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## C. NON-EXECUTIVE DIRECTOR KMP REMUNERATION (continued) 

## 2. Structure (continued) 

their participation in the DSP each calendar year. The various allotments during the year under the DSP are set out in the table below. 

<img src='content_image/243375.jpg'>

The various share, option and ‘in substance option’ entitlements of all Directors are advised to ASX in accordance with the Listing Rules and the Act requirements and are set out on page 11 of the Directors’ Report. 

The remuneration of Non-Executive Director KMP for the periods ending 30 June 2014 and 30 June 2013 are detailed on pages 19 and 20 of this Report. 

## D. EXECUTIVE KMP COMPENSATION 

The names and positions of the Executive KMP of the Group for the period ending 30 June 2014 and 2013 are detailed on page 18 of this Report. 

## 1. Objective 

The Company aims to reward the Executive Director KMP and Executive Committee KMP with a level and mix of remuneration commensurate with the seniority of their position and responsibilities within the Group, so as to: 

– reward for Group financial performance against targets set by reference to appropriate benchmarks; 

– reward for achievement of annually set personal performance criteria; 

– align the interests of the Executive Committee KMP with those of the Company and of its shareholders; 

– link their rewards to the strategic goals and performance of the Group; and 

– ensure total compensation is competitive by market standards for the relevant industry. 

## 2. Structure 

In determining the level and make-up of Executive KMP compensation, the Remuneration Committee seeks independent advice of external consultants as required from time to time to advise on market levels of compensation for comparable roles in the entertainment industry. The proportion of fixed pay and variable compensation (potential short term and long term incentives) is monitored by the Remuneration Committee, taking into account the Group’s then present circumstances and its future short-term and longer-term goals. 

The compensation of Executive Director KMP and Executive Committee KMP consists of the following key elements: 

– Short term, fixed compensation; 

– Other compensation such as post employment compensation (including superannuation); 

– Variable Compensation: 

– Short Term Incentive Bonus (“STI”); and 

– Long Term Incentive (“LTI”). 

On 29 November 2013 Mr. Graham Burke and Mr. Robert Kirby both became Co-Executive Chairman and Co-Chief Executive Officer of VRL with no change to their remuneration arrangements other than Mr. Burke’s $1.0 million annual performance bonus being shared equally between Mr. Burke and Mr. Kirby. This change in titles was in recognition that both Mr. Kirby and Mr. Burke work closely together as a highly effective team beyond the traditional roles and boundaries of individual Chairman and CEO. The change also reflects that Mr. Kirby and Mr. Burke effectively share both positional functions between them. The flexibility that the joint titles brings to Mr. Kirby and Mr. Burke also facilitates enhanced senior executive input into the day-to-day operations of the Company with both men primarily concentrating their various efforts in different parts of the Company’s businesses. 

The details of the fixed and variable components (and the relevant percentages) of each individual Executive KMP of the Company and the Group are set out on pages 19 and 20 of this Report. 

The remuneration and terms and conditions of employment for the Executive Director KMP and the Executive Committee KMP are set out in individual contracts of employment. The details of each contract of the relevant Executive KMP are outlined in section E of this Report. 

## 3. Fixed Compensation 

## (a) Objective 

The level of fixed pay is set so as to provide a base level of compensation which is fair, reasonable and appropriate to the seniority of the position and to be competitive in the market. Fixed pay (defined as the base compensation payable to an individual and which is not dependent on the outcome of specific criteria) is reviewed annually by the Remuneration Committee, taking into account other elements of the compensation mix, such as STI bonus and LTI arrangements. 

The Remuneration Committee is responsible for approval of the level of fixed pay for Executive KMP and all other senior corporate and divisional executives. No specific remuneration review was undertaken during the year by the Company, however during the prior year the Remuneration Committee commissioned a survey-based market benchmarking review from a remuneration consultant, Mercer (Australia) Pty. Ltd., for Mr. David Kindlen, the Group’s Chief Information Officer, for which the Company paid $2,800. At the direction of the Remuneration Committee, the consultant was factually briefed by the Company’s Finance Director, Ms. Julie Raffe, to whom Mr. Kindlen reports. The 2013 review was conducted without Mr. Kindlen’s knowledge and no contact was made by the consultant with Mr. Kindlen for the purposes of conducting the review and accordingly the Company is satisfied that that the remuneration recommendation was made free from undue influence by Mr. Kindlen. During the year other remuneration advice was provided to the Group by the consultant mainly for the provision of market remuneration data for salaried staff other than for KMP, for which the Company paid $5,600 (2013: $5,055). 

## (b) Structure 

The Executive Director KMP and Executive Committee KMP receive their fixed (primary) compensation in a variety of forms including cash, superannuation and, where applicable, taxable value of fringe benefits such as motor vehicles and other non-monetary benefits. The fixed compensation component is not ‘at risk’ but is set by reference to competitive industry expectations and the scale and complexity of the different businesses together with appropriate benchmark information for the individual’s responsibilities, performance, qualifications, experience and location. 

The fixed compensation component of each Executive Director KMP and Executive Committee KMP for the periods ended 30 June 2014 and 30 June 2013 is detailed on pages 19 and 20 of this Report. 

## 4. Variable Compensation — Short Term Incentive (“STI”) Bonus 

## (a) Objective 

For the Executive Director KMP and the Executive Committee KMP the objective of the STI bonus program is to link the achievement of the Group’s annual operational targets with the compensation received by the Executive Director KMP and the Executive Committee KMP charged with meeting those targets, as well as relevant personalised individual targets for Executive Committee KMP. The total potential STI bonus available is set at a level so as to provide appropriate incentive to the Executive Committee KMP to achieve the operational targets set by the Group and such that the cost to the Group is reasonable in the circumstances. The STI bonus program is also available to other non-KMP executives. 

The STI is designed so that a large portion of an executive’s individual remuneration is ‘at risk’ against meeting targets linked to the Group’s annual performance and mid-term business objectives, weighted so that the more senior the executive the larger the proportion of remuneration that is at risk. For the Executive Committee KMP, their STI is a blend of financial KPIs applicable to the Group together with personal KPIs based on the relevant responsibilities of each role, whereas the Executive Director KMP’s STI bonus is based solely on CFROI and EPS financial KPIs. 

## (b) Structure 

All Executive Committee KMP, as well as other corporate and divisional executives, are eligible to participate in the Group’s annual STI bonus scheme after at least six months of service. Actual STI bonus payments made to the Executive Director KMP and to each Executive Committee KMP depend on the extent to which pre-determined financial performance benchmarks and/or other individual financial or non-financial criteria set at the beginning of each financial year, are met. 

