AS AT 30 JUNE 2011
24
The Board is responsible for administering the LTIP in accordance with the LTIP Rules and the terms and conditions of
specifc grants of options and/or performance rights to participants in the LTIP.
The Board may determine which persons will be eligible to participate in the LTIP from time to time. Eligible persons may
be invited to apply to participate in the LTIP. The Board may in its discretion accept such applications.
The terms and conditions of the options and the performance rights are summarised below:
Details of the options
Instrument
Each option represents an entitlement to one ordinary share.
Exercise price
Determined at the time of invitation and payable by the option holder at the time of exercise.
Vesting conditions
Vesting to occur upon the satisfaction of the EPS and KPI performance conditions as
summarised in this table and on page 25.
Following the satisfaction of the performance hurdles described below, the options comprising
each tranche will vest on, and become exercisable on or after, the relevant vesting date.
EPS performance target The basic EPS (“Basic EPS”) for the purpose of the options is equal to 13.0 cents per share,
being the pro forma forecast earnings per share of FlexiGroup for FY2007 as calculated under
AASB 133 less the share-based payments expenses (as determined under AASB 2) relating
to the grants of options over shares from Eighth SRJ Pty Limited and Viewlove Pty Limited
(former shareholders of Flexirent Holdings Pty Limited) to certain senior executives of the
Group and adjusted for extraordinary items as determined by the Board.
Performance testing (“testing date”) against the EPS hurdle will take place on the date of
announcement of the relevant annual fnancial results of FlexiGroup. For some but not all
tranches, retesting will occur at the retesting date in respect of the next fnancial year-end date
immediately following the relevant initial testing date. Options that do not vest on retesting will
be taken to have lapsed.
The applicable EPS hurdle for each test period is measured on an annual compounding basis to
the relevant performance test date, using the Basic EPS as the base line number. The Board has
the discretion to vary at any time the EPS hurdle applicable to all or part of the options.
Why the EPS performance
target was chosen
EPS was chosen as a performance condition as it is aligned to earnings growth and the
generation of value to shareholders.
KPI performance target The KPI hurdles may include any combination of operational, volume and product mix, cultural,
fnancial and other measures as determined and modifed by the Board from time to time.
In determining whether the KPI performance hurdles have been satisfed, a report is prepared
for the Remuneration Committee detailing each KPI performance hurdle and the performance
of the executive against the hurdle. The Remuneration Committee approves that rating for all
KPI performance hurdles.
Why the KPI performance
target was chosen
KPI hurdles were included in the determination of awarding options to ensure that fnancial
and non-fnancial measures are aligned and drive shareholder value.
Vesting date
Following the satisfaction of the performance hurdles applying to an option, the option vests
on, and becomes exercisable on or after, a date predetermined by the Board (“vesting date”).
The vesting date is efectively the tenure condition. It means that an option holder may only
exercise options that vest following the satisfaction of the applicable performance hurdles
on or after the vesting date provided that they remain employed by FlexiGroup as at this date.
If an option holder ceases to be employed by FlexiGroup or any of its subsidiaries for any reason
on or prior to the vesting date relating to a tranche of options, all options in the tranche will lapse
immediately unless the Board makes a determination that those options have vested.
Following the vesting date or the accelerated vesting of an option, the vested option may be
exercised by the executive subject to any exercise conditions and the payment of the exercise
price (if any), and the executive will then be allocated or issued shares on a one-for-one basis.
Exercise period
Vesting date to expiry date
Expiry date
31 December 2011 or 31 December 2012 depending upon the tranche.
Directors’ Report (continued)