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## Remuneration repor t (cont’d) 

## Further Education 

During the year the focus on enhancing shareholder value in all facets of the business identified opportunities within the organisation’s human capital. Existing processes were refined to identify candidates in leadership positions whose skills and experience could be enhanced through further specific education. Courses offered by leading institutions both domestically and internationally including Columbia Business School and London Business School were assessed to match the development needs of individual staff. The success of this ongoing program is reflected in the increase in the depth of talent within the organisation’s leadership group and the value which the individuals have placed on the Company’s commitment to their personal development. 

## Hedging of Unvested Securities 

The Group Securities and Insider Trading Policy contains a restriction on executives and other employees entering into a hedging transaction to remove the ‘at risk’ aspect of securities that have been granted to them as part of their remuneration package and which have not vested subject to performance conditions and/or which are still subject to forfeiture conditions. Employees are provided with a copy of this policy and are required to provide annual certification that they have complied with the policy. Failure to comply with the policy could result in disciplinary action, including forfeiture of the securities, suspension or termination of employment. 

## Remuneration Mix 

The table below shows the executive TFR and target performance base remuneration as a proportion of total remuneration: 

<img src='content_image/198671.jpg'>

## 2.5 Services from Consultants 

The Board seeks and considers advice from independent, external remuneration consultants where appropriate. Remuneration consultants are engaged directly by and report to the Remuneration Committee. 

In selecting remuneration consultants, the Remuneration Committee takes into account potential conflicts of interest and their terms of engagement, regulate their access to, and require, their independence from IOOF’s management. The advice and recommendations of external consultants are used as a guide, but do not serve as a substitute for thorough consideration of the issues by each Director. 

In November 2011, the Remuneration Committee engaged Ernst & Young Human Capital (EYHC) as remuneration consultant to the Committee to provide market data and benchmarking information to assist the Committee in reviewing remuneration of KMP. Recommendations for the amount of remuneration to KMP were not provided. 

In addition to the market and benchmarking data research, EYHC provided data in relation to the structure of long-term incentive plans for Executive KMP to the Company during the year. 

## 3. Remuneration Snapshot 

The following is designed to provide a summary of IOOF’s remuneration policies and structure and provide an overview of the actual value of the remuneration received by Non- Executive Directors, the Managing Director and KMP in 2011-12. Comprehensive detail on these matters is contained in Section 4. 

## 3.1 Non-Executive Directors 

The fees paid to Non-Executive Directors fall within a limit of $980,000 approved by shareholders at the 2010 Annual General Meeting. There has been no increase in the approved limit since this time. 

Details on the fees paid to Non-Executive Directors in 2011-12 are shown on page 39. 

Non-Executive Directors’ fees remain unchanged in the two years immediately following the global financial crisis i.e. in 2008-09 and 2009-10. Since that time they have been adjusted in line with inflationary movements. 

The Board elected to increase Non-Executive Director fees by 3% for the 2012-13 financial year. 

## 3.2 Managing Director and Key Management Personnel 

The remuneration of the Managing Director and Executive KMP is designed to ensure strong alignment between the medium and long term interests of shareholders and the executive team. To achieve this, the remuneration packages of Executive KMP are structured into three components: 

Total Fixed Remuneration: This is the only ‘guaranteed’ part of the remuneration package. The amount of the Total fixed remuneration pay is reviewed annually by the Remuneration Committee having regard to market movements in the financial services industry and the relativities of an individual’s responsibilities at IOOF, along with their performance, qualifications and experience. 

