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DIRECTORS’ REPORT

In accordance with best practice corporate governance, service agreement, Mr Penn agrees that all intellectual
the structure of non-executive Director and executive property rights created, developed or acquired by him in
remuneration is separate and distinct. the course of his employment, belong to the Company.
The Company or the executive may terminate the service
Non-Executive Director remuneration agreement by giving the other party three months notice.
The Company seeks to set aggregate remuneration at
The Company may terminate the agreement at any time
a level which provides the Company with the ability to
with immediate effect in the event of non-performance
attract, retain and motivate directors of the highest quality,
of duties or in the event of dishonesty, a willful breach,
whilst incurring a cost which is acceptable to shareholders.
non-observance or neglect in the discharge of duties.
The Constitution of the Company and the ASX Listing The agreement provides that for a period of twenty four
Rules specify that non-executive directors are entitled to months after termination of his employment contract (less
receive remuneration for their services as determined by any served notice period) Mr Penn will not compete with
the Company in a General Meeting. The Company has Pro-Pac in Australia.
resolved that the maximum aggregate amount of directors’
fees (which does not include remuneration of executive Senior Management
directors and other non-director services provided by Employment agreements entered into with senior
directors) is $200,000 per annum. Non-executive directors management contain the following key terms:
are entitled to be reimbursed for their reasonable expenses
incurred in connection with the affairs of the Company. A Event Company Policy
director may also be remunerated as determined by the
directors if that director performs additional or special Resignation/notice period 3 months or less
duties for the Company.
Serious misconduct Company may terminate
The remuneration of the Company’s Non-Executive at any time
Directors for the period ending 30 June 2014 is detailed in
Payouts upon resignation or
Table 1 of this Remuneration Report.
termination, outside industrial
Executive Director and Senior Management regulations (ie ‘golden handshakes’) None
remuneration
The Group aims to develop remuneration packages
Executive Long Term Incentive Plan (ESPP)
properly reflecting each person’s duties and responsibilities The Company has established an ESPP to encourage
and the remuneration is competitive in attracting, retaining employees to share in the ownership of the Company and
and motivating people of the highest quality. promote the long-term success of the Company as a goal
shared by the employees. The ESPP has been approved
The Remuneration Committee is responsible for reviewing by members of the Company for the purposes of sections
and providing recommendations to the Board with respect 260C(4)(a), 259B(2)(a), 257B(1) and paragraph (b) of the
to the remuneration packages of senior management and definition of employee share scheme buy-back in section
executive directors. 9 of the Corporations Act. There are currently 2,680,000
The Remuneration Committee is also responsible for shares issued to employees under the Plan.
providing advice to the Board with respect to non- The following are the key terms and conditions of the ESPP:
executive directors’ remuneration.
• No shares under the ESPP will be allotted unless the
The Board is responsible for determining remuneration requirements of the Corporations Act 2001 and the ASX
packages applicable to the Board members and the Chief Listing Rules have been complied with.
Executive Officer. The Chief Executive Officer determines
the remuneration packages for the senior executives of the • Performance hurdles apply to the ESPP. The key
Company in accordance with compensation guidelines set performance hurdle is that the total shareholder return
by the Board. to shareholders of the Company must exceed the rate
of growth over the same period for the S&P/ASX Small
The remuneration of the Chief Executive Officer and senior Ordinaries Accumulation Index (or any equivalent or
management for the year ending 30 June 2014 is set out in replacement of that index).
Table 1 of this report.
• Shares are allocated to employees at either the value
Employment contracts of shares as detailed in the latest disclosure document
issued by the Company or the 5-day weighted average
Chief Executive Officer price immediately prior to the offer being made to the
The Company has entered into an executive service employee.
agreement with Mr Brandon Penn in relation to his role • The Company may provide loans to participants to
as Chief Executive Officer of the Group. In his executive acquire shares under the ESPP. As security for the loans,

6 Pro-Pac Packaging Limited + Controlled Entities