Westgold Resources Limited Annual Report 2020

38 Westgold Resources Limited Annual Report 2020 Financial Report Remuneration Report (Audited) continued 3. REMUNERATION GOVERNANCE The Remuneration and Nomination Committee makes recommendations to the Board on: – Non-Executive Director fees; – Executive remuneration (Directors and senior executives); and – The executive remuneration framework and incentive plan policies. The remuneration and nomination committee assess the appropriateness of the nature and amount of remuneration of non-executive directors and executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high performing directors and executive team. The composition of the remuneration and nomination committee is set out on page 35 of this financial report. Use of remuneration advisors The Remuneration and Nomination Committee did not engage with any remuneration advisors during the current year but continued to apply the previous recommendations provided by BDO Remuneration and Reward Pty Ltd in FY2018 on the Group’s executive remuneration framework and policies. Recommendations applied A short-term incentive (STI) policy that has the objective of linking executive remuneration with the achievement of the Group’s key operational and financial targets. The STI will be an annual “at risk” component of remuneration for executives that is payable in cash based on performance against key performance indicators (refer to section 4). A long-term incentive (LTI) policy focussing on the efforts of executives on long-term value creation to further align management’s interests with those of the shareholders. The LTI is considered to be an “at risk” component of remuneration for executives that is payable in zero exercise price options (ZEPOs) (being an option to acquire an ordinary share in Westgold for nil consideration). The Executive Chairman has a maximum LTI opportunity of 80% of fixed remuneration and other executives have a maximum LTI opportunity of 60% of fixed remuneration. The number of options granted is determined by dividing the LTI remuneration dollar amount by the volume weighted average price of Westgold shares traded on the ASX during the 5-day trading period prior to the day of the grant. Options are granted with a three-year performance period. Any options that do not vest will lapse after testing. Options will be subject to the following performance conditions: – Relative Total Shareholder Return (RTSR) (50%); and – Return on Capital Employed (ROCE) (50%). The Board considers that RTSR is an appropriate performance hurdle because it ensures that a proportion of each participant’s remuneration is explicitly linked to shareholder value and ensures that participants only receive a benefit where there is a corresponding direct benefit to shareholders. The Board considers ROCE as an appropriate measure as it focuses executives on generating earnings that efficiently use shareholder capital as the reinvestment of earnings. The LTI structure will be revisited in FY2021. 4. NON-EXECUTIVE DIRECTOR REMUNERATION NED Remuneration Policy The NED fee policy is designed to attract and retain high calibre directors who can discharge the roles and responsibilities required in terms of good governance, strong oversight, independence and objectivity. The Company’s constitution and the ASX listing rules specify that the NED fee pool limit, shall be approved periodically by shareholders. The last determination was on listing of the Company was approved at the Extraordinary General Meeting of shareholders on 24 November 2016 with an aggregate fee pool of $500,000 per year. The amount of the aggregate remuneration sought to be approved by shareholders and the manner in which it is paid to NEDs is reviewed annually against comparable companies. The Board also considers advice from external advisors when undertaking the review. Non-executive directors are encouraged to hold shares in the Company and align their interests with the Company’s shareholders. The shares are purchased by the directors at the prevailing market share price.