REMUNERATION REPORT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 INTRODUCTION The Directors are pleased to present the Group’s Remuneration Report describing the remuneration practices for the Group’s Non-Executive Directors and Group Executive Team (Executives), including key management personnel (KMP). The information provided in this Remuneration Report has been prepared in accordance with the requirements of the Corporations Act 2001 (Cth) (the Corporations Act) and has been audited as required by section 308(3C) of the Corporations Act. Sections 1-5 set out the remuneration arrangements that apply to all Executives. Section 6 sets out the remuneration disclosures required in respect of KMP Executives. Sections 7-8 set out the remuneration disclosures required in respect of Non-Executive Directors. 1.  REMUNERATION SNAPSHOT Executives of the Group receive Total Reward Remuneration (TRR) that comprises fixed and variable (at risk) annual pay. The three components of the remuneration framework are outlined as follows: Total Fixed Remuneration (TFR) Short Term Incentive (STI) Long Term Incentive (LTI) •• TFR is set by reference to benchmark market information for comparable roles and individual performance •• 15-50% of TRR •• 15-30% of TRR •• 50% of target STI is based on non‑financial PIs and 50% of target STI is based on financial KPIs •• Grant of performance rights or share options under the Long Term Incentive Plan •• Includes cash, non-financial benefits, and superannuation •• Paid in cash •• EBTDA gateway •• Designed to link long-term Executive reward with value creation •• Three-year performance period •• Performance hurdles linked to EBTDA and EPS 2.  ROLE OF THE REMUNERATION AND NOMINATION COMMITTEE The Remuneration and Nomination Committee (‘Remuneration Committee’) is responsible for reviewing and making recommendations to the Board on the remuneration arrangements for the CEO and Executives. The Charter of the Remuneration and Nomination Committee is available on the Group’s website at www.ofx.com. To assist in performing its duties and making recommendations to the Board, the Remuneration Committee seeks independent advice from external consultants on various remuneration-related matters. The Remuneration Committee follows protocols around the engagement and use of external remuneration consultants to ensure compliance with the relevant Executive remuneration legislation. During the year, the Company engaged 3 Degrees Consulting to provide remuneration recommendations as defined under the Corporations Act 2001 in relation to the CEO and Executive remuneration structure to be implemented in FY17, including STI and LTI design features and incentive opportunities, as well as the retention arrangements put in place upon the unsolicited, non-binding indicative proposal from Western Union. 3 Degrees Consulting was paid $96,800 for these services. The Board is satisfied that this advice received from 3 Degrees Consulting was made free from undue influence from the KMP to whom the recommendations relate as 3 Degrees Consulting was engaged by and reported directly to, the Chair of the Remuneration Committee. In this regard, in addition to adhering to Board approved protocols, 3 Degrees Consulting provided a formal declaration to the Chair of the Remuneration Committee. The recommendations were made free from undue influence from Executives to whom the advice was related. In addition to providing remuneration recommendations, 3 Degrees Consulting provided market practice data and advice on other aspects of the Company’s remuneration framework throughout the year including governance, legal and stakeholder communications. Together, for these additional remuneration related services, 3 Degrees Consulting was paid $62,950. 32 OZFOREX GROUP 3.  EXECUTIVE REMUNERATION PRINCIPLES AND STRUCTURE PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION The objective of the Executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns Executive reward with achievement of strategic objectives and the creation of value for shareholders and conforms to market practice for delivery of reward. The Board, in consultation with external remuneration consultants, ensures that Executive reward satisfies the following key criteria for good reward governance practices: •• Competitiveness and reasonableness; •• Incorporates shareholders’ feedback; •• Performance linkage/alignment of Executive compensation; •• Transparency. Other criteria which are considered in the Company’s remuneration principles are: •• Alignment to shareholders’ interests: •• has economic profit as a core component of plan design; •• focuses on sustained growth in shareholder wealth, growth in share price and delivering constant return on assets as well as focusing the Executive on key non-financial drivers of value; •• attracts and retains high quality Executives. •• Alignment to participant interests: •• rewards capability and experience; •• reflects competitive reward for contribution to growth in shareholder wealth; •• provides a clear structure for earning rewards; •• provides recognition for contribution to