Senior Executive remuneration guidance and practices Remuneration mix Senior Executive remuneration consists of fixed annual remuneration (FAR), short term incentives (STI) and long term incentives (LTI). How is the mix of fixed and at-risk remuneration determined? The mix of fixed and at-risk remuneration may vary and is dependent upon the organisational seniority of an executive, also considering Company and individual performance factors. The Executive Chair has a greater proportion of remuneration at-risk, compared to other Senior Executives. For all Senior Executives, it may be possible that during a particular year, no at-risk remuneration will be earned, with fixed remuneration representing 100% of their total remuneration. For the year ended 30 June 2023, the outcomes and relative proportions of fixed and at-risk remuneration of Senior Executives are described on page 27. Fixed Annual Remuneration (FAR) What is included in fixed remuneration? FAR includes base salary, inclusive of superannuation. Allowances and other benefits may be provided, including additional superannuation, provided that, in the case of extra superannuation, no extra cost is incurred by the Company. How is fixed remuneration determined and reviewed? The level of FAR is set to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. FAR is reviewed annually with any adjustments to FAR for Senior Executives ultimately approved by the Board following consideration by the Remuneration Committee. Sheffield seeks to position FAR at the 50th market percentile of salaries for comparable companies within the mining industry, utilising information provided by independent remuneration consultants. FAR applicable to the Executive Chair and Chief Financial Officer was reviewed by the Remuneration Committee during the year ended 30 June 2023, with no changes proposed to FAR by the Remuneration Committee. Short Term Incentive (STI) What are considered as Short Term Incentives? STIs are performance measures governing the cash component of at-risk remuneration, payable annually based on a mix of Company and individual performance criteria. Why are short term incentives provided? At-risk remuneration strengthens the bond between pay and performance. The purpose of providing STIs is to incentivize and reward Senior Executives for annual performance relative to the expectations of their role accountabilities, required behaviours and KPI’s as well as for execution of annual business plans. A compensation and benefits structure that provides at-risk remuneration is also a necessary part of a competitive remuneration arrangements within the Australian and global marketplace for executives. Do the STIs consider variable performance levels compared to objectives? Yes. The quantum of any STI award is linked to the extent of achievement of applicable performance criteria. Performance levels for each performance criteria are set at the following three levels: – Threshold - a performance level representative of minimum achievement. It represents the minimum level of performance for which a minimum STI award would be payable above this level. The STI is designed such that there is a >75% probability the executive will meet or exceed this level of achievement. – Target - a performance level that represents a challenging but achievable level of performance. The STI is designed such that there is a 50% probability of achievement in any given year. – Stretch - a performance level that represents the upper limit of what may be achievable. The STI is designed such that there is a less than 25% probability the executive will reach or exceed this level of achievement. The probabilities of achievement are set at these levels such that, over time and assuming performance to role awards approximately equal to the target level would be payable. Remuneration Report (audited) continued 22 Sheffield Resources Limited Annual Report 2023
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