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2. Remuneration – audited (continued)

2.1 Remuneration policy and framework (continued) Risk governance arrangements

As detailed in the Suncorp Group’s remuneration policy, the following risk governance arrangements apply to all employees as relevant:

–– the Suncorp Group STI pool is based on Suncorp Group performance, inclusive of risk management, as assessed by the Board

–– risk management is incorporated into scorecards for all employees

–– performance‑based remuneration for all employees is subject to deferral based on predefned thresholds –– both deferred STI and LTI are subject to potential ex‑post adjustment based on the Suncorp Group’s ex‑post adjustment provisions and at the discretion of the Board; and

–– remuneration decisions for employees working in risk and fnancial control roles are governed by a separate process which enables the performance of employees in these roles to be assessed independently of the business areas they oversee.

Remuneration Committee

The Remuneration Committee comprises four independent non‑executive directors and is chaired by Dr Zygmunt Switkowski. Three members of the Committee are also members of the Risk Committee, one of whom is the Risk Committee Chairman.

Further information on the Remuneration Committee’s role, responsibilities and membership can be found in the Corporate Governance Statement. Use of remuneration consultants

The Remuneration Committee engages independent external remuneration consultants to provide advice and market‑related information as required.

In 2011 the Remuneration Committee engaged PwC to provide advice to the Remuneration Committee and the Board on matters relating to remuneration benchmarking, proposed changes to the Suncorp Group’s remuneration structures and practices and on specifc matters such as remuneration policy.

The requirement for the services of an independent consultant to the Remuneration Committee will be assessed annually in the context of the issues to be addressed by the Remuneration Committee.

Linking remuneration to business objectives The diagram below illustrates how SLT remuneration is structured to support the Suncorp Group’s strategic objective of achieving sustainable business growth.

Sustainable business growth

Attract and retain talented executives

Strategic business objective

Supported by remuneration drivers

Reinforced through remuneration structures

1. Fixed remuneration levels are aligned to the median of a defned talent market. 2. Rewards of up to 237.5% of fxed salary are available through the variable ‘at-risk’ components of remuneration (STI and LTI).

Motivate superior performance

1. Signifcant component of remuneration is ‘at-risk’ under both STI and LTI plans. 2. STI is subject to fnancial and non-fnancial performance measures with some portion now deferred.

3. Vesting of the LTI award is dependent on the Company’s relative total shareholder return (TSR) performance against a peer group. If TSR performance is below the median of the peer group, the LTI does not vest and is forfeited.

Ensure appropriate risk alignment

1. SLT cannot hedge equity instruments that are unvested or subject to restrictions, for example unvested performance rights held in the Executive Performance Share Plan. 2. Remuneration policy amended in 2010 to provide a governance framework for the structure and operation of remuneration systems, within the context of the Suncorp Group’s long-term fnancial soundness and risk management framework.

Directors’ Report (continued)