Ann: Annual Report to shareholders, page-3

STI linked to not exceeding CAPEX or lease expenses by 10% of forecast? Excellent you are getting paid extra to do your job and have some accountability for other peoples money.

STI (cash) cost as at Dec 31 2024 was $661k; I’ll leave it to everyone else to determine the impact on our financial statements (ratio of STI to net profit). Whilst this does align to operational efficiencies, it may mean STIs are allocated for just meeting budget, however, the financial feasibility of projects need to stack up.

LTIs do stack up a bit more in the ROCE aspect. For 2025 the ROCE needs to exceed 20%. Current capital employed is around $95.4m (unless the board is using a different metric) so would need to be generating $20m+ on this; this is a justified incentive tying back to an factor dependent on operational excellence. However, this also excludes depreciation and amortisiation from the calculations.

LTI part #2 though, is relating to exceeding the 3 year annualised total rate of the S&P ASX Small Ordinaries Index by >20%. Over the last 3 years the annual return rate has been -0.7%. Over the last 10 years the S&P small ords index has return 8% whilst the median is 9.69%.

So looking at a rough (long-term average) TSR return of >10-12% for this section of the LTIs to be issued.

If both ROCE and TSR targets are exceeded, participants can earn up to 150% of their base salary as an LTI award. The stretch target rewards exceptional performance that surpasses shareholder expectations. The maximum that can be earned during any one year is 150% of the base salary.


Anyhow the impact on STIs really peeves me off, paid out nearly 2% of our MCAP in short term incentives alone. I wanted the STI + LTIs proposed to be provided at the AGM, not developed and approved by the board after the fact. Doubtful a rough criteria wasn't (somewhat) developed prior to the AGM. Once again, at the cost of shareholders management are rewarded for a lack of TSR.