AS AT 30 JUNE 2011
34
Directors’ Report (continued)
If the TSR performance rights vesting condition is not met for any Tranche 2 performance rights when measured on the
testing date for performance rights performance period 2 and those Tranche 2 performance rights have not otherwise
lapsed, those Tranche 2 performance rights may be exercised during the performance rights exercise period for
performance rights Tranche 3 if the TSR hurdle is met on the testing date for performance rights performance period 3.
For these purposes, the performance rights performance period will be from 1 July 2012 (the beginning of performance
rights performance period 2) to 30 June 2014 (the end of performance rights performance period 3).
There is no retesting for Tranche 3 performance rights if the TSR performance rights vesting condition is not met for any
Tranche 3 performance rights when measured on the testing date for performance rights performance period 3.
Details of the options issued in June 2011
The details of the options issued to G McLennan, D Klotz and P Laughton are set out below:
Instrument
Each option represents an entitlement to one ordinary share.
Exercise price
$2.11
Vesting conditions
Options will vest on, and become exercisable on or after, the Vesting Date to the extent that
certain performance conditions that are based on the fnancial performance of FlexiGroup.
The measure used to determine FlexiGroup’s fnancial performance is Earnings Per Share
growth targets (“EPS hurdle”) and Total Shareholder Return (“TSR hurdle”).
Fifty percent (50%) of each tranche of options will be subject to the EPS hurdle, while the
remaining ffty percent (50%) will be subject to the TSR hurdle.
EPS performance target The basic EPS (“Basic EPS”) for the year ending 30 June 2014 is 27.9 cents per share.
Performance testing (“testing date”) against the EPS hurdle will take place on the date of
announcement of the relevant annual fnancial results of FlexiGroup. There will be no retesting
of options. Options that do not vest will be taken to have lapsed.
The Board has the discretion to vary at any time the EPS hurdle applicable to all or part of the options.
TSR performance target The performance hurdle set by the Board in relation to each Tranche is based on TSR growth
of the Company measured against other companies in the S&P/ASX 300 Index (not including
resources companies) TSR growth for the relevant performance period.
The TSR for FlexiGroup will be determined by calculating the amount by which the sum of:
• the 30 day volume weighted average price (“
VWAP
”) for FlexiGroup Shares in the period
up to and including 30 June at the end of the relevant Performance Period; and
• the dividends paid on a FlexiGroup share during the relevant Performance Period,
exceeds the 30 day VWAP for FlexiGroup shares in the period up to and including 1 July at the
beginning of the relevant Performance Period, expressed as a percentage.
Nil
– if the Company’s TSR ranked in the 4th quartile (i.e. 76th to 100th ranking) of companies
in S&P/ASX 300 Index (excluding resources companies).
25%
– if the Company’s TSR equals performance of the 75th ranking company in S&P/ASX 300
Index (excluding resources companies).
Pro-rata between 25% and 50%
– if the Company’s TSR ranked in the 3rd quartile (i.e. 51st
to 75th ranking) of companies in S&P/ASX 300 Index (excluding resources companies).
Pro-rata between 50% and 100%
– if the Company’s TSR ranked in the 2nd quartile (i.e. 26th
to 50th ranking) of companies in S&P/ASX 300 Index (excluding resources companies).
100%
– if the Company’s TSR ranked in the 1st quartile (i.e. 1st to 25th ranking) of companies
in S&P/ASX 300 Index (excluding resources companies).
Why vesting conditions
were chosen
The vesting conditions were chosen as performance conditions as they refect, at the date
they were granted, the generation of signifcant shareholder value.
Vesting date
1 December 2014
Exercise period
From vesting date to expiry date
Expiry date
31 December 2016
Disposal restriction
No disposal restriction imposed at the time of this grant.