Lendlease Annual Report 2022

Financial Statements 169 Arrangements for LTA Awards LTA Design How the LTA Works Performance Rights • An annual grant of ‘performance rights’ is made to a limited number of executives on the Global Leadership Team • 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 a variable number of Lendlease securities or at the discretion of the Board, cash with an equivalent value, upon vesting • Outcomes against performance hurdles will determine how many Lendlease securities will be received following vesting between nil and a maximum number • 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. Performance Period (applicable to FY20, FY21 and FY22 Grants) • 100 per cent of the performance rights are assessed over a three year period and the number of Lendlease securities that may be delivered on vesting is determined. The first tranche will vest immediately thereafter, and the second, third and fourth tranches will be deferred and will vest progressively four, five and six years after the grant date • If the performance hurdle is not met, the awards are forfeited • There is no retesting of the LTA grant. 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 LTA 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 LTA grant may remain on foot, subject to the original terms. Performance Hurdles Financial Year 2020 • 50 per cent subject to Lendlease’s Total Securityholder Return (TSR) compared to the companies in the S&P/ASX 100 Index. The S&P/ASX 100 companies are determined at the start of the performance period • 50 per cent subject to Return on Equity (ROE) hurdle. Financial Year 2021 onwards • One third subject to Lendlease’s Total Securityholder Return (TSR) compared to the companies in the S&P/ASX 100 Index. The S&P/ASX 100 companies are determined at the start of the performance period • One third subject to Average Operating Return on Equity (Operating ROE) hurdle • One third subject to compound annual growth rate (CAGR) % in funds under management. Percentage of performance securities that vest as a proportion of maximum opportunity Measure Former Group CEO (Steve McCann) Senior Executive Vesting Schedule - Relative TSR (FY20 to FY21) Below the 50th percentile No Vesting No Vesting At the 50th percentile 27 per cent vesting 11 per cent vesting Between the 50th percentile and 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 - Relative TSR (FY22) Below the 50th percentile No Vesting At the 50th percentile 40 per cent vesting Between the 50th percentile and 75th percentile Pro rata vesting on a straight line basis between 40 per cent and 100 per cent At or above the 75th percentile 100 per cent vesting Vesting Schedule - Average ROE (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 vesting 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 vesting 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) 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 vesting 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 vesting 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