## 1. Introduction 

This Remuneration Report has been written in a different format this year in order to simplify this important area for shareholders and provide a clear and concise explanation of the Group’s remuneration structure and the actual value of the remuneration received by Key Management Personnel (KMP) of the Group. 

The information in this report is in accordance with AASB 124 Related Party Disclosures and section 300A of the Corporations Act 2001, and has been audited as required by Section 308(3C) of the Corporations Act 2001 unless otherwise stated. 

The key principles of IOOF’s remuneration policy remains unchanged from last year. These principles, as outlined in the following section, are designed to achieve a performance culture across the Group subject to the constraints embodied in the Group’s risk appetite framework, by linking a large component of executive’s remuneration to the creation of value for our shareholders. 

The Board of Directors oversees the Group’s remuneration policies on recommendations from the Remuneration and Nominations Committee (the “Remuneration Committee”). The Board and the Remuneration Committee review these policies annually to ensure that they remain in line with the market and regulatory environment and that the interests of employees and shareholders are closely aligned, to maximise shareholder value in the medium and longer term. 

During the past twelve months, IOOF has experienced significant challenges arising from market movements, competitive pressures, and regulatory changes within the financial services industry in which it operates. Moreover, in response to issues arising out of the global financial crisis, regulators in Australia, in keeping with those in a number of overseas jurisdictions, have introduced a number of legislative measures which place increased focus on the remuneration quantum and structures employed by public companies. 

The Board of IOOF Holdings Ltd, in conjunction with the Remuneration Committee, has reviewed the Group’s remuneration policies to determine whether any significant changes or fine-tuning adjustments are needed in light of the above. The Remuneration Committee has also engaged the services of external consultant, Ernst & Young, to assist with this review. 

The Board has determined that its over arching remuneration policies remain appropriate and robust, when account is taken of all the changes in the market, industry and regulatory environment over the past year. 

The Group aims to ensure that its remuneration policies are consistent with best practice in terms of: 

• attracting and retaining high quality people; and 

• aligning the rewards for performance by KMP with the returns achieved by Shareholders. 

The remuneration arrangements for KMP comprise three key components: 

• a base package which is a fixed amount is generally increased on an annual basis according to cost of living increases (CPI), market movements or changes in the scope of the position. The base amount will generally not be reduced except in extreme circumstances (e.g. under performance or significant adverse changes impacting on IOOF); 

• a short term incentive amount (STI) which is related to growth in shareholder value as measured by the returns received by shareholders from dividends and the growth in the share price; and 

• a long term incentive (LTI) which is intended to provide an incentive to the KMP to remain with the Group to enhance the sustainable performance of IOOF over the long term and to provide sound and competitive rates of return for our clients. 

The values of LTI’s are disclosed in the Remuneration Report as the amortised value of the grants of shares, options and or performance rights. The benefits derived by KMP from LTI’s vary in line with the movements in the Company’s share price. 

## 2. Remuneration Framework 

## 2.1 Objectives 

A principal objective of the Board is to achieve superior returns for our shareholders within the financial services industry in which it operates, while managing risk in a prudent manner. To realise this objective, the Board has recognised that it is fundamental to align the interests of employees with those of the shareholders by attracting, motivating and retaining high performing executives and other employees. 

The Board has adopted a policy that IOOF’s remuneration policy will: 

• Be competitive in the markets in which IOOF operates in order to attract, motivate and retain high calibre employees; 

• Reinforce the short and long term objectives of the Group as set out in the strategic business plans endorsed by the Board; and 

