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## REMUNERATION REPORT (CONTINUED) 

## D. EXECUTIVE KMP COMPENSATION (continued) 

## 5. Variable Remuneration — Long Term Incentive (“LTI”) (continued) 

(b) Structure (continued) 

## (iii) 2012 Option Plan for CEO (“2012 OP”) (continued) 

continue to vest subject to the growth hurdles being met. If Mr. Burke voluntarily terminates his employment with the Company including by way of resignation or retirement, all options terms continue for 12 months as if Mr. Burke’s employment had not ceased and on that date all remaining vested and unvested options shall lapse. If Mr. Burke dies or involuntarily terminates his employment with the Company including by way of early retirement due to ill health, permanent disablement or mental incapacity, the Company retains the right to allow all option terms to continue as if Mr. Burke’s employment had not ceased and all options will continue to vest subject to the growth hurdles being met. 

The terms of the grant of the options provide that should the Board determine that Mr. Burke has entered into a hedging transaction or other transaction having the effect of limiting or eliminating the economic risk associated with the options as a result of the DPS and EPS growth vesting hurdles to which they are subject, the options will expire. 

The fair value of each option estimated at date of grant on 29 November 2012 was $0.73, $0.74 and $0.75 for Tranches 1, 2 and 3 respectively. The notional adjusted equity value of the option allotment and the percentage of Mr Burke’s total remuneration are detailed on pages 19 and 20 of this Report. 

## 6. Other benefits 

The Group has other compensation arrangements with some Executive KMP such as travel and entertainment reimbursement for business only purposes and either Company maintained vehicles, vehicle leases or car allowances as part of their remuneration packages. In addition the payment of superannuation or retirement benefit amounts within prescribed statutory limits are made, including various ancillary insurance covers. Where relevant, the grossed up taxable value of these benefits have been included as a non-monetary benefit, with the details of the value of these benefits set out on pages 19 and 20 of this Report. 

With the appointment of Ms. J.E. Raffe as Finance Director of the Company in May 2012, Ms. Raffe’s proposed ESP allocation was delayed from the June ESP allotment to KMP, granted at $3.14, to 29 November 2012 to allow for shareholder approval at the Company’s 2012 annual general meeting, following which the ESP shares were issued at $3.78. The Company agreed to compensate Ms. Raffe with an additional bonus at the time of her future sale of these ESP shares for the additional value, if any, foregone by the deferred grant date. 

This potential bonus payment to Ms. Raffe represents a cash-settled share-based payment estimated to be a maximum of $275,439, to be re-assessed at each financial year for changes in expected probability of payment. The fair value of this additional bonus amount was estimated on the basis of the estimated after-tax impact of $0.64 per share, being the difference between $3.78 and $3.14, and is accrued for over the 5 years from date of grant, being $71,920 for the 2014 financial year (2013: $42,167). 

## F. KMP SHARE AND OPTION HOLDINGS 

## 1. Ordinary Shares Held by KMP in Village Roadshow Limited (number) 

2014 

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## E. EMPLOYMENT CONTRACTS 

Compensation and other terms of employment for many of the Group’s Executive KMP and Non-KMP Executives are formalised in service agreements. 

The main terms of all major employment contracts and bonus payments are reviewed by the Remuneration Committee. The major provisions of the service agreements of these Group officers relating to compensation are as set out below. 

## 1. Executive Director KMP 

Both Mr. Graham Burke and Mr. Robert Kirby, the Company’s Executive Director KMP, have signed agreements with the Company setting out the principal terms and remuneration arrangements agreed with the Company’s Remuneration Committee. 

These terms include a base salary, CPI adjusted, superannuation and car allowance, and an annual capped incentive performance bonus is payable for the Company achieving certain EPS and CFROI targets. In addition both Mr. Burke and Mr. Kirby may seek a potential loan from the Company of up to $2 million on terms and conditions to be agreed by the Remuneration Committee of the Company. 

Mr. Graham Burke also has a service contract with the Company which expires on 1 December 2017. In addition to the terms outlined above, the contract provides for the granting of four and a half million options over ordinary shares with appropriate exercise hurdles, which options were issued on 29 November 2012. Other than a global twelve month non- compete clause, the contract does not provide for pre-determined compensation in the event of termination. 

## 2. Executive Committee KMP 

Messrs. D. Kindlen, C.J. Kirby, S.T. Phillipson and Ms. J.E. Raffe have ongoing employment agreements with the Company with no fixed expiry dates. In addition to base salary and superannuation, and a Company motor vehicle provided to Ms. Raffe and a car allowance provided to Mr. C.J. Kirby, all Executive Committee KMP are eligible to be paid an annual performance bonus. All Executive Committee KMP have STI performance bonus arrangements similar to VRL’s Executive Director KMP based on CFROI and EPS metrics, as well as a discretionary performance bonus based on annually set personal performance criteria. 

Payment for termination without cause under these employment contracts for Executive Committee KMP is equal to twelve months of salary and reflects the post employment restraints applicable to these Executive Committee KMP under their relevant employment contracts. The Group may terminate an employment contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, the KMP is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unexercisable LTI plan shares are immediately forfeited and all remaining loans over such LTI shares must be repaid within 6 months of termination. 

