FAIRFAX MEDIA  LIMITED  2013  31 REMUNERATION REPORT (AUDITED) 1. INTRODUCTION 2. REMUNERATION FRAMEWORK AND GOVERNANCE  This report forms part of the Company’s 2013 Directors’ Report and sets out the Fairfax Group’s remuneration arrangements for  ‘key management personnel’ (KMP) in accordance with the requirements of the  Corporations Act 2001  and its regulations. KMP  comprises Directors and members of the senior executive team who have authority and responsibility for planning, directing  and controlling the activities of the Fairfax Group.  At the 2012 Annual General Meeting the Company received a ‘first strike’ under the Corporations Act as more than 25% of  votes cast in relation to the Remuneration Report were cast against the non-binding resolution. Accordingly, at the 2013  Annual General Meeting, a ‘second strike’ will cause the Company to propose a motion at that Annual General Meeting to  spill the Board. The Board has subsequently changed the executive incentive plans as set out below. 2.1 ReMuneRATion PRinCiPleS And FRAMeWoRk 2013 And 2014 CHAnGeS FAIRFAX MEDIA EXECUTIVE REMUNERATION FRAMEWORK The objectives of the Company’s executive remuneration framework are to align executive remuneration with the  achievement of strategic objectives, the creation of value for shareholders, and to have regard to market so as to be  able to attract and retain key people.  The People and Culture Committee (P&CC) assists the Board to achieve the goal that the executive remuneration  framework address the following: The  executive remuneration framework  comprises a mix of GLYPH<f.short>ixed and performance-based components. •  attract, retain and motivate talented, qualiGLYPH<f.short>ied and experienced people in the context of industry changes over recent  years, and the market in which Fairfax is currently operating; •  fairly remunerate and reward for achievement of Group strategic milestones, with incentive payments deferred to  promote alignment with shareholder interests; •  align remuneration with achievement of business strategy; and •  be transparent and fair. Performance Incentives Fixed remuneration package •  for 2014 executive KMP have volunteered to  sacriGLYPH<f.short>ice 10% of GLYPH<f.short>ixed remuneration into  restricted shares •  in recognition of Group GLYPH<f.short>inancial performance  in recent years, most senior executives’ GLYPH<f.short>ixed  remuneration has been frozen  •  represents the total GLYPH<f.short>ixed cost to the Company  including fringe beneGLYPH<f.short>its tax payable •  includes cash, superannuation and any beneGLYPH<f.short>its  employees choose to salary sacriGLYPH<f.short>ice (eg motor  vehicle and parking) •  short term incentive (STI) payments subject to  annual GLYPH<f.short>inancial performance of the Company,  as well as speciGLYPH<f.short>ic strategic and operational  objectives relevant to the executive •  on recommendation from the CEO, the P&CC  reviews and approves STI payments and the key  performance indicators for the following year •  GLYPH<f.short>inancial gateway for FY13 STI was not met, and  therefore no payments made for that year •  for FY13 and prior, long term incentive linked to  performance against total shareholder return  and earnings per share conditions over 3 years  •  prior years' LTI vesting criteria were tested  following end of FY13 and not met, therefore no  LTI awards for prior years which have reached  the vesting date will vest •  for 2014 new incentive plan to be implemented