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Remuneration Report

The Board presents the Suncorp Group Limited Remuneration Report for the fnancial year ended 30 June 2011 (2011). This report forms part of the Directors’ Report. Sections 2 and 3 of the Remuneration Report have been audited in accordance with section 308(3C) of the Corporations Act 2001 . It should be noted that the Suncorp Group completed a restructure on 7 January 2011 which resulted in Suncorp Group Limited (the Company) replacing Suncorp‑Metway Ltd (SML) as the ultimate parent of the Suncorp Group. As both the Company and SML are disclosing entities, separate Remuneration Reports are required.

The Remuneration Report is presented in the following three key sections:

1. Remuneration overview – unaudited

1.1 remuneration in 2011

1.2 remuneration earned by the Senior Leadership Team (SLT) (Group Chief Executive Offcer (Group CEO) and Senior Executives reporting directly to the Group CEO) in offce at 30 June 2011 1.3 changes in 2012

2. Remuneration – audited

2.1 the policy and framework for remunerating the SLT 2.2 Key Management Personnel (KMP), position titles and appointment dates 2.3 remuneration components

2.4 the link between remuneration and the Suncorp Group’s performance 2.5 SLT remuneration disclosures 2.6 contractual arrangements

3. Non‑executive director arrangements – audited

3.1 remuneration structure

3.2 Non‑Executive Directors’ Share Plan 3.3 non‑executive directors’ retirement benefts 3.4 remuneration disclosures

1. Remuneration overview – unaudited

Introduction

The Board is committed to clear and transparent disclosure of remuneration arrangements, and presenting this in a useful way for shareholders.

This overview provides key details regarding remuneration for 2011, and is included in addition to statutory reporting requirements to make it easier for shareholders to understand the Suncorp Group’s remuneration arrangements.

Sections 2 and 3 of this Remuneration Report provide greater detail regarding remuneration structures and outcomes and have been prepared in accordance with the Corporations Act 2001 and relevant accounting standards.

Remuneration strategy

The Suncorp Group’s remuneration strategy is to attract, motivate and retain talented executives to deliver strong long term results for our stakeholders while encouraging prudent risk taking behaviour.

Remuneration structure

The structure of remuneration transforms the remuneration strategy into practice.

The total remuneration opportunity for the Group CEO and Senior Executives (together the Senior Leadership Team (SLT)) is made up of both fxed and ‘at‑risk’ components. The at‑risk component comprises both short‑term incentives (STI) and long‑term incentives (LTI) which have to satisfy performance and risk‑related conditions. All these components together comprise the total remuneration opportunity.

For fxed remuneration the Suncorp Group broadly targets the median of the competitive market, while the at‑risk component provides the opportunity for total remuneration to reach the upper end of the market spectrum. To achieve this, the proportion of at‑risk remuneration, particularly STI, is intentionally positioned towards the upper end of the market enabling the Suncorp Group to appropriately reward superior performance.

STI awards are dependent upon performance against a balanced scorecard of fnancial and non‑fnancial performance objectives. These scorecard components are weighted towards delivery of business strategy and achievement of annual objectives, in particular, with the aim of consistently creating value for the longer term. To ensure outcomes have been delivered within the Suncorp Group’s risk appetite and to meet APRA’s requirements, a percentage of the STI award is deferred for two years. LTI opportunities are dependent upon Total Shareholder Return (TSR) performance relative to a peer comparator group (refer section 2.3). The purpose of LTI is to focus the SLT on the Suncorp Group’s long‑term business strategy, align SLT and shareholder interests and to support the creation of long‑term shareholder value.

When the Board assesses performance it takes into account the quality of outcomes and the creation of long‑term value for shareholders, customers and employees. The Board has discretion to adjust STI and LTI reward outcomes as necessary to refect the quality of the operational improvements. Discretion may be applied for:

–– STI, at year end when assessing performance against scorecard objectives to determine STI awards, or at the end of the two‑year deferral period, when determining if there are any risk management issues impacting the initial performance result assessed; and

–– LTI, at any time prior to or at the fnal vesting of the performance rights and will take account of factors such as any material misstatements of fnancial results or individual instances of non‑compliance with Suncorp Group policies.

1.1 Remuneration in 2011

The following drivers and actions have been considered in arriving at 2011 remuneration outcomes.

This year, the Suncorp Group has strengthened the business through the sound execution of its business plans. Since June 2010 the Suncorp Group has successfully delivered against the strategic growth plan outlined to the market in May 2010. This required completion of numerous signifcant projects including:

Directors’ Report (continued)