IGO Interactive Annual Report 2019

DIRECTORS’ REPORT—REMUNERATION REPORT 30 JUNE 2019 IGO LTIP OUTLINE FOR FY19 An outline of the key elements of the Company’s Long-Term Incentive Program (LTIP), as it relates to the Company’s KMP, is provided below: LTIP OPPORTUNITY The LTIP opportunity is determined by the Executive’s role within the business and is awarded by the offer of a number of performance rights based on a percentage of TFR. The LTIP opportunity for each individual KMP is outlined on page 56. PERFORMANCE HURDLES For performance rights issued in FY19 there are two equally weighted performance hurdles utilising the following measures: 1. relative TSR; and 2. absolute TSR. VESTING OF PERFORMANCE RIGHTS Vesting of the performance rights granted to Executive KMP is based on a continuous service condition and performance conditions as detailed below. SERVICE CONDITIONS Performance rights are subject to a service condition. This condition is met if the KMP’s employment with IGO is continuous for three years commencing on or around the grant date and is aimed at the retention of key personnel. PERFORMANCE CONDITIONS FOR PERFORMANCE RIGHTS Relative TSR The TSR scorecard for the three year measurement period is determined based on a percentile ranking of the Company’s TSR results relative to the TSR of each of the companies in the peer group over the same three year measurement period. The Board considers that relative TSR is an appropriate performance hurdle because it ensures that a proportion of each participant’s remuneration is linked to the return received by shareholders from holding shares in a company in the peer group for the same period. Absolute TSR The increase in the Company’s absolute TSR will be measured over a three year period. The Board considers that absolute TSR is an appropriate performance hurdle because it ensures KMP performance is rewarded when a year-on-year improvement in shareholder value is achieved. VESTING SCHEDULE Relative TSR The vesting schedule of the performance rights subject to relative TSR testing is as follows: Relative TSR performance Level of vesting Less than 50th percentile Zero Between 50th and 75th percentile Pro-rata straight line percentage between 50% and 100% 75th percentile or better 100% Absolute TSR The vesting schedule of the performance rights subject to absolute TSR testing is as follows: Absolute TSR performance % of Performance Rights that will vest 10% per annum return 33% Above 10% per annum and below 20% per annum return Pro-rata straight line percentage between 33% and 100% Above 20% per annum return 100% MEASUREMENT PERIOD Testing occurs three years from 1 July of the relevant financial year. CESSATION OF EMPLOYMENT In the event that the KMP’s employment with IGO terminates prior to the vesting of all performance rights, outstanding unvested rights will be reviewed by the Board and may or may not vest depending on the circumstances of the cessation of employment. BOARD DISCRETION The Board has absolute discretion to adjust performance rights vesting if, on assessment, absolute TSR is negative over the performance period. PEER GROUP The Company’s relative TSR performance for performance rights issued during FY19 will be assessed against all members of the S&P ASX 300 Metals and Mining Index. LTI - NON-EXECUTIVE DIRECTORS The overarching Employee Incentive Plan (EIP) permits non-executive directors to be eligible employees and therefore to participate in the plan. It is not currently intended that non-executive directors will be issued with share rights under the EIP and any such issue would be subject to all necessary shareholder approvals. 52 — IGO ANNUAL REPORT 2019