Executive Remuneration Governance
Executive Directors receive no extra remuneration for their service on the Board beyond their Executive salary package.
KMP remuneration is compared against similar positions across the ASX300 and Industry peers to ensure that remuneration levels
and structures remain consistent with roles of comparable skill, experience and responsibility levels.
During FY21 Paradigm revised its STI and LTI incentive programs, the level of incentive available to Key Management Personnel (KMP)
under both programs consists of the following:
• A review was conducted of the CEO’s remuneration, including a comparison against other ASX-listed companies of comparable
market capitalisation. Based on that review, the Board determined that Mr Rennie’s total remuneration package was significantly
below the median for a CEO of a company of similar market capitalisation. It was resolved to revise Mr Rennie’s base salary and
at risk component (including STI and LTI) so that it was more in line with the median remuneration for such a position. Accordingly,
Mr Rennie’s base salary was increased by 10% in FY21 and the potential maximum available STI was increased to up to 40% of
base salary.
• The CEO is eligible to receive an LTI award of up to 600,000 ordinary shares. The actual award is linked to the STI performance
outcome. i.e., If 75% of the STI is achieved (30%) then the LTI award is 75% of 600,000 shares. The LTI award will vest equally over
a 3-year period i.e. 75% of 600,000 shares equates to an award of 450,000 shares. These shares will vest equally at 150,000 shares
per year for 3 years. The award price for the shares will be based on the 30 day VWAP with a 25% premium applied to this price, to
provide greater alignment to increase total shareholder returns (TSR). The shares will be supported by a non-recourse loan, meaning
that for the shares to be fully “exercised” (i.e. by repaying the loan), the share price at the point of “exercising” the shares will need to
be greater than the offer price of the share award. The shares must be “exercised” within 5 years of the offer date.
• The Executive Director and Chief Medical Officer (CMO) is eligible to earn an STI of up to 30% of their base salary, pending
achievement of Board approved performance objectives, which are linked to the Board approved strategic plan.
16 Annual Report 2021 Paradigm Biopharmaceuticals Limited
• The Executive Director and CMO is eligible to receive an LTI award of up to 500,000 ordinary shares. The actual award is linked to
the STI performance outcome. That is, if 75% of the STI is achieved (22.5%) then the LTI award is 75% of 500,000 shares. The LTI
award will vest equally over a 3-year period i.e., 75% of 500,000 shares equates to an award of 375,000 shares. These shares will
vest equally at 125,000 shares per year for 3 years. The award price for the shares will be based on the 30 day VWAP with a 25%
premium applied to this price, to provide greater alignment to increase TSR.
• The shares will be supported by a non-recourse loan, meaning that for the shares to be fully “exercised” (I.e. by repaying the loan),
the share price at the point of “exercising” the shares will need to be greater than the offer price of the share award. The shares must
be “exercised” within 5 years of the offer date.
Following Board approval of the annual strategic plan update, the Board approves the current year, in this case FY21, performance
objectives against which KMP STI and LTI will be reviewed and assessed.
A formal review process by the Remuneration and Nomination Committee of KMP performance is undertaken annually to assess the
delivery of the agreed objectives. The outcome of this review process delivers any STI and LTI award, which are fully at risk.
In addition to governing KMP remuneration, the Remuneration and Nomination Committee sets the aggregate fee pool for NonExecutive Directors and Non-Executive director fee’s (subject to shareholder approval).
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