AUB Group Limited Annual Report 2023

DIRECTORS’ REPORT YEAR ENDED 30 JUNE 2023

SECTION 2 HOW VARIABLE REMUNERATION IS STRUCTURED (CONTINUED)

SHORT TERM INCENTIVE (STI) – HOW DOES IT WORK? Deferral terms

(CONTINUED)

The following STI deferral arrangements have been introduced for Group Executives: 70% of STI outcome will be paid in cash and the remaining 30% is deferred in the form of an equity award of PSRs, with these PSRs vesting as follows: – half of the deferred component (15% of the STI outcome) after 12 months; and – half of the deferred component (15% of the STI outcome) after 24 months. No additional performance conditions apply to the vesting of PSRs, with the exception of the continued employment by the relevant Group Executive as described below. The number of PSRs is calculated using the VWAP over the 60 trading days immediately prior to and including the last day of the performance period. An amount (based upon dividends paid by AUB during the deferral period) accrues on the PSRs and is paid in cash at the end of the deferral period if the PSRs vest. The Board has broad ‘clawback’ powers to lapse unvested PSRs in a number of circumstances, including in the event of fraud, dishonesty, gross misconduct, breach of duties or obligations, a material misstatement, error or omission in the financial report, to prevent a participant being entitled to an inappropriate benefit, or if there is a change of control event. The clawback policy also permits clawback of any shares allocated on exercise of the PSRs, as well as cash payments received on vesting and exercise of PSRs. The Board assesses performance of the CEO and Managing Director against the Balanced Scorecard (as described in Table 4) with the benefit of recommendations from the Remuneration and People Committee. The CEO and Managing Director assesses the other Group Executives’ performance based on the Group Balanced Scorecard outcomes and achievement against individual goals. The CEO and Managing Director then recommends an STI award for consideration by the Remuneration and People Committee, which then recommends an STI award for approval by the Board. The Board believes the abovementioned methods in assessing performance are an appropriate way to assess the performance of AUB Group and the Group Executives’ individual contribution, and to determine their remuneration outcomes. In addition, the aggregate of annual STI payments available for all employees is subject to review by the Remuneration and People Committee and approval of the Board. A Group Executive will only remain eligible to receive an STI outcome if that person ceases employment prior to the STI entitlement date and is a ‘good leaver’ (for example, ceases employment by reason of retirement or bona fide redundancy), unless the Board determines otherwise. If a Group Executive has ceased employment and is a ‘good leaver’, then unvested PSRs (deferred STI) will remain on foot and vest in the ordinary course, unless the Board determines otherwise. If a Group Executive has ceased employment and is not a ‘good leaver’, then unvested PSRs will automatically lapse on or around the date of cessation of employment, unless the Board determines otherwise. PSRs granted under the plan are not transferable and participants are prohibited from entering into hedging arrangements in respect of unvested PSRs.

Eligibility for dividends Forfeiture and clawback

Who assesses performance?

Cessation of employment

Restrictions on transfer or hedging

AUB GROUP ANNUAL REPORT 2023

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