Our Strategic Remuneration Policy is designed to ensure Synlait meets the strategic policy objective of attracting, rewarding, and retaining staff with the requisite skills and capabilities to ensure successful business outcomes.
Director remuneration is paid by way of Director fees. Employee fixed remuneration comprises a base salary, employer KiwiSaver contributions (for participating employees), and medical insurance.
Synlait does not offer a regular bonus or any other short-term incentive programme. It operates a Long-Term Incentive Scheme (LTI Scheme) which a small group of selected senior employees are invited to join each year. Any benefits from the LTI Scheme are based on company performance rather than individual performance and paid in addition to the market salary and other benefits agreed with the participating employees.
The LTI scheme provides for the issue of shares in Synlait to participants, if specified goals are met. The LTI scheme is an annual scheme with performance share rights (PSRs) granted to Board-approved participants in July in each year the LTI Scheme operates. PSRs are non-transferable and have no voting or other share rights and are otherwise subject to the rules of the LTI Scheme and individual award agreements.
Each PSR will be converted into one ordinary share in Synlait after the Board determines that specified performance hurdles have been met during the assessment period of three financial years following the date of the grant. This is provided that the employee remained employed by Synlait at the end of the assessment period. No cash consideration is payable by the employee on the grant of PSRs, or on the issue of fully paid ordinary shares following vesting of PSRs.
There are two performance hurdles required to be met, relating to total shareholder return (TSR) and earnings per share (EPS). Vesting of half of the total award is dependent on the TSR target being met, and the remaining half, the EPS target being met. The degree of vesting in each case is determined by a progressive vesting scale. If our TSR is greater than or equal to the 75th percentile of a peer group over the assessment period, a minimum of 50% of the PSRs will vest. The peer group comprises the S&P/NZX 50 index companies on the first day of the assessment period. If our EPS over the assessment period equals the Board approved EPS target plus 10%, then a minimum of 50% of the PSR will vest. For either performance hurdle to be met, our TSR must be positive over the assessment period.
Vesting of annual awards is monitored to ensure that the value vested in any one year does not exceed 5% of market capitalisation, as required by NZX Listing Rules.