Home' Nufarm Annual Report : Nufarm Annual Report 2017 Contents Are payments in cash
50% of executive KMPs’ STI is paid in cash at the time of performance testing and 50%
deferred into shares in the company for nil consideration.
When do the shares vest?
Vesting will occur on the second anniversary of the grant date of the deferred equity,
subject to continued employment or otherwise if the participant has left employment
for a qualifying reason.
Is there a clawback
provision in the plan?
The rules of the plan provide for clawback of deferred STI prior to vesting with board
discretion where payment is contrary to the financial soundness of the company,
in circumstances where the financial performance of Nufarm over the relevant period
(including the initial STI performance period) has been misstated, and/or for individual
What happens if
the executive KMP
If an executive KMP leaves before the vesting anniversary under ‘qualifying leaver’
provisions the equity will remain in the plan until the vesting date. If the executive
leaves under other than ‘qualifying leaver’ circumstances the equity will be forfeited.
‘Qualifying leaver’ provisions include participants who cease employment due to retirement,
death, ill health/disability, redundancy or contract severance without cause by Nufarm.
The rules of the plan provides the flexibility, in special circumstances (e.g. health or severe
personal hardship), to accelerate the vesting. This would result in the shares being released
from the trust to the executive.
(c) FY17 LTI plan
Why have an LTI plan?
This plan aligns executive interests and earnings with the longer term Nufarm strategy
and the interests of shareholders.
in the LTI plan?
The current participants in the plan are disclosed executives and other selected senior
managers (together, the LTI plan participants).
Are the awards
cash or shares?
The plan rules provide the flexibility to use a number of different instruments provided they
comply with local regulations and sound practice. At the time of vesting the board will
determine if the rights convert to ordinary shares or cash or other instruments which may
be in use at the time.
When are the awards made? Under the plan, LTI plan participants receive an annual award of rights as soon as practical
after the announcement of results for the preceding year.
How is the number
of rights calculated?
The number of rights to be granted is calculated by dividing the individual’s LTI grant
opportunity for the performance year by the volume weighted average price of the
company’s shares over the five trading days immediately following the prior year’s annual
When do the awards vest?
The performance/vesting period for awards is three years. Awards will vest in two equal
tranches as follows:
• 50% of the LTI plan grant will vest subject to the achievement of RTSR performance hurdle
measured against a selected comparator group of companies; and
• the remaining 50% of the LTI plan grant will vest subject to the three-year average
of an absolute ROFE target.
Why have ROFE and RTSR
been chosen as the hurdles?
ROFE is used to track progress towards the goal to return long term results back to
acceptable levels for Nufarm. Strong RTSR performance ensures Nufarm is an attractive
investment for shareholders.
What is the comparator
group for the assessment
of relative TSR?
Based on the results of research and modelling carried out by Ernst and Young, at the inception
of the plan the board approved the adoption of the ‘S&P ASX 200 excluding those companies
in the Financial, Materials and Energy groups’ as the RTSR comparator group. This provides a
group which is large enough for sound measurement with exclusions that reduce the volatility
by removing companies which are in significantly different industries to Nufarm. Commencing
from FY15, the board approved the inclusion of Dulux (DLX), Incitec Pivot (IPL) and Orica (ORI)
on the basis of their similarity as chemical companies even though they appear in the materials
index. The RTSR comparator group is also seen as an appropriate representation of Nufarm’s
competitors for investment.
How is RTSR measured?
RTSR will be measured over the performance period. For the purposes of this measurement,
each company’s share price will be measured using the average price over 60 days up to
(but excluding) the first day of the performance period, and the average closing price over
60 days up to and including the last day of the performance period.
DIRECTORS’ REPORT continued
NUFARM LIMITED ANNUAL REPORT 2017
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