operational performance. OVERVIEW OF EXECUTIVE REMUNERATION COMPONENTS The Total Reward Remuneration (TRR) framework provides a blend of fixed short-term and long-term incentives and has three components: •• Fixed – TFR; •• At Risk – STI; •• At Risk – LTI. The relative proportion of ‘fixed’ and ‘target at risk’ components of Executive remuneration varies by Executive. Executives with a closer link to the growth drivers of the business have a higher proportion of ‘at risk’, whilst Executives more aligned to risk and compliance functions have a lower ‘at risk’ component. The table below outlines the percentage allocations for the CEO and the Executives. Participation in special retention plans is not taken into account in determining the Executives’ percentage allocations. Total Reward Remuneration Fixed TFR CEO 1 CEO2 Executives At Risk Target STI Target LTI 40% 30% 30% 33% 50% 17% 50%-70% 15%-30% 15%-20% 1. Mr Helm ceased to be CEO on 1 June but remained an employee until 6 August 2015 2. Mr Kimber was appointed CEO on 1 June 2015 Remuneration is reviewed annually to ensure it remains competitive within the market. Remuneration increases are subject to merit and are in respect of Executives, subject to the approval of the Remuneration Committee. The Remuneration Committee has the discretion to change performance-based elements of remuneration, including short-term and long-term incentives, at any time, where it considers it appropriate. ANNUAL REPORT 2016 33 REMUNERATION REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 3.  EXECUTIVE REMUNERATION PRINCIPLES AND STRUCTURE CONTINUED OVERVIEW OF EXECUTIVE REMUNERATION COMPONENTS CONTINUED Total Fixed Remuneration (TFR) TFR may be delivered as a combination of cash and prescribed non-financial benefits at the Executives’ discretion. Executives are offered a competitive base pay that comprises the fixed cash component of pay and rewards inclusive of superannuation. External remuneration consultants from time to time provide analysis and advice to ensure TFR is set to reflect the market for a comparable role. (i) Benefits Executives may structure their remuneration to include non-cash benefits. (ii) Superannuation Retirement benefits are provided via defined contributions to approved superannuation funds. Short Term Incentive (STI) The key details of the STI Plan for the FY16 financial year are as outlined below: STI component Details Eligibility All Executives participated in the STI Plan during the year. Opportunity The size of the STI opportunity available to each Executive is based on their accountabilities and impact of their role on the Company. This is typically in the range of 15-50% of TRR. Executives who commence or leave during the financial year are generally paid a pro-rata share of their STI entitlements. KPIs The STI is subject to the achievement of annual KPIs. See (i) below for further detail. Payment Payments of the STI are made after the financial results are released in May. Delivery Cash. (i)  Key performance indicators The Remuneration Committee will annually approve the KPIs to link the STI Plan and the level of payout if the KPI targets are met. This includes setting any maximum payout under the STI Plan, and minimum levels of performance. The Remuneration Committee is responsible, after the preparation of the financial statements each year (in respect of financial measures) and after a review of performance against non-financial measures by the CEO (and in the case of the CEO, by the Board following recommendation by the Committee), for recommending to the Board the final STI payout for the previous financial year. The Board retains the discretion to vary the final STI payout if performance is considered to be deserving of either a greater or lesser amount. The KPI’s linked to the STI Plan comprise two equal tranches (50% each) and within each tranche are a series of objectives. To be eligible for access to STI, a minimum EBTDA performance must be achieved of at least 90% of target EBTDA. Target EBTDA is approved by the Board at the commencement of the performance period. Tranche A are non-financial performance indicators for the particular Executive and Tranche B are financial performance indicators. (ii)  Tranche A (50%) The non-financial performance indicators are designed to drive leadership performance and behaviours consistent with the role and expectations for that individual Executive. These include objectives around leadership and culture, risk and compliance and project management. A maximum of 50% of the total target STI is available in Tranche A. If an Executive does not meet a minimum performance threshold in Tranche A, they are not eligible to participate in Tranche B. 34 OZFOREX GROUP (iii)   Tranche B (50%) The financial performance indicators are an appropriate way to align the delivery of the Group’s objective of delivering growth to the shareholders and ultimately improving shareholder returns. In the event of outperformance against the target financial performance indicators, there is a potential additional 20% outperformance bonus available on the Total STI (Tranche A and Tranche B). If