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Investor Presentaiton

Armour Energy and controlled entities armourenergy.com.au Directors' report continued for the year ended 30 June 2020 REMUNERATION REPORT (AUDITED) CONTINUED PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION CONTINUED The Board assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit. Such officers are given the opportunity to receive their base remuneration in a variety of forms including cash and fringe benefits. It is intended that the manner of payments chosen will be optimal for the recipient without creating undue cost for Armour. Further details on the remuneration of Directors and Executives are set out in this Remuneration Report. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. If a Non-Executive director performs extra services, which in the opinion of the directors are outside the scope of the ordinary duties of the director, Armour may remunerate that director by payment of a fixed sum determined by the directors in addition to or instead of the remuneration referred to above. However, no payment can be made if the effect would be to exceed the maximum aggregate amount payable to non-executive directors. A non-executive director is entitled to be paid travelling and other expenses properly incurred by them in attending director's or general meetings of Armour or otherwise in connection with the business of Armour. Armour aims to reward the Executives with a level and mix of remuneration commensurate with their position and responsibilities within Armour. The Board's policy is to align Director and Executive objectives with shareholder and business objectives by providing a fixed remuneration component. Mith The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it should seek to enhance shareholders' interests by: link reward with the strategic goals and performance of Armour. focusing on sustained growth in shareholder wealth and achievement of these strategic goals; and ensuring total remuneration is competitive by market standards. Additionally, the reward framework should seek to enhance executives' interests by: rewarding capability and experience reflecting competitive reward for contribution to growth in shareholder wealth providing a clear structure for earning rewards In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Cre Non-executive Directors' Remuneration The board seeks to set aggregate remuneration at a level which provides Armour with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. Armour's specific policy for determining the nature and amount of remuneration of non-executive directors is as outlined below. O ப The Company's constitution and ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 9 November 2011 where the shareholders approved a maximum annual aggregate remuneration of $500,000. Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the Remuneration Committee. The Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. All directors have the opportunity to qualify for participation in the Employee Share Option Plan, subject to the approval of shareholders. The rights, responsibilities and remuneration terms for each non-executive director are set out in a letter of appointment, pursuant to which: " Directors are granted the rights to access Group information, and the right to seek independent professional advice Directors are provided with a Deed of Access and Indemnity Directors are provided with coverage under Armour's directors and officers insurance policy Directors are made aware of Armour's Corporate Governance policies and procedures Directors are ordinarily entitled to remuneration of $50,000 per annum, plus reasonable expenses for travel and accommodation, however, as of May 2020 there was a 20% reduction to lower Corporate costs There are no fixed terms or notice periods, with the exception of the Chairman The remuneration of non-executive directors for the year ended 30 June 2020 is detailed on page 32 of this remuneration report. Executive remuneration Armour aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components and is commensurate with their position and responsibilities within Armour and to: link reward with the strategic goals and performance of Armour align the interests of the executives with those of shareholders ensure total remuneration is competitive by market standards The remuneration of the executives is recommended by the Remuneration Committee and determined by the Board. The remuneration will comprise a fixed remuneration component and also may include offering specific short and long-term incentives, in the form of: . base pay and non-monetary benefits short-term performance incentives share-based payments other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration. The remuneration of executive directors and other KMP for the year ended 30 June 2020 is detailed on page 32 of this Remuneration report. 30 31
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