Directors’ Report For personal use only 30 June 2014 Directors’ Report PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION COMPETITIVENESS AND REASONABLENESS: Fixed Remuneration On listing in 2006, the Group’s senior management ranks were heavily populated with shareholders who held  significant numbers of MIN shares. These shareholdings provided an incentive to link corporate performance  and shareholder value. While senior managers involved at the Group’s listing continue to serve the business,  new senior managers recruited to assist with growth and development of the Group do not have such significant  shareholdings. The Board, in designing the remuneration system, is mindful of these varying circumstances and  has attempted to create a system that aligns performance with the improvement of shareholder value, suiting the  varying circumstances of senior managers. The objective of the Group’s compensation framework is to ensure reward for performance is market competitive  and appropriate for the results delivered. The framework aligns compensation with the achievement of strategic  objectives, operational performance and the creation of shareholder value, and is structured to provide an  appropriate mix between short and long term rewards. The Board ensures that compensation satisfies the  following key elements for good governance: •  competitiveness and reasonableness, •  alignment to shareholders’ interests, •  performance linkage / alignment of executive compensation, •  transparency. •  The Remuneration Committee has structured an executive remuneration framework that is market  competitive and complementary to the Group’s reward strategy.  •  Committee members have evaluated the market competitive frameworks used by other ASX 100 companies,  supported by a detailed market review this financial year, and crafted the compensation framework to reflect  both current market practice and MRL’s particular requirements. The Remuneration Committee is responsible for determining and reviewing remuneration arrangements for directors  and other KMP. As the Group’s performance depends on the quality of its directors and executives, the remuneration  philosophy is designed to assist, to attract, motivate and retain high performance and high quality personnel. Fixed Remuneration consists of base salary, superannuation and non-monetary benefits. This is reviewed  annually by the Remuneration Committee, based on general economic conditions, individual and business  performance, and comparable market remuneration. KMP may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle  benefits) where it does not create any additional costs to the Group and provides additional value to the executive. Mineral Resources Limited Annual Report 2014  25 A summary of the Group’s KMP remuneration policy is as follows: Attracting and retaining talented and  qualified executives Encouraging executives to strive for  superior performance Aligning executive and Shareholder  interests Remuneration is market related  (aimed at the 62.5% percentile of  relevant market data). Significant portion of remuneration  is ‘at risk’ under short and long term  incentive plans. Value is derived for the  KMP by meeting personal and corporate  goals, which are assessed annually. STI incentives are awarded only on  achieving key safety, productivity and  profitability targets.  Long term incentives are delivered  through awarding MIN shares, which  encourages delivery of an absolute  improvement in shareholder value and  also focuses executives on key non- financial value drivers such as safety.  Granted awards vest in the future only  if the individual and the Group continue  to meet future targets. 