## ENVIRONMENTAL REGULATION 

The consolidated entity's operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory of Australia, or of New Zealand. 

## DIVIDENDS 

Since the end of the financial year the Directors have declared the payment of a final ordinary dividend of NZ 9.0 cents per share. Dividends will carry full New Zealand imputation credits and full Australian franking credits. The dividend will be paid on 22 November 2013. 

The Company does not currently have an active dividend re- investment plan. 

## INSURANCE OF OFFICERS 

The Company has entered into deeds of indemnity, insurance and access with each Director which confirms each person’s right of access to certain books and records of the Company for a period of seven years after the Director ceases to hold office. This seven year period can be extended where certain proceedings or investigations commence before the seven years expires. The deed also requires the Company to provide an indemnity for liability incurred as an officer of the Company, to the maximum extent permitted by law. 

Indemnification: Pursuant to the Constitution, the Company is required to indemnify all Directors and employees, past and present against all liabilities allowed under law. The Company has entered into an agreement with each Director to indemnify those parties against all liabilities to another person that may arise from their position as Director or other officer of the Company or its controlled entities to the extent permitted by law. The deed stipulates that the Company will meet the full amount of any such liabilities, including reasonable legal costs and expenses. 

Insurance: Pursuant to the Constitution, the Company may arrange and maintain Directors’ and officers’ insurance during each Director’s period of office, and for a period of seven years after a Director ceases to hold office. This seven year period can be extended where certain proceedings or investigations commence before the seven years expires. 

## REMUNERATION REPORT 

The remuneration report is set out in the following sections: 

A PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION 

B DETAILS OF REMUNERATION 

C SERVICE AGREEMENTS 

D DETAILS OF SHARE-BASED COMPENSATION 

E ADDITIONAL INFORMATION, PERFORMANCE RIGHTS VESTING 

The information provided in this remuneration report has not been audited as Kathmandu Holdings Limited is a foreign company in terms of the Corporations Act 2001 (Australia). 

However, the report provided generally follows the same principles applied by Australian companies listed on the ASX, 

and the audited remuneration disclosures contained in note 9 of the financial statements generally comply with those required under the Corporations Act 2001 (Australia). 

## A PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION 

The Company’s Remuneration and Nomination Committee is the primary body that determines the quantum and framework of Directors and Executive remuneration. The composition, role and responsibility of the Committee is outlined in the Corporate Governance Statement on page 26 of this annual report. 

The Committee adopts a series of principles in determining remuneration related decisions. The principles used are: 

Remuneration (quantum and/or structures) whether measured at base or total level, should be market competitive, and generally account for key relevant internal and external factors such as employee level of responsibility and place of domicile, Company commercial circumstances, and market practice; 

Those employees with the ability to influence the achievement of the Company’s strategic objectives and business plans (“key management and senior management personnel”) should be rewarded by way of performance based rewards structured to reflect achievement against those objectives and plans; 

The alignment and mix of remuneration should not be based primarily upon cash incentives earned from Company short term profit performance. The remuneration framework recognises the varying Executive roles, remunerates these accordingly and has an incentive structure that has a reduced and appropriate proportion of total remuneration that is cash based; 

The opportunity to participate in equity based rewards should be a component of the reward structure for key management personnel, both to align their reward with the creation of shareholder value, and to encourage their ongoing participation in and retention by the Company; 

Key management personnel includes all Executives, which are personnel who are reporting directly to the Chief Executive Officer or Chief Financial Officer, designated as an Executive by the CEO and with responsibility and authority for management of a significant profit or cost centre. Executives should have a substantial portion (as a target no less than one-third) of their total remuneration aligned with reward for creating shareholder value. This should generally be achieved through the application of appropriate and measureable performance hurdles to be met as criteria for receiving incentive based remuneration by way of cash or equity; 

The Executive Directors (Chief Executive Officer and Chief Financial Officer) should, relative to other Executives have 

• a greater proportion of total remuneration (at least 45%) that is “at risk”, i.e. contingent upon the achievement of performance hurdles, and 

