to awards under this Plan, including to any deferrals of awards under this plan or another plan intended to facilitate deferral. Offers and invitations related to the STIP will specify whether or not clawback applies.

9 7 20 Funding No funds need to be set aside or reserved for payment of awards under the Plan. Any obligation of the Company to pay awards under the Plan will be unfunded and paid from general assets and funds of the Company. The Company will budget for Target levels of STIP awards. 21 Not Exclusive Method of Incentive The Plan is not the exclusive method of providing incentive remuneration for employees of the Company. The Board may provide other forms of remuneration including incentives as it sees fit from time to time. 22 No Right to Continued Participation Participation by an employee in one Measurement Period will not confer any right on the employee to participate in any subsequent Measurement Period. 23 No Right to Continued Employment Participation in one or more Measurement Periods by an employee will not either confer on the employee any right to continue as an employee of the Company or affect the right of the Company to terminate the employment of the employee. 24 Relationship to Other Plans Except as otherwise provided in these Rules, participation by an employee in any other remuneration or incentive plan of the Company will not affect participation in the Plan. Acceptance of participation in this Plan does not constitute acceptance of, or participation in, any other plan, including any Equity plans that may be linked to the payment of STI awards under this Plan. Any portions of awards payable in the form of Equity that result from participation in this Plan, are subject to participation in and acceptance of the terms of the Equity plans determined by the Board to be the instruments for satisfying such Equity awards under this Plan. Non-acceptance of the terms of any plan nominated by the Board to satisfy any Equity component of an award under this Plan, or failure to become a participant of such a plan for any other reason, will result in forfeiture of any Equity component of the Participant s award under this Plan. 25 Non-Transferability of Awards Except as otherwise specifically provided for in these Rules, no award payable at any time under the Plan may be: Alienated by sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind; or Subjected to the debts or liabilities of any person, in any way. Any attempt to so alienate or subject will be void.

10 8 26 Amendment of the Plan The Board may amend or terminate the Plan at any time provided that the rights of Participants to awards earned prior to the amendment or termination are not affected, unless otherwise agreed in writing with Participants. 27 Effective Date These rules will be effective from 1 July 2017 and will continue until the Plan is amended or terminated. 28 Definitions Award Opportunities Base Package Board Change of Control Company Corporations Act Amounts that may be earned under the STIP. Is the annual cost to the Company of salary, superannuation contributions, other remuneration benefits and fringe benefits tax. In relation to a Measurement Period, the Base Package rate that should be used to calculate Award Opportunities is the rate applicable on the first day of the relevant Measurement Period, unless otherwise determined by the Board. The Board of directors of Retail Food Group Limited. When the Board advises Participants that one or more persons acting in concert have acquired or are likely to imminently acquire control of the Company as defined in section 50AA of the Corporations Act. Retail Food Group Limited and its subsidiary companies. Corporations Act 2001 (Cth). Eligible Employee Those employees who are eligible to be Participants under Rule 4. Equity Gate Financial instruments linked to Shares, which may include ordinary shares, rights, share purchase loan plans, options or derivatives etc. A condition that must be met or exceeded in order for any STI award to be payable, either in respect of a class of KPIs or to the STIP Award Opportunity as a whole. KPI Key performance indicator as prescribed in Rule 7. KRA Key result area, a broad area or category of performance assessment e.g. Company financial results. RFG Retail Food Group Limited ACN Measurement Period Has the meaning as in Rule 3.

11 9 Offer Participant Performance Goal Plan Right Rules Share STIP STIP Statement Stretch Target Threshold An offer, subject to acceptance, to participate in the STIP for a specified Measurement Period, as defined in Rule 5. An employee of the Company who has been offered participation in a Measurement Period and accepts the offer as prescribed in these Rules. An outcome for a KPI that has been identified which may be expressed as a range of potential outcomes around the target level, or as a binary condition (either achieved or not achieved). The STIP as governed by these Rules. Means an entitlement to the value of a Share. These rules. A fully paid ordinary share in the Company Short term incentive plan governed by these Rules. A written presentation of the KPIs, performance goals for the KPIs, weightings and award opportunities applicable to a Participant for a Measurement Period. A performance level that is clearly at the upper limit of what may be achievable. A performance level that represents a challenging but achievable level of performance. A performance level that is below optimal but nevertheless acceptable. It is the minimum for which a small award would be payable.

12 29 SCHEDULE A EXAMPLE STIP STATEMENT 10