Corporate Report for the year ended 30 June 2022
Introduction and overview
Governance and risk
Security holder information
Long Term Incentive (LTI)—how does it work? (continued)
FCF component The Group’s FCF 1 per security percentage growth rate is calculated over the four-year performance period. 2 The FCF per security component of performance awards granted will vest based on the Group’s compound annual growth targets translated into annual FCF (excluding Capital Releases) per security over the four-year performance period. The Board uses its discretion to determine whether the performance awards are settled in Transurban stapled securities or a cash payment of equivalent value. Following testing, any awards that do not vest, lapse and any awards that vest are automatically exercised into Transurban stapled securities or settled in cash at the discretion of the Board. No price is payable on exercise.
FCF vesting schedule The FCF component of performance awards vest on a straight-line basis in accordance with the following table:
FCF per security over the performance period
% of performance awards that vest
Below minimum threshold
Between minimum threshold and maximum target
Straight line vesting between 50 and 100
At or above maximum target
The method of assessing the performance measure set out above is the most appropriate for the type of performance measure used. If employment ceases due to resignation before the performance measures are tested, generally there is no entitlement to unvested performance awards and any unvested awards will lapse, unless the plan rules provide otherwise, or the Board otherwise resolves.
Cessation of employment
Same treatment as per STI.
Minimum security holding The Board has endorsed minimum security holding guidelines for Non-executive Directors, the CEO and Executive KMP. The guidelines recommend that Non-executive Directors, the CEO and Executive KMP build and maintain a minimum security holding of Transurban stapled securities equal to 100% of their fixed remuneration or base fees (excluding superannuation). The minimum stapled security holding can be accumulated over a five-year period. As at the date of this report, all KMP have either achieved and maintained their minimum security holding or, for those new to the Group, are on track to meet the five- year accumulation period.
The remuneration and other terms of employment for the CEO and other Executive KMP are formalised in service agreements that have no specified term. Under these agreements, the CEO and other Executive KMP are eligible to participate in STI and LTI plans. The notice periods in place for FY22 are outlined below:
Period of notice to terminate by the Group 3
Period of notice to terminate by the Executive KMP
Other Executive KMP
Other Executive KMP – commencing post 6 October 2020
1 References to FCF in relation to FY23 LTI Plan exclude Capital Releases 2 T he FCF (excluding Capital Releases) per security target range is calculated by adding each of the FCF (excluding Capital Releases) budget and forecasts over the four-year performance period, and determining the CAGR required to achieve the 4-year aggregate FCF (excluding Capital Releases) 3 P ayment in lieu of the notice period may be provided (based on the executive’s fixed remuneration). The Group may also terminate at any time without notice for serious misconduct
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