Lendlease Annual Report 2022

Financial Statements 171 35.f. 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. 35.g. 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. 35.h. 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. 35.i. Google Development Ventures (GDV) Incentive Incentive Design How the Incentive Works Performance Rights • A one-off grant of ‘performance rights’ to Denis Hickey to reward the successful delivery of GDV over the next three years Performance Period • 3 years from 1 July 2021 to 30 June 2024 Performance Hurdles • 70% of Performance Rights will vest based on the achievement of the key milestones for GDV during the performance period, including the securing of entitlements and capital plans and the commencement of construction for each project • 30% of Performance Rights will vest based on customer satisfaction feedback from the client and internal stakeholders at key touchpoints in the project life cycle, so that GDV milestones are not only delivered within the required timeframes but also to an exceptional standard Termination of Employment • In the event of resignation or termination for cause, unvested rights are forfeited • In all other circumstances, the portion of the award that reflects milestones that are already tested and achieved during the performance period will remain on foot. The untested portion is forfeited (except in the case of redundancy, whereby the untested portion will be continue to be tested against plan milestones and vest if applicable following the end of the performance period) 35.j. Amounts Recognised in the Financial Statements LTI and LTA awards are valued using Monte-Carlo simulation methodology where the security price can be projected based on the assumptions underlying the Black-Scholes formula. Retention awards are valued by discounting the security price by the expected dividends assumed to be paid from the valuation date until the vesting date (if applicable). The model inputs include the Lendlease Group security price, a risk free interest rate, expected volatility and dividend yield. During the financial year ended 30 June 2022, a $51 million expense was recognised in the Income Statement in relation to equity settled security based payment awards (June 2021: $55 million).