Investor Presentaiton

82 Remuneration Report 2.1 Short term incentive (continued) 2.2 Long-term incentive Executive KMP remuneration 2 83 Annual Report 2023 Woolworths Group Performance against: F23 STI measures Our focus on progressing the strategic agenda and consistently delivering a better Customer experience has continued through F23, with a particular focus on delivering everyday value for customers facing cost of living pressures. The F23 STI metric outcomes benefited from a more stable operating environment than recent years, with strong sales growth and an improvement in EBIT following a challenging F22. These metrics were offset by Working Capital Days which was below Target due to intentional investment in inventory to secure supply and improve availability. Customer Satisfaction was below Entry with customer experience impacted by inflation and stock availability through the year. The F23 STI calculated scorecard outcome of 89.8% reflects each of these factors. In finalising the F23 outcome the Board considered the tragic context that a team member and a contractor each lost their lives at work during the year. The Board determined that there should be a 10% point reduction in the Group STI scorecard outcome from 89.8% to 79.8% of Target. The circumstances of both fatalities are the subject of investigation which will, in due course, further inform the Board's discretion on this matter. Our approach and rationale: long-term incentive The Group's LTI plan is called the Woolworths Incentive Share Plan (WISP). The plan is designed to align executives to overall company performance by delivering on the Group's strategic priorities and long-term shareholder returns. The LTI measures represent financial and non-financial metrics. Reputation was introduced as an LTI metric to replace Sales per square metre for the F22-24 plan onwards. Sales per square metre was applicable to the F21-23 plan which is reflected in the performance against LTI measures described on page 84. LTI vesting for executive KMP is subject to Board discretion over and above meeting performance hurdles. This includes consideration under the malus policy. Measures and targets are reviewed annually. Assessing business performance: The LTI rewards executives subject to performance against three measures over a three-year performance period: 0 Relative TSR - 40% weighting ■Return on Funds Employed - 40% weighting ■Reputation - 20% weighting Assessing individual performance: The Board has discretion to adjust the vesting outcome for individuals where it is appropriate to do so (see malus policy as outlined in Section 3.4). 1 highlights Performance 2 Business review F23 performance against the STI scorecard was 89.8% of Target (59.9% of Maximum). Discretion exercised to reduce the outcome to 79.8% of Target (53.2% of Maximum). F23 STI MEASURE OUTCOMES (% OF TARGET) Stretch Target Discretion exercised to reduce STI by 10% points Entry Sales 22.3% EBIT 22.1% Working 15.4% Capital Days Customer 0.0% Satisfaction Safety 30.0% Downward adjustment Sales 1 Sales from continuing operations were $64,294 million, up 5.7% on F22. Sales were strong across the Group, with PFD performance a highlight. In Australian Food, elevated inflation was experienced through the year, with item growth stabilising in H2 and eCommerce returning to growth having cycled the significant prior year impacts of COVID in H1. ENTRY: $62.9BN 1 TARGET: $64.0BN STRETCH: $65.2BN ACTUAL F23: $64.3BN Sales is income from the sale of goods and services, excluding other income. Earnings Before Interest and Tax EBIT from continuing operations before significant items² was $3,116 million, up 15.8% on F22. EBIT growth was driven by strong sales growth, a focus on returning to historic levels of productivity and the removal of COVID costs incurred in the prior year. EBIT growth in Australian Food, Australian B2B and BIG W was offset by a decline in New Zealand Food. ENTRY: $2.97BN TARGET: $3.09BN STRETCH: $3.21BN ACTUAL F23: $3.12BN 2 Significant items for F23 was a net loss of $117 million before tax. Refer to 2023 Financial Report for details. Working Capital Days Average Working Capital Days were -2.7 days, a reduction of 1.8 days compared to F22, reflecting both incremental investment in inventory to improve availability and mitigate the risk of further supply chain disruption, and increased receivables driven by growth in non-Retail business. ENTRY: (2.1) DAYS TARGET: (3.3) DAYS STRETCH: (4.5) DAYS ACTUAL F23: (2.7) DAYS 3 3 The Group has recognised the costs of running its distribution centres within cost ofsales (refer to Note 1.1.1 of the 2023 Financial Report for further details, including the reclassification of F22 comparatives). However, for the purposes of determining the F23 outcome, distribution centre costs were reclassified from cost of sales to branch and administration expenses, which is consistent with the basis used in setting the metric targets. Customer Satisfaction Group VOC NPS was in line with F22 as ongoing stock availability challenges and the impact of inflation on value for money perception impacted customer experience during the year. Despite being below aspiration, VOC NPS remains at a strong level in absolute terms. ENTRY: 49.0 TARGET: 50.0 STRETCH: 52.0 ACTUAL F23: 48.3 Relative TSR Relative TSR (rTSR) is used as a measure in our LTI plan to align executive outcomes with long-term shareholder value creation. The peer group is the top 30 ASX companies, excluding metals and mining companies¹. Vesting of 50% is achieved when our peer group ranking is at the median and vesting of 100% is achieved at the 75th percentile or higher. Between the median and the 75th percentile there is straight-line vesting from 50% to 100%. Peer group ranking below the median results in zero vesting. rTSR outcomes are calculated by an external provider. Return on Funds Employed ROFE is an important measure to drive behaviours consistent with the delivery of long-term shareholder value. ROFE improvements can be delivered through earnings growth as well as the disciplined allocation of capital and management of assets and working capital. ROFE is defined as EBIT before significant items for the previous 12 months as a percentage of average (opening, mid and closing) funds employed. Reputation Reputation plays a key role in the extent to which customers choose to engage with Woolworths Group. It represents delivery against our purpose, commitments -including our response to climate change - and evolving expectations of our customers and stakeholders. Reputation is measured using data from RepTrak, and measures brand reputation across four key metrics: trust, admiration, positive feeling and esteem. The score is calculated as the average of the previous 12 months rolling 12-month scores in the final year of the plan compared to baseline. Reputation was introduced as an LTI metric to replace Sales per square metre for the F22-24 plan onwards. Vesting Schedule The vesting schedule for these measures is: Entry Target Stretch rTSR 1,2 ROFE Reputation TOTAL % MAX 20% 8% n/a 24% 4% 12% 32% 40% 40% 20% 100% Delivering LTI outcomes: Executive KMP are awarded a maximum value of 170% of TFR at the beginning of the three- year performance period. Awards of performance rights are made at face value based on the five-day VWAP up to and including 1 July at the beginning of the performance period. Dividends that would have been earned and reinvested over the performance period vest in the form of additional shares subject to the performance conditions. The deferred nature of LTI arrangements supports retention and also provides a risk management lever to facilitate malus policy application during the performance period. 3 Directors' Report 4 Report Financial LO information Other Total (% of Target) Board Discretion Adjusted (% of Target) 79.8% Adjusted (% of Max) 53.2% 89.8% (10.0%) Safety The Safety Severity metric improved on the prior year with an outcome of 1.52, with significantly improved reporting and transparency of incidents across the Group, and focus on high potential events. 1 The F23-25 rTSR peer group comprises the following ASX companies (ASX Code): ALL, AMC, ANZ, APA, ASX, BXB, CBA, COH, COL, CPU, CSL, EDV, GMG, JHX, MQG, NAB, QBE, RHC, RMD, SCG, SHL, STO, SUN, TCL, TLS, WBC, WDS, WES, WOW and XRO. 2 Consistent with market practice, 50% of the rTSR tranche vests at the 50th percentile, the entry point for vesting to occur, with stretch achieved at the 75th percentile. ENTRY: 1.72 TARGET: 1.69 STRETCH: 1.65 ACTUAL F23: 1.52