financial performance is more than 25% negative to target then no STI will be payable irrespective of whether the minimum performance threshold in Tranche A was met for a particular Executive. The financial performance indicators for 2016 were: •• Net operating income; •• EBTDA (earnings before tax, depreciation and amortisation); •• New dealing clients; and •• Net active clients. (iv)   2016 STI outcome For the 2016 financial year, the minimum gateway performance of 90% of the EBTDA target set at the start of the financial year was not met. Therefore, as explained under (i) above, irrespective of performance under Tranche A or Tranche B, no STI was payable for the year. The amount of target STI forfeited by KMPs is set out below. Target STI payment % of Target STI payable % of Target STI forfeited R Kimber1 624,525 0% 100% M Ledsham 116,667 0% 100% 71,673 0% 100% KMP M Loyez A Smith 2 53,537 100% 0% 100% 4,732 C Pendleton-Browne4 0% 56,464 3 0% 100% Former KMP 5 L Cox6 19,506 0% 100% 106,084 0% 100% 124,648 0% 100% 52,700 0% 100% 35,133 0% 100% 15,726 0% 100% J Davidson 7 S Griffin8 N Helm9 D Higgins 10 J Parker 6 J Rohloff6 1. R Kimber commenced employment with the Group 1 June 2015. 2. M Loyez commenced employment with the Group 3 August 2015. 3. A Smith commenced employment with the Group 6 October 2015. 4. C Pendleton-Browne commenced employment with the Group 16 November 2015. 5. The amount shown as the target STI payment is the target payment for the period that employee was a KMP, not the full year payment. 6. L Cox, J Parker and J Rohloff ceased being a KMP on 31 May 2015, but remain Executives. L Cox is a part-time employee. 7. J Davidson ceased to be an employee on 4 September 2015. 8. S Griffin resigned as a KMP and employee on 18 September 2015. 9. N Helm ceased to be an employee on 6 August 2015. 10. D Higgins resigned as KMP on 30 September 2015, and ceased to be an employee on 31 March 2016. ANNUAL REPORT 2016 35 REMUNERATION REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 3.  EXECUTIVE REMUNERATION PRINCIPLES AND STRUCTURE CONTINUED OVERVIEW OF EXECUTIVE REMUNERATION COMPONENTS CONTINUED Long Term Incentive (LTI) Long-term incentives are provided to Executives pursuant the OzForex Group Long Term Incentive Plan (‘the LTI Plan’). The key details of the plan are as outlined below: LTI components Details Objective The LTI Plan is designed to link long-term Executive reward with the ongoing creation of shareholder value, with the allocation of equity awards which are subject to satisfaction of performance hurdles. Under the LTI Plan, either performance rights or options can be issued. Eligibility All Executives participated in the LTI Plan in the 2016 financial year if they were an employee at the start of the year. In certain circumstances, one-off allocations of performance rights have been made as part of the initial employment arrangements of a particular Executive. Instrument Performance rights enable the Executive KMP to acquire an ordinary share in the Company in the future subject to time-based and performance-based vesting conditions being achieved. They are granted for nil cash consideration and have a nil exercise price. They carry no right to vote or receive a dividend. Award value An Executive KMP LTI award is typically in the range of 15-30% of their TRR. Allocation methodology The number of performance rights issued to each Executive KMP is calculated by dividing their LTI target value by the value per right, being the volume weighted share price in the five days prior to issuance adjusted for the probability of achieving performance levels, and the present value of expected dividends that will not be received by employees during the vesting period. Allocation timing Generally, performance rights will be issued annually in June. An additional issuance of performance rights outside of the annual issuance may occur as a retention mechanism at different times. Performance period Three years. Vesting conditions Performance rights are subject to a performance hurdle and ongoing employment. The performance hurdle to apply to each issuance of performance rights will be determined by the Board at the time of issue. Forfeiture conditions Performance rights will automatically be converted to one ordinary share upon the vesting date provided the Executive complies with the rules of the LTI Plan. Performance rights that are not converted will be forfeited where: •• The expiry date applicable to the performance right is reached; and •• If, upon the employee ceasing to be employed or their employment is terminated, the Board notifies the employee of the forfeiture; or •• Performance conditions are not met. Any performance rights which do not vest following testing of the performance hurdles at the end of the performance period will be automatically forfeited. Shareholder approval Any performance rights to be issued to the CEO are subject to shareholder approval. Changes in share capital If there are any changes in the share capital of the Company (such as a rights issue, subdivision, consolidation or reduction in capital) then the Directors may make