Lendlease Annual Report 2021

e. Restricted Securities Award (RSA) The Restricted Securities Award (RSA), previously referred to as the LTA Minimum, is similar to fixed remuneration as it is not subject to performance conditions. It is designed to motivate and reward a limited number of key executives to deliver on the Group’s long term strategy and to allow them to have a sense of ownership and share in the value created for securityholders. The RSA (and previously referred to LTA Minimum) is not continuing from FY22 under the revised Executive Reward Strategy. Specifically, the objectives are to: • Align the interests of securityholders and our most senior executives • Support long term value creation • Better align reward to risk management (recognising that the RSA may be forfeited in certain circumstances). Arrangements for RSA Awards RSA Design How the RSA Works Performance Rights • An annual grant of ‘performance rights’ is made to a limited number of executives on the Global Leadership Team • However, following feedback from proxy-holders and other stakeholders, the RSA will no longer be offered from FY22 • The Board intends that the awards be settled in Lendlease securities, although some or all of the award may be settled in cash at the Board’s discretion • Performance rights are rights to receive one Lendlease stapled security, or at the Board’s discretion, cash or other instruments of equivalent value • In the event of a change in control of the Group, the Board has the discretion to determine whether the vesting of some or all performance rights should be accelerated. Vesting Period • The first tranche (i.e. 25%) will vest after three years and the second, third and fourth tranches will vest progressively four, five and six years after the grant date. Termination of Employment • If the executive resigns and becomes engaged in activities that are competitive with the Group or is terminated for cause, the unvested RSA is forfeited • If the executive is terminated and if the Board considers vesting would provide a benefit that was unwarranted or inappropriate, the Board has the discretion to lapse some or all performance rights prior to the vesting date • For ‘good leavers’, the RSA grant may remain on foot, subject to the original terms. f. Distinguished Executives Award (DE Award) The Distinguished Executives Award (DE Award) is a program established to recognise and reward Lendlease technical mastery and significant contribution to the business. DE Awards are generally deferred over five and seven years. The deferred component is awarded as Lendlease securities and held in Lendlease employee security plan trusts on behalf of the employees. For employees to receive the deferred component, they must generally be employed by the Group at the time of vesting. DE Awards are valued based on the average price of on market purchases made in respect of these awards at the time of grant. g. Executive Deferred Award (ED Award) The Executive Deferred Award (ED Award) is an award that was made to a limited number of executives and senior managers in recognition of their role in supporting the Lendlease transformation program. The ED Award comprises a one off grant of Lendlease deferred securities which vest in three equal tranches, with the final vesting three years after grant. Securities are held in Lendlease employee plan trusts for the deferral period. Refer to Note 29a ‘Employee Security Plans’ for further details. For employees to receive the deferred components in full, they must generally be employed by the Group at the time of vesting. h. Deferred Equity Award (DEA) The DEA is delivered to Senior Executives as a grant of rights with vesting over two years. The Board determined that an equity award was more appropriate than paying cash as a result of COVID. The key objectives of this award are to: • Recognise the achievement of non financial performance outcomes that support long term value creation • Consider the balance between motivating, recognising and rewarding executives with securityholder interests • Provide the Board with additional review points prior to vesting • Provide a retention element given that executives will be required to wait up to two years for the award to vest. i. Pro Rata CEO Grant The pro rata CEO Grant is designed to recognise the period served as Global CEO (one month) in FY21 for Anthony Lombardo. Arrangements for the Pro Rata CEO Grant Pro Rata CEO Grant How the Pro Rata CEO Grant Works Performance Rights • A one-off grant of ‘performance rights’ to reflect time served as Global CEO in FY21 reduced to reflect the length of the period and value already granted for FY21 • All other terms, including the performance period, performance hurdles, termination rules remain as per the FY21 LTA Grant referred to above. Vesting Schedule - Relative TSR (FY19, FY20 and FY21) Measure Percentage of performance securities that vest as a proportion of maximum opportunity Group CEO (Steve McCann) Senior Executive Below the 50th percentile No Vesting No Vesting At the 50th percentile 27 per cent vesting 11 per cent vesting At or above the 50th percentile and below the 75th percentile Pro rata vesting on a straight line basis between 27 per cent and 100 per cent Pro rata vesting on a straight line basis between 11 per cent and 100 per cent At or above the 75th percentile 100 per cent vesting 100 per cent vesting Vesting Schedule - Average ROE (FY19 and FY20) Less than 10 per cent No Vesting No Vesting Between 10 per cent and target ROE set by the Board Pro rata on a straight line basis between 0 per cent and 63 per cent Pro rata on a straight line basis between 0 per cent and 41 per cent At target ROE set by the Board 63 per cent vesting 41 per cent vesting Between target set by the Board and 14 per cent Pro rata on a straight line basis between 63 per cent and 100 per cent Pro rata on a straight line basis between 41 per cent and 100 per cent At or above 14 per cent 100 per cent vesting 100 per cent vesting Vesting Schedule - Average Operating ROE (FY21 only) Less than 8 per cent No Vesting No Vesting Between 8 per cent and target Operating ROE set by the Board Pro rata on a straight line basis between 13 per cent and 63 per cent Pro rata on a straight line basis between 8 per cent and 41 per cent At target Operating ROE set by the Board 63 per cent vesting 41 per cent vesting Between target set by the Board and 11 per cent Pro rata on a straight line basis between 63 per cent and 100 per cent Pro rata on a straight line basis between 41 per cent and 100 per cent At or above 11 per cent 100 per cent vesting 100 per cent vesting Vesting Schedule - CAGR % FUM (FY21 only) Below CAGR for threshold vesting No Vesting No Vesting Between CAGR for threshold vesting and CAGR for target vesting Pro rata on a straight line basis between 13 per cent and 63 per cent Pro rata on a straight line basis between 8 per cent and 41 per cent At CAGR for target vesting 63 per cent vesting 41 per cent vesting Between CAGR for target vesting and CAGR for maximum vesting Pro rata on a straight line basis between 63 per cent and 100 per cent Pro rata on a straight line basis between 41 per cent and 100 per cent At CAGR for maximum vesting 100 per cent vesting 100 per cent vesting Section F: Other Notes continued 35. Employee Benefits continued Notes to Consolidated Financial Statements continued 189 188 Lendlease Annual Report 2021 Financial Statements