## REMUNERATION REPORT 

Dear Shareholder 

On behalf of the Board, I am pleased to present Fairfax Media’s 2013 Remuneration Report. 

## OUR REACTION TO CHANGES IN OUR MARKET 

Fairfax Media has not stood still in another challenging year for the media business. We have confronted the fundamental changes in the media market and developed a strategy that we believe will deliver a lean and agile Fairfax Media in a highly competitive market. We are implementing our transformation strategy. 

Through this transition, Fairfax Media has moved its organisational focus from print to digital and has profitable cash positive newspapers. The 2013 financial year has been a time of real progress on the critical milestones to achieving the business transformation we have previously announced. We have: 

• consolidated our core Australian publishing businesses into a single unit, Australian Publishing Media, which is removing duplication from our business and driving revenue; 

• launched the compact editions of the weekday Sydney Morning Herald and The Age, so as to enable printing plant rationalisation; 

• established Domain as a standalone operation recognising the significance of the real estate sector and Domain’s strong position in this sector; 

• formed the Digital Ventures unit to maximise the full potential of our digital transaction businesses such as Stayz and RSVP and to grow new digital opportunities; 

• reduced our cost structure significantly; reflected in the $251 million in savings we have previously announced, plus an additional $60 million in savings including the restructure of Australian Publishing Media; 

• begun a comprehensive product review to do those things that we do well and profitably and not do those things that are not efficient or that are not part of our core business; and 

• begun new revenue generation initiatives across our business including a focus on leveraging our mastheads and powerful brands in the growing business of events. 

We have advised the market that traditional print advertising revenue continues to decline. The transition from a traditional print media company to a cross-platform business is not instantaneous. 

We are confident that we are on a path that will lead us to maximise the opportunities available to a company with our brands, reputation and people. We believe this will generate competitive returns for our shareholders over the medium to long term. 

But we acknowledge that short term returns to shareholders have suffered through this transition. 

This development has been reflected in 2013 remuneration and in a comprehensive review of incentive arrangements for 2014 and beyond. 

## REMUNERATION IN THE 2013 FINANCIAL YEAR 

In the 2013 financial year, a year of challenges and of change: 

• the majority of senior executive salaries were frozen as were fees paid to Non-Executive Directors. The Chairman also fulfilled his commitment made at the last AGM and agreed to a reduction in his fees from $432,730 per annum to $396,760; 

• there will be no annual bonuses paid to senior executives for 2013, unless there was a pre existing contractual payment commitment; and 

• the long term incentives, granted previously and tested at the end of the performance period this year, did not vest. 

This report provides details of our remuneration practices and the incentive plans in place in the 2013 financial year. We also want to share with you what we plan to do for the 2014 financial year and beyond. 

## REMUNERATION2014ANDBEYOND 

The Board has gone back to the drawing board to design a ‘fit for purpose’ remuneration plan that is better reflective of the journey we are asking our shareholders to go on with us in this period of consolidation and transformation followed by the emergence of a new Fairfax Media. The plan recognises that: 