adjustments as they consider appropriate subject to the ASX Listing Rules. Implications of the CEO stepping down during 2016 On 6 February 2015, the Company announced that Neil Helm CEO would be stepping down over the forthcoming months. As a result the Board resolved as follows with regard to the performance rights on issue to him at that time: •• That the 46,454 performance rights issued in February 2014 will be forfeited, being a pro-rata amount of the original 176,250 performance rights issued at that time, known as the IPO Performance Rights. The balance of 129,796 performance rights will remain on foot subject to the terms and conditions set out under ‘IPO performance rights issuance’ (Section 4) below. The Board has determined that 31.2% of these will vest on 7 June 2016. •• That 474,653 performance rights would be forfeited (being 304,653 of the 330,000 performance rights issued in December 2014 and the further 170,000 performance rights for which shareholder approval was intended to be sought in 2015). This leaves 25,347 performance rights which will remain on foot and subject to the terms and conditions that were approved by shareholders at the 2014 AGM. These performance rights are eligible to vest on 7 June 2017, subject to satisfying the performance conditions set out in the 2014 Notice of Meeting. The 25,347 performance rights represent the pro-rata portion of the standard annual allocation of performance rights that were issued and does not include any portion of the special issuance of performance rights that were approved at the 2014 AGM. 36 OZFOREX GROUP In both cases, the pro-rata calculation has been determined by reference to the end of Mr Helm’s six month notice period following the date of his resignation, being 6 August 2015. Performance rights and options issued during 2016 At the 2015 Annual General Meeting approval was sought to grant the CEO, Mr Kimber, an initial issuance of performance rights and options under the LTI Plan. There was a standard annual issuance of performance rights to Executives in June 2015 (FY15 performance rights). The performance conditions that apply to FY15 performance rights, including to Mr Kimber are as follows: Vesting schedule (EBTDA CAGR) Performance Measurement Period (PMP) Vesting Gateway (EPS CAGR) 1 April 2015 – 31 Mar 2018 (36 months) ≥17% 100% vesting Pro-rata vesting: 25% - 100% 0% vesting % of allocation eligible to vest (vesting date) ≥22% 17%-22% <17% 100% (7 June 2018) The options issued to Mr Kimber will vest 50% on 30 June 2018 and 50% on 30 June 2019 subject to ongoing employment conditions as shown on page 44. Two new Executives, Mr Smith and Mr Pendleton‑Browne, were granted a one-off initial issuance of performance rights at the commencement of their employment to replace forfeited incentives from their previous employment. No performance hurdles apply to the issuances to Mr Smith and Mr Pendleton-Browne, except tenure. Further information on the number of performance rights and options held by KMPs can be found in Section 6 of this Remuneration Report. Additional retention arrangements implemented during 2016 In light of the unsolicited, non-binding indicative proposal from Western Union (Indicative Proposal) as announced on 19 November 2015, the Board considered the need to put retention arrangements in place for new Executives who commenced in the six months prior to that Proposal. Since the commencement of Richard Kimber as CEO of OzForex on 1 June 2015, the Company has recruited five new Executives being the Chief Operating Officer, Chief Technology Officer, Head of People and Culture, Chief Marketing Officer and Acting Head of North America. A total retention pool of $2.66 million was allocated to the six Executives who commenced in their roles during the six months prior to the receipt of the Indicative Proposal. This included $1.25 million allocated to CEO, Richard Kimber. The Board believed that these arrangements were fair and reasonable in the circumstances because the new Executives had little or no unvested equity allocated to them under the Company’s LTI Plan and as such presented a retention risk if provided with more certain offers of employment. It was in shareholders’ best interests that the services of Mr Kimber and newer Executives were retained to lead the Company during the period of uncertainty and beyond. The retention arrangement remains on foot until 31 December 2016, such that if a change of control event occurs before then, the retention pool will vest in favour of eligible Executives as to 50% upon a change of control, and 50% six months from financial close of any transaction to ensure continuity and retention post the transaction period. The retention pool will be progressively reduced/replaced by any LTI granted (which for the next LTI grant to the CEO will be subject to shareholder approval at the next AGM) before any change of control transaction completes (or if no change of control transaction eventuates) with normal performance conditions attached to ensure Executives do not receive any windfall gain from the arrangements if there is no change of control. Longer serving