REA Group Ltd Annual Report 2021

Annual Report 2021 | REA Group Ltd 5. Executive remuneration components (continued) Are there any restrictions placed on the rights? Group policy prohibits executives from entering into transactions or arrangements which operate to transfer or limit the economic risk of any securities held under the LTI Plan while those holdings are subject to performance hurdles or are otherwise unvested. What happens in the event of a change of control? In accordance with the LTI Plan rules, the Board has discretion to waive any vesting conditions attached to the performance rights in the event of a change of control. What happens if the executive ceases employment? Unvested performance rights lapse on cessation of employment except to the extent that the Board exercises a discretion to allow them to remain on foot. Generally, where the Board has exercised its discretion in the past it has done so where REA has terminated an executive’s employment with notice (a ‘good leaver’) and in that circumstance has allowed retention of a pro-rata portion (by reference to time served in the performance period), with the unvested rights continuing until the usual performance testing date, without acceleration of vesting. 5.4 Recovery incentive The following table summarises the key components and operation of the Group’s recovery incentive: Recovery Incentive Summary KMP participants CEO and CFO Award type Performance rights Performance period The performance rights allocated during the year are subject to a two-year performance period beginning 1 July 2020 and ending on 30 June 2022, with 40% of the total grant available for testing after the first year (tranche 1), and 60% available for testing as at 30 June 2022 (tranche 2) 1 . 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 “Recovery Incentive 2021‑2022” as the performance period ends in FY22. Performance metrics Metric Weighting EBITDA 25% rTSR 25% Strategic targets set with reference to FY22 key deliverables 50% When are performance conditions tested? 1 Incentive payments are determined in line with the approval of the Financial Statements at the end of each year in the performance period. How is the Recovery Incentive 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. Total Target Recovery Incentive value (tranche 1 & tranche 2) CEO CFO $1,414,327 delivered in performance rights $354,936 delivered in performance rights Year in review Directors’ Report Financial Statements Remuneration Report Sustainability Our Leaders 55