Lendlease Annual Report 2024

76 Lendlease Annual Report 2024 Long Term Award (LTA) This section presents the key features of the 2024 LTA (granted in September 2023). LTA Design How the LTA Works Eligibility • Group CEO and Executives. Quantum • The maximum face value of the 2024 LTA award granted in September 2023 is as follows: – Group CEO: 178% of Fixed Remuneration – Executives (excluding Group CRO): 180% of Fixed Remuneration – Group CRO: 144% of Fixed Remuneration. Delivery • Rights to acquire securities, subject to specific performance conditions and continued tenure. • The number of performance rights is adjusted up or down at vesting based on performance over the assessment period. • The award may be settled in cash or other means at the Board’s discretion. Determining the Number of Performance Rights • Face value - VWAP of stapled securities traded on the ASX over the 20 trading days prior to the release of the full year results preceding the grant date. Performance Period • Three years. Deferral • Released in four equal tranches at the end of Y3, Y4, Y5 and Y6. • The timeframe reflects a balance between reward that motivates Executives while reflecting the ‘long tail’ of profitability and risk associated with ‘today’s decisions’. Performance Hurdles • The Board believes that these measures provide a suitable link to long term securityholder value creation. • While the Board appreciates that there are, at times, differing views held by stakeholders, we believe that these measures provide the appropriate balance between market and non-market measures. Market Measure Non Market Measures Relative Total Securityholder (RTSR) – 1/3 Average Operating Return on Equity (ROE) – 1/3 CAGR % in IM ROIC– 1/3 Rationale • TSR incentivises Executives to deliver returns that outperform what a securityholder could achieve in the market and promotes management to maintain a strong focus on securityholder outcomes. • Operating ROE reflects the capital intensive nature of Lendlease’s activities and is an important long term measure of how well the management team generates acceptable earnings from capital invested and rewards decisions in respect of developing, managing, acquiring and disposing of assets. • CAGR % in IM ROIC reflects the Investment segment's capital intensive nature and assesses the ability to generate acceptable earnings, which further aligns with the securityholder experience and a greater mix of stable recurring earnings. Definition • TSR is measured by the growth in security price and any dividends/ distributions paid during the performance period. • Operating ROE is calculated as the Group’s Operating Profit After Tax divided by the arithmetic average of beginning, half and year end securityholders’ equity. • Performance is based on the average Operating ROE results over the three year performance period. • CAGR % in IM ROIC is calculated based on the average Investments (IM) ROIC results over the performance period. Target Setting • TSR is measured against companies that comprise the Standard & Poor’s (S&P)/ Australian Securities Exchange (ASX) 100 index. • Operating ROE target is reviewed annually and is set within the published range of the Group’s Portfolio Management Framework which was between 8% and 10% in FY24 1 . • Operating ROE target aims to drive outperformance without incentivising excessive risk taking. • The Board believes that the vesting range provides a realistic goal at the lower end (in the context of risk free rates of return, cost of capital and market consensus) and a stretch at the upper end. • The Board is conscious of the impact that debt can have on the Operating ROE result and has governance protocols in place to monitor this. • IM ROIC hurdles are reviewed annually and were set with reference to the Group’s Portfolio Management Framework (PMF) in FY24.