Executives who have multiple grants under the existing LTI Plan still on foot will not be entitled to participate in the retention pool. The Board has indicated, however, that it intends to exercise discretion such that all unvested incentives will vest in full, subject to satisfactory individual performance, should a change of control transaction occur. In the event there has been no change of control by 31 December 2016, the balance of the retention pool that has not been granted in LTI will lapse. As per AASB 137 Provisions, Contingent Liabilities and Contingent Assets, there is no requirement to recognise a provision and therefore expense for this arrangement until the likelihood of the arrangement crystallising, on a change of control event, becomes probable. A change of control event has currently been assessed as remote and so there is no requirement to provide for this expense. ANNUAL REPORT 2016 37 REMUNERATION REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 4.  LEGACY (IPO RELATED) REMUNERATION PRACTICES IPO PERFORMANCE RIGHTS ISSUANCE As foreshadowed in the prospectus prior to the IPO (sections 6.3.1 – 6.3.3 of the Prospectus), all Executives who were employed by the Company at the listing date (and others who were members of the Leadership Team at the time of the IPO) were issued performance rights on the listing date, which subject to satisfaction of relevant performance conditions will vest on 7 June 2016 (reflecting a 32-month vesting period to align the vesting date with annual issuances of performance rights). A key performance condition for full vesting of the performance rights will be that the Group meets or exceeds earnings growth targets for the performance period and the employment of the relevant Executive at the vesting date. The performance conditions will be measured for the period 1 October 2013 to 31 March 2016 (Performance Period), or 30 months. The Board has determined that the vesting of some or all of the performance rights would be determined on the basis outlined below: EBTDA over a 30-month Performance Period to 31 March 2016 Performance level At or above Target Greater than or equal to 18% CAGR Between Threshold and Target Between 13% and 18% CAGR Below Threshold Vesting level 100% Below 13% Pro-rata from 25% to 100% 0% The Board considered EBTDA to be an appropriate hurdle as one that best aligned the interest of shareholders with those of the Executives. 176,250 performance rights were issued to the previous CEO, Neil Helm, and 360,325 (KMPs 253,000) performance rights were issued to Executives and several other select employees on 26 February 2014. These performance rights were valued using a trinomial model and discounted for the probability of achieving performance levels and the present value of dividends that will not be received by employees during the vesting period. They were issued at a nil exercise price with a 32-month vesting period. The vesting date is 7 June 2016. The Board has determined that EBTDA over the 30-month performance period from 1 October 2013 to 31 March 2016 was 13.41% and therefore 31.2% of the performance rights will vest on 7 June 2016. See Section 6 for further detail. The details of these performance rights were also outlined in the prospectus. 5.  GROUP PERFORMANCE As the Company only listed on 11 October 2013, it is not possible to present five years of financial company performance data. The Group’s 2014‑2016 annual financial performance measures are listed below. The financial measures for the Group for the period 1 April 2013 to 11 October 2013 are based on the results of OzForex Limited (formerly OzForex Pty Limited), as the Group’s financial results have been prepared as a continuation of the OzForex Limited consolidated group. Performance metrics 2016 Underlying EBTDA $90.1m $72.6m $34.5m $22.4m $36.1m Underlying basic earnings per share 3 4 Closing share price $29.4m 142,500 120,500 9.09cps Basic earnings per share2 $34.5m 150,900 Active clients Dividend per share 2014 $33.1m EBTDA 2015 $103.9m Net operating income 1 10.11cps 6.84cps 9.95cps 10.11cps 8.92cps $0.07184cps $0.05875 N/A 2.02 2.41 3.30 (1.30 above ‘retail’ price) 1. Net operating income, a non-IFRS measure, is the combination of ‘Interest income’ and ‘Net fee and commission income’. 2. For the calculation of EPS refer to Note 29 of the financial statements. 3. Underlying basic earnings per share is the basic earnings per share calculation utilising the Underlying NPAT of the Group. 4. This represents dividends distributed in the period. 38 OZFOREX GROUP 6.  