Lendlease Annual Report 2022

Governance 85 Alignment Between Remuneration Outcomes and Securityholder Experience STA outcomes and securityholder experience In the August 2021 Strategy Briefing 1 , the Global CEO set out the five year roadmap for delivering sustainable performance. The focus of FY22 was to reset the platform for delivery and growth. This involved deploying a more focused business model, optimising the Group operating structure and businesses, recalibrating the cost base, implementing the outcomes of the Development portfolio review and accelerating the conversion of the pipeline, and growing the Investments platform. A change was made to the approach to the structuring of Development joint ventures in order to improve the alignment of profit recognition with realised cash and the risk/reward profile. A consequence of this was to defer recognition of Development profits to later years, with a reduced OPAT expected in FY22, building back to our Portfolio Management Framework targets by FY24. The FY22 Operating Plan, which forms the basis for the FY22 STA scorecard KPIs, was aligned to the strategy reset. Key outcomes delivered in FY22 against the strategic roadmap are: • Successful consolidation of the Australian businesses into an integrated unit • Annualised cost savings in excess of the $160m target • Record Development Work in Progress in the second half providing strong momentum as we enter FY23, on the pathway to delivering annual production in excess of $8bn by FY24 • Growth in the Investment platform ahead of plan • Construction margin was at the bottom end of the target range. In applying the discretion embedded in the Executive Reward Strategy, the Board had regard to these and other factors when assessing the appropriate balance between pay for performance in the form of STA and securityholder outcomes for FY22. More detail is given in the assessment of performance against the Global CEO STA scorecard set out on page 90. 1 Refer to the ASX Announcement "Lendlease Strategy briefing" released on 30 August 2021. FY18 FY19 FY20 FY21 FY22 Statutory Profit after Tax (PAT) Attributable to Securityholders ($m) 792.8 467 (310) 222 (99) Core Operating Profit After Tax (PAT) Attributable to Securityholders ($m) 708.1 632 206 377 276 Total Dividends / Distributions ($m) 399.6 237 191 186 110 Statutory Earnings per Stapled Security (EPS) (cents) excluding treasury securities 137 80 (51.8) 32.5 (14.4) Core Operating Earnings per Stapled Security (EPS) (cents) 121.4 111.5 34.2 54.8 40.1 Annual Total Securityholder Return (%) 24 (33) (2) (6) (19) Statutory Return on Equity (ROE) (%) 1 12.7 7.4 (4.7) 3.2 (1.4) Core Operating Return on Equity (ROE) (%) 2 11.3 10.1 3.1 5.4 4.0 Closing Security Price as at 30 June ($) 3 19.74 13.00 12.37 11.50 9.11 CEO STA outcome (% maximum opportunity) 67% 0% 23% 30% 4 48% Executive STA outcomes (% maximum opportunity) 43% - 93% 17% - 33% 17% - 27% 17% - 40% 55% - 61% 1. Statutory ROE is calculated as the annual Statutory Profit after Tax attributable to securityholders divided by the arithmetic average of beginning half year and year end securityholders' equity. 2. Core Operating ROE is calculated as annual Core Operating Profit after Tax attributable to securityholders divided by the arithmetic average of beginning half year and year end securityholders' equity. Core Operating ROE replaces Statutory ROE as an LTA hurdle from FY21 onwards as it better reflects the impact management have in creating value for securityholders. 3. FY18 reflects 29 June 2018 closing security price and FY19 reflects 28 June 2019 closing security price. 4. Reflects STA outcome for the Global CEO for the period 1 June 2021 to 30 June 2021. The STA outcome for the Former Group CEO was 0% for the period from 1 July 2020 to 31 May 2021.