Urbanise.com Annual Report 2019

Performance Criteria –– KPIs cover financial (revenue, EBITDA and working capital) and non-financial at a Group, regional and product level performance. For each KPI, a target is set. The targets are set by the Remuneration and Nomination Committee or the Executive Chairman for the year ahead. Long-Term Incentive (LTI) The options and performance rights are designed to align employee remuneration with the creation of shareholder value and improving cash flows over the long-term and enable the company to recruit and retain the talented people needed to achieve the Company’s business objectives. Executives can be awarded an LTI of up to 40% of fixed remuneration in accordance with the Group’s Employee Share Option Plan (ESOP). The number of performance rights granted is determined using the fair value at the date of grant, considering the terms and conditions upon which the performance rights were granted. Executives are eligible to receive performance rights (one performance right equals one ordinary share in the company upon meeting the performance criteria). The performance rights vest over a 2 to 3-year period dependent on certain financial and market performance measures, as well as continued employment with the company unless otherwise determined by the Board. The treatment of vested and unexercised awards will be determined by the Board with reference to the circumstances of cessation. Options and performance rights do not vest until all vesting or performance criteria set at granting have been met in accordance with the terms and conditions of the ESOP. There are no voting or dividend rights attached to the options or performance rights. Voting rights will attach to the ordinary shares when the options or performance rights have been exercised. Unvested options and performance rights cannot be transferred and will not be quoted on the ASX. All options and performance rights expire on the earlier of their expiry date or three months after termination of the employee’s employment subject to Directors’ discretion. Performance Criteria Performance criteria include the Group achieving revenue targets, cash flow targets, other financial targets or share price levels as set by the Board. The performance criteria are set by the Remuneration and Nomination Committee or the Executive Chairman for the year ahead. At the board meeting on 24 October 2018, a resolution was passed to issue performance share rights to Urbanise employees. 18,000,000 of the performance shares are based on cash flow targets being met at 30 June 2019. These performance shares will vest in 3 equal tranches on 31 August 2019, 31 August 2020 and 31 August 2021, subject to the employees’ (including Key Management Personnel) continued employment. There is no exercise price on these performance rights. Cash flow targets have been met at 30 June 2019. At the board meeting on 21 November 2018, a resolution was passed to issue performance share rights to Urbanise employees. 12,000,000 of the performance shares are based on cash flow targets being met at 30 June 2019. These performance shares will vest in 3 equal tranches on 31 August 2019, 31 August 2020 and 31 August 2021, subject to the employees’ (including Key Management Personnel) continued employment. There is no exercise price on these performance rights. Cash flow targets have been met at 30 June 2019. In September 2017, 7,306,250 performance share rights were issued to Urbanise employees. These performance share rights were based on share price targets being met at 30 June 2019. These shares did not vest as targets were not met. In November 2017, 9,235,000 performance share rights were issued to Urbanise employees. These performance share rights were based on revenue targets being met at 30 June 2020. The probability of vesting has been determined to be 0%. Dividends Executives are not eligible to receive dividends on unvested performance rights. Executives will receive dividends on vested performance rights. Sign on payments In addition to fixed remuneration, STI and LTI, the Board may determine, from time to time, to award sign on payments to new executives. The CEO has been awarded a one-off performance-based bonus up to the equivalent of $120,000 being payable as a combination of $60,000 in cash and up to 2,000,000 in shares. The award of the shares is subject to shareholder approval. The bonus is in recognition of achieving financial performance hurdles for the period ended 30 June 2019. Directors’ Report 25