KEY MANAGEMENT PERSONNEL (KMP) On appointment as CEO, Richard Kimber made an assessment of the KMP and resolved to reduce the number of Executives involved in planning, directing and controlling the Group’s activities. This was formalised by the introduction of the Strategy Execution Committee which is representative of the KMPs. The following Executives and Non-Executive Directors of the Group were classified as KMP during the 2016 financial year and unless otherwise indicated were classified as KMP for the entire year. Executives Title Term as KMP in 2016 Richard Kimber Managing Director and Chief Executive Officer (CEO) From 1 June 2015 Adam Smith Chief Operating Officer (COO) From 6 October 2015 Craige Pendleton-Browne Chief Technology Officer (CTO) From 16 November 2015 Maria Loyez Chief Marketing Officer (CMO) From 3 August 2015 Mark Ledsham Chief Financial Officer (CFO) Full year David Higgins Chief Technology Officer (CTO) Resigned 30 September 2015 Jacqueie Davidson Head of Human Resources Resigned 4 September 2015 Jason Rohloff Chief Risk Officer Until 31 May 2015 Jeff Parker Chief Enterprise Officer Until 31 May 2015 Linda Cox Company Secretary and Head of Investor Relations Until 31 May 2015 Neil Helm Managing Director and Chief Executive Officer Resigned 6 August 2015 Simon Griffin Chief Commercial Officer (CCO) Resigned 18 September 2015 Non-Executive Directors Peter Warne Chairman Full year Melinda Conrad Non-Executive Director Full year Grant Murdoch Non-Executive Director Full year Douglas Snedden Non-Executive Director Full year CONTRACTUAL ARRANGEMENTS Richard Kimber – Managing Director and CEO Mr Kimber was appointed Managing Director and CEO effective 1 June 2015. For the 2016 financial year, Mr Kimber’s remuneration arrangements comprised a combination of TFR, STI and LTI with greater weighting to STI as shown on page 33. Mr Kimber’s TFR is $500,000 and he was also eligible for STI at a target amount of $750,000. Initial equity awards of performance rights to the value of $250,000 and 400,000 options were approved at the Annual General Meeting on 4 August 2015. The performance hurdles applying to this issuance are set out on page 37. As explained on page 35, no STI was payable for the 2016 financial year as the minimum gateway performance was not met. The terms of his appointment and termination arrangements are set out below. Contract components Details Duration Ongoing contracts Termination by Executive Six months’ notice Termination by the Company Six months’ notice Post-employment restraints Six month post-employment restraints. Treatment of STI and LTI Upon termination, if the CEO is considered a good leaver (such as cessation due to redundancy), the CEO will be entitled to a pro-rata STI award. Board discretion applies to the treatment of any unvested LTI. ANNUAL REPORT 2016 39 REMUNERATION REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 6.  KEY MANAGEMENT PERSONNEL (KMP) CONTINUED CONTRACTUAL ARRANGEMENTS CONTINUED KMP Executive (excluding Managing Director and CEO) employment contracts and notice periods Contract components Details Duration All KMP Executive have ongoing contracts Termination by Executive Six months’ notice for all KMP Executive Termination by the Company Six months’ notice for all KMP Executive Post-employment restraints M Loyez, C Pendleton-Browne, A Smith have six-month post-employment restraints. No other KMP Executive have post-employment restraints. Treatment of STI and LTI Upon termination, if the KMP Executive is considered a good leaver (such as cessation due to redundancy), the KMP Executive will be entitled to a pro-rata STI award. Board discretion applies to the treatment of any unvested LTI. EXECUTIVE REMUNERATION DISCLOSURES Postemployment Long-term benefits benefits Share-based payments1 Short-term employee benefits Year Cash salary and fees Cash bonus Nonmonetary benefits2 Other3 Superannuation Long service leave Performance rights Options Total Current KMP R Kimber4 40 OZFOREX GROUP – 18,190 – 71,170 42,587 551,076 – – – – – – – 2016 330,810 – – – 19,177 10,660 282,681 – 643,328 311,469 67,000 – – 18,531 6,079 157,368 – 560,447 2016 197,132 – – – 12,872 – – – 210,004 – – – – – – – – – 2016 152,159 – – – 9,654 – 61,170 – 222,983 – – – – – – – – – 2016 124,221 – 17,236 – 7,765 – 18,199 – 167,421 2015 C PendletonBrowne7 – – 2015 A Smith 6 – – 2015 M Loyez 5 419,129 2015 M Ledsham 2016 2015 – – – – – – – – – Postemployment Long-term benefits benefits Share-based payments1 Short-term employee benefits Year Former KMP Cash salary and fees Cash bonus Nonmonetary benefits2 Other3 Superannuation Long service leave Performance rights Options Total 8 L Cox9 2016 23,492 – – – 2,485 29 16,800 – 42,806 2015 106,471 32,895 – – 10,056 108 38,313 – 187,843 J Davidson10 2016 82,859 – – 44,257 9,414 82 (37,181) – 99,431 2015 164,996 36,163 – – 15,572 135 38,313 – 255,179 S Griffin11 2016 167,483 – – 118,564 14,350 2,982 (88,981) – 214,398 2015 326,469 107,416 – – 18,531 4,719 172,068 – 629,203 N Helm J Parker 157,348 – – – 8,927 2,887 28,663 – 197,825 452,108 329,253 – – 17,892 8,252 97,485 – 904,990 2016 147,907 – – – 9,588 2,244 (87,547) – 72,192 2015 D Higgins13 2016 2015 12 296,469 40,000 – – 18,531 5,508 129,897 – 490,405 Total KMP remuneration (Group) 54,293 – – – 3,147 82 47,221 – 104,743 296,469 98,075 – – 18,531 335 146,568 – 559,978 2016 43,134 – – – 3,147 863 36,159 – 83,303 2015 J Rohloff 9 2016 2015 9 263,469 50,000 – – 18,531 (9,272) 125,654 – 448,382 2016 1,899,967 – 17,236 162,821 118,716 19,829 8,354 42,587 2,609,510 2015 2,217,920 760,802 – – 136,175 15,864 905,666 – 4,036,427 1. The share-based payments reflect the amounts accrued during the period. No performance rights or share options vested during the year ended 31 March 2016. 