REA Group Ltd Annual Report 2021

REA Group Ltd | Annual Report 2021 Remuneration Report Dear Shareholder, On behalf of the Board, I am pleased to present our Remuneration Report for the financial year ended 30 June 2021, my first as Chair of the Human Resources Committee. REA Group in FY21 – strong results in an uncertain world The impact of the COVID-19 pandemic on the residential and commercial property market was without precedent. The effect of various government lockdowns and social restrictions on residential property sales and auctions during calendar 2020 had an enormous impact on our business and the residential and commercial property sector generally. During 2021, REA responded decisively to the changing needs of customers and consumers during the pandemic, whilst accelerating the growth strategy through pivotal investments. realestate.com.au continued to accelerate audience metrics, reaching new all‑time highs during FY21. Average monthly visits to realestate.com.au topped 121.9 million 1 , outperforming the closest competitor by 3.3 times on average 2 . The business delivered record customer sentiment, rolled out a number of new products (eg. Connect, Rental Applications) and new consumer experiences such as the Property Owner Dashboard. The business delivered strong revenue and EBITDA from core operations growing 13% and 19% respectively. Remuneration decisions in FY21 – recovery and preparing for the future At the beginning of FY21, the Board made a number of remuneration decisions. These were proportionate given the market volatility and the impact that the uncertain conditions were likely to have, on REA Group, our shareholders, our employees, and our customers. They included: – Deferring our normal salary reviews from July/August 2020 to the end of the calendar year and implementing increases in December 2020/January 2021 for KMP. Our market benchmarking highlighted that some of our remuneration levels remained comparatively below market peers, resulting in increases to the salaries and incentive opportunities of our KMP (detailed below). – The performance measures applicable to the LTI Plan 2021 and LTI Plan 2022 grants were rendered almost unachievable on our best forecasting back at the beginning of FY21. As a result, we introduced a recovery incentive for executives to incentivise management to focus on the things that they could control to chart REA’s recovery from the setbacks of the pandemic. These recovery awards deliver proportionate rewards in equity only, and only in circumstances where our key operational and strategic goals are met. – Delaying the setting of targets under the LTI Plan 2023 (as disclosed last year) to moderate the impact of COVID-19 by shortening the revenue and EPS target performance period to two years commencing on 1 July 2021 and including the introduction of rTSR in this plan. Applicable outcomes will be disclosed in the 2023 Remuneration Report. Other changes made to improve the alignment of our remuneration with performance of REA were: – The introduction of relative total shareholder return ( rTSR ) as a performance measure into our Long Term Incentive ( LTI ) Plan 2023 (as disclosed in our Notice of Meeting for the 2020 AGM), to augment our existing revenue and EPS growth targets with a metric that focuses on our long term performance for shareholders relative to ASX peers. Pursuant to this performance measure, we compare REA Group’s share price and dividend performance against a bespoke group of 41 ASX150 companies that we feel represent our key competitors for shareholder capital and outperforming against this group would represent a ‘win’ for shareholders. – The introduction of short-term incentive ( STI ) deferral where rather than 100% of STI awards being paid immediately in cash, 30% of any awards that vest will be delivered in restricted shares. This has been introduced to help our executive team grow their shareholdings in REA over time, and to align the value of that part of the STI award with shareholder experience for an extended period after the end of the performance year. 1 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au , Total Sessions. 2 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au vs Domain, Total Sessions. 44 Remuneration Report