COMPUTERSHARE ANNUAL REPORT 2008

Directors’ ReportDetails of total short term cash incentives relating to the current financial year that have been awarded to executive directorsand other key management personnel are set out in the remuneration table on page 30 of this report. These cash incentives areexpected to be paid in September 2008.Variable remuneration – long term incentivesThe Group also provides long term share based awards for key management personnel other than executive directors of theCompany. Recipients of long term share based awards must complete specified periods of service (two years for the LTI plan andfive years for the DLI Plan) as a minimum before any share awards under the long term incentive plan become unconditional. TheDLI Plan includes an additional performance criteria (refer below). The method of long term incentive reward framework has beenadopted to seek to align key management personnel’s financial interest with those of the shareholders and to assist in the retentionof participants.The performance of each individual is reviewed on an annual basis. Both short term and long term incentive awards arediscretionary and are subject to approval of the Board based on recommendations from the Remuneration Committee. The exerciseof the discretion in any given year is based on the Group’s performance and the attainment of specific individual objectives agreedupon during the year.All key management personnel, with the exception of executive directors, are also eligible to participate in the Company’s generalemployee share plans on the same terms and conditions as all other employees. Executive directors are not eligible to participatein the Company’s option or share plans. An overview of the Company’s employee option and share plans are disclosed in note 28 ofthe financial statements.Variable remuneration performance conditionsAs explained above, executive directors and other key management personnel’s variable remuneration is a blend of short and longterm incentives.Short term incentivesAs detailed above, the eligibility of Company and Group executive directors and other key management personnel to receive theirshort term variable remuneration is dependent on the achievement of certain performance criteria.In the case of executive directors and other key management personnel, short term bonus eligibility is, in part, conditional onthe achievement of budgeted financial performance measures. At least 50% of the total amount of available short term bonusremuneration for a year is conditional on achieving predetermined or budgeted levels of financial performance (EBITDA or earningsbefore interest, tax, depreciation and amortisation) of the area of the key manager ‘s overall responsibility. Financial performance ismeasured as actual EBITDA of the area compared to budgeted EBITDA.This measure is chosen as it is readily capable of objective determination and fosters an entrepreneurial business developmentethos among the key management personnel of the Group.The balance of the performance conditions used to determine bonus eligibility relate to a subjective assessment of various nonfinancialmeasures and considerations. These measures and considerations differ between executive directors and other keymanagement personnel depending on the areas of their overall responsibility. Separate subjective factors relevant to work areas arechosen for each key manager.In the case of C. Morris, P. Maclagan, W.S. Crosby, S. Rothbloom and S. Irving in their roles to the date of this report, the non-financialconsiderations include the achievement of business service levels, achievement of organic growth objectives and various otherconsiderations.In the case of T. Honan, the non-financial considerations include an assessment of his achievement on risk management initiatives,the quality of budgeting and financial reporting, expense control and investor relations initiatives.In each case, the applicable non-financial performance conditions have been chosen as they are considered to be both appropriateand important measures of non-financial objectives that are within each key management personnel’s sphere of influence andrelevant to their area of work within the Group.Long term incentivesThe eligibility of key management personnel (other than directors) to receive their long term incentive remuneration under theDLI Plan is dependent on the achievement of a key performance condition: namely an increase in management basic earningsper share of the Group over a 5 year period. For example, awards under the DLI Plan in the year ended 30 June 2005 are basedon average compounded growth in the Group’s earnings in the 5 year period ending 30 June 2010. Recognising that the minimumperformance hurdle for the performance rights granted on 1 July 2005 (to vest in 2010) was achieved three years early, the Boardused its powers under the DLI plan rules to vary the performance hurdles attaching to the performance rights. The specified periodof service of five years before the share awards become unconditional remains unchanged.Previously, if compounded growth in the Groups’ earnings over a five year period was less than 15% no rights vested and if it wasmore than 20% then all rights vested and if growth was between 15% to 20% then the proportion of rights that vested increasedon a pro rata straight line basis between 40% (for growth of 15%) and 100% (for growth of 20%). Under the amended performancehurdles, the Board will compare the growth in the Group’s earnings as at the end of year 4 as against a 5 year compounded growthtarget using this same basis of calculation. The holder will then receive 50% of that amount as a minimum vesting at the end ofyear 5. If the actual growth in earnings at the end of year 5 results in a higher number of rights vesting, then the holder will receivethat amount.PAGE 28 Computershare Annual Report 2008