2. Non-monetary benefits received by C Pendleton-Browne related to relocation costs paid by the Company as part of him becoming an employee of the Group. 3. Other payments relate to amounts paid as part of a termination including pay in lieu of notice. 4. R Kimber commenced employment with the Group 1 June 2015. 5. M Loyez commenced employment with the Group 3 August 2015. 6. A Smith commenced employment with the Group 6 October 2015. 7. C Pendleton-Browne commenced employment with the Group 16 November 2015. 8. The 2016 disclosures shown for former KMP are up until the date they ceased to be a KMP. 9. L Cox, J Parker and J Rohloff ceased being a KMP on 31 May 2015, but remain Executives. L Cox is a part-time employee. 10. J Davidson resigned as a KMP and employee on 4 September 2015. 11. S Griffin resigned as a KMP and employee on 18 September 2015. 12. N Helm resigned as a KMP and employee on 6 August 2015. 13. D Higgins resigned as KMP on 30 September 2015, and ceased to be an employee on 31 March 2016. ANNUAL REPORT 2016 41 REMUNERATION REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 6.  KEY MANAGEMENT PERSONNEL (KMP) CONTINUED FIXED AND AT-RISK REMUNERATION The percentage of remuneration received as fixed pay and at-risk pay during the year ending 31 March 2016 by the Executive KMP is outlined below: At risk – LTI Fixed remuneration Other At risk – STI Rights Options R Kimber 79.36% – – 12.91% 7.73% M Ledsham 55.96% – – 44.04% – 100.00% – – – – Name M Loyez A Smith 72.57% – – 27.43% – C Pendleton-Browne 78.83% 10.30% – 10.87% – PERFORMANCE RIGHTS Details of the performance rights provided as remuneration to each of the Executive KMP during the financial year are set out below. On vesting, each performance right is convertible into one ordinary share of the Company. No exercise price is payable and no performance rights vested during the period. Further information on the performance rights is set out in Note 23 of the Financial Statements. Issuance Grant date IPO rights 11 October 2013 Date performance Value per rights can be performance right converted into at grant date shares $ Performance achieved % vested 7 June 2016 1.83 Partly 31.2%2 Retention rights Tranche 1 20 October 2014 7 June 2017 2.21 To be determined – Tranche 2 20 October 2014 7 June 2018 2.21 To be determined – Tranche 3 20 October 2014 7 June 2019 2.21 To be determined – 26 June 2015 7 June 2018 1.84 To be determined – FY15 performance rights 1 Retention rights Executive A 16 October 2015 7 June 2017 2.51 To be determined – Retention rights Executive B1 20 November 2015 20 November 2018 2.42 To be determined – 1. The Group issued the retention rights (Executive A & Executive B) during the 2016 financial year for new Executives employed during the period in lieu of forfeited incentive amounts from previous employment. 2. See further details in Section 4 of this Remuneration Report. 42 OZFOREX GROUP The movement in the performance rights over the year is outlined below: Held at 1 April 2015 Number of performance rights granted during the year Number vested during the year Number of Value of performance rights at rights forfeited grant date during $ the year Held at 31 March 2016 Current KMP R Kimber FY15 performance rights – 135,995 – 250,231 – 135,995 Total – 135,995 – 250,231 – 135,995 M Ledsham IPO rights 55,000 – – 100,650 37,840 17,160 450,000 – – 994,500 – 450,000 – 59,838 – 110,102 – 59,838 505,000 59,838 – 1,205,252 37,840 526,998 Retention rights Executive A – 92,829 – 233,001 – 92,829 Total – 92,829 – 233,001 – 92,829 Retention rights Executive B – 82,645 – 200,001 – 82,645 Total – 82,645 – 200,001 – 82,645 Retention rights FY15 performance rights Total A Smith C Pendleton-Browne Former KMP L Cox Retention rights FY15 performance rights Total 150,000 – – 331,500 – 150,000 – 19,326 – 35,560 – 19,326 150,000 19,326 – 367,060 – 169,326 J Davidson Retention rights FY15 performance rights Total 150,000 – – 331,500 150,000 – – 22,337 – 41,100 17,345 4,992 150,000 22,337 – 372,600 167,345 4,992 52,500 – – 96,075 36,145 16,355 350,000 – – 773,500 327,792 22,208 – 57,118 – 105,097 38,079 19,039 402,500 57,118 – 974,672 402,016 57,602 57,500 – – 105,225 41,229 16,271 500,000 – – 1,105,000 475,677 24,323 – 62,558 – 115,107 46,419 16,139 557,500 62,558 – 1,325,332 563,325 56,733 D Higgins IPO rights Retention rights FY15 performance rights Total S Griffin IPO rights Retention rights FY15 performance rights Total ANNUAL REPORT 2016 43 REMUNERATION REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 6.  