REA Group Ltd Annual Report 2021

Annual Report 2021 | REA Group Ltd 5. Executive remuneration components (continued) Why were these performance measures chosen? The Board considers the financial measures to be appropriate as they are aligned with the Group’s objective of delivering profitable growth and, ultimately, improved shareholder returns. The non-financial performance measures for the CEO have been set by the Board to drive strategic initiatives, leadership performance and behaviours consistent with the Group’s corporate philosophy and its overall business strategy. The CEO sets individual and business key performance indicators for the executive team in consultation with the Board. 5.3 Long term incentive The following table summarises the key components and operation of the Group’s LTI plan: Long Term Incentive Summary KMP participants CEO and CFO Award type Performance rights Performance period The performance rights allocated during the year are subject to a three-year performance period beginning 1 July 2020 and ending on 30 June 2023. Due to the uncertainties created by COVID-19, the EPS and revenue performance conditions under the LTI Plan 2023 apply over a two year period, from 1 July 2021 to 30 June 2023. The measurement period for rTSR commenced in February 2020, to moderate the impact of COVID-19 from the Company and peer group, given the significantly different levels and speeds of recovery across the peer group as at 1 July 2020 (when the performance period would normally commence). The Group refers to this grant as the “LTI Plan 2023” as the performance period ends in FY23. Performance metrics Metric Weighting CAGR – Revenue 25% CAGR – EPS 50% rTSR 25% When are performance conditions tested? Incentive payments are determined in line with the approval of the Financial Statements at the end of the performance period. How is the LTI grant determined? The number of performance rights issued to each executive is calculated by dividing their ‘target LTI’ value by the value per right. The value per right is determined on a face value basis using a 10-day volume-weighted average price (VWAP) over the period 31 July to 13 August 2020, representing the five working days before, and the five working days after annual results. Each performance right is a right to acquire one share in REA upon vesting. Target LTI value CEO CFO $1,100,000 1 delivered in performance rights $330,000 delivered in performance rights Relationship between performance and vesting The following vesting schedule applies to the Revenue and EBITDA hurdles for the LTI Plan 2023 granted this year. The LTI Plan 2021 that was performance tested at the end of this financial year had 0% vesting as performance was below threshold. Performance level % of target awards vesting* Below Threshold 0% vesting Threshold 60% vesting Target 100% vesting Stretch** 200% vesting * Incremental vesting is made between Threshold and Target, as well as Target and Stretch points. ** Vesting of over-performance (between Target and Stretch) provides acceleration to provide greater differentiation for out-performance. Year in review Directors’ Report Financial Statements Remuneration Report Sustainability Our Leaders 53