KEY MANAGEMENT PERSONNEL (KMP) CONTINUED PERFORMANCE RIGHTS CONTINUED N Helm IPO rights 129,796 – – 322,538 89,300 40,496 Retention rights 25,347 – – 1,105,000 – 25,347 Total 155,143 – – 1,427,538 89,300 65,843 J Rohloff IPO rights Retention rights FY15 performance rights Total 47,000 – – 86,010 32,336 14,664 350,000 – – 773,500 – 350,000 – 51,134 – 94,087 – 51,134 397,000 51,134 – 953,597 32,336 415,798 41,000 – – 75,030 28,208 12,792 450,000 – – 994,500 – 450,000 – 57,118 – 105,097 – 57,118 491,000 57,118 – 1,174,627 28,208 519,910 J Parker IPO rights Retention rights FY15 performance rights Total OPTIONS Details of the options provided as remuneration to each of the Executive KMP during the financial year are set out below. On vesting, each option is convertible into one ordinary share of the Company. The exercise price is $2.49. No options vested during the period. Further information on the options is set out in Note 23 of the Financial Report. Value of options at grant date Grant date Date options can be converted into shares Share options tranche 1 1 June 2015 30 June 2018 $0.52 Share options tranche 2 1 June 2015 30 June 2019 $0.50 Number vested during the year Value Number of options at of options grant date forfeited $ during the year Held at 31 March 2016 Issuance The movement in the share options over the year is outlined below. Number of options Held at granted during 1 April 2015 the year R Kimber Share options tranche 1 – 200,000 – 104,000 – 200,000 Share options tranche 2 – 200,000 – 100,000 – 200,000 Total – 400,000 – 204,000 – 400,000 44 OZFOREX GROUP 7.  NON-EXECUTIVE DIRECTOR DISCLOSURES FEE FRAMEWORK The Board seeks to set fees for the Non-Executive Directors that reflect the demands which are made on and the responsibilities of the Directors, and at a level which will attract and retain directors of the highest quality. The Non-Executive Director fees are based on the findings of a benchmarking exercise undertaken by KPMG prior to the listing which reviewed Board remuneration relative to peer and comparable sized companies. Going forward, Non-Executive Directors’ fees will be reviewed from time to time and they may seek the advice of external remuneration advisers for this purpose. There were no changes in fees during the year. FEE POOL The maximum total of all fees payable to all Non-Executive Directors was set at $1,000,000 per annum, prior to listing. To preserve independence, Non‑Executive Directors do not receive any equity as part of their remuneration and do not receive any performance-related compensation. Non‑Executive Directors receive superannuation contributions where required by Superannuation Guarantee legislation. Fees applicable for 2016 Role $ Chairperson fee 200,000 Base Director fee 100,000 Committee Chair fee 25,000 Committee Member fee 15,000 Statutory Non-Executive Director Fees for the year ended 31 March 2016 Details of the fees paid to the Non-Executive Directors are outlined below. Short-term employee benefits Postemployment benefits Non-Executive Directors Year Cash salary and fees Superannuation Total P Warne 2016 211,217 19,177 230,394 2015 211,314 18,686 230,000 M Conrad 2016 127,854 12,146 140,000 2015 127,927 12,073 140,000 2016 114,155 10,845 125,000 2015 114,221 10,779 125,000 2016 119,254 11,329 130,583 2015 – – – 2016 – – – 2015 115,000 – 115,000 2016 572,480 53,497 625,977 2015 568,462 41,538 610,000 G Murdoch D Snedden W Allen 1 Total Non-Executive Director remuneration (Group) 1. W Allen resigned as non-Executive Director on 31 March 2015. ANNUAL REPORT 2016 45 REMUNERATION REPORT CONTINUED FOR THE FINANCIAL YEAR ENDED 31 MARCH 2016 8.  NON-EXECUTIVE DIRECTOR SHAREHOLDINGS Details of the Non-Executive Director and their affiliates’ shareholdings in OzForex Group Limited are set out below. Non-Executive Director Year Shares held at the beginning of the year P Warne 2016 150,000 2015 125,000 25,000 150,000 M Conrad 2016 50,000 50,000 100,000 2015 50,000 – 50,000 2016 95,000 50,000 145,000 2015 50,000 45,000 95,000 2016 – 39,000 39,000 2015 – – – G Murdoch D Snedden Movements Shares held at the end of the year 100,000 250,000 9.  SECURITIES TRADING POLICY All Directors and employees are required to comply with the Group’s Securities Trading Policy in undertaking any trading in the Company’s shares and may not trade if they are in possession of any inside information. Directors and employees can only trade during the specified trading windows immediately following the release of the half year and full year results and the annual meeting. In addition, Directors and certain restricted employees may only trade during the trading windows with prior written clearance as set out in the Policy. The Policy prohibits employees who participate in any equity-based plan from entering into any transaction in relation to unvested securities which would have the effect of limiting the economic risk of an unvested security. 10. OUTLOOK The Group will continue to review and adjust its reward mechanisms annually, as required to ensure that its long-term growth aspirations are met. In particular, a new Executive remuneration structure is being implemented for the 2017 financial year, which has been specifically structured to ensure close alignment of Executives to the delivery of the Accelerate Strategy and the long-term creation of shareholder value. Further details about the new Executive remuneration structure will be provided in the 2017 annual report. This report is made in accordance with a resolution of the Directors. On behalf of the Board PETER WARNE CHAIRMAN 16 May 2016 RICHARD KIMBER MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER 16 May 2016 46 OZFOREX GROUP