The rights outstanding at 30 June 2010 have not vested, are not exercisable at 30 June 2010 and have no  exercise price.  The rights are subject to performance hurdles of total shareholder return (Tranche 1: 50%) and EPS growth  (Tranche 2: 50%) in accordance with the following scale:  The fair values of rights granted during the year with a total shareholder return performance hurdle, have  been calculated using a Monte-Carlo simulation valuation model taking into account price volatility, risk free  interest rates and comparator company shareholder return performance. A Black-Scholes model has been  used to value the rights with an EPS performance hurdle taking into account price volatility, risk free interest  rates and the dividend yield.  The Executive Directors did not participate in the 2008 PEP. In 2009 the Board determined to introduce an  alternative cash based transitional long term incentive plan while the Company developed a new long term  incentive plan for Executive Directors and senior management. The new long term incentive plan was  developed in FY2010.  The Group’s performance will be measured over a period of three years commencing with FY2009. Performance will be measured by reference to two measures each weighted at 50%. The first measure will  be total shareholder return (TSR) compared to the TSR of the smallest 100 companies in the S&P/ASX300  excluding companies in the resources and financial sectors and the second measure will be absolute growth  in earnings per share (EPS). The Board has discretion to adjust earnings so that they accurately reflect  ongoing Company performance. Each measure will have an equal weighting and is pro-rated between a  base threshold and stretch targets. Performance will be measured at the end of FY2011.  In the event of a takeover or change-in-control, the stretch TLTI award opportunities will become immediately  payable to participants. A takeover or change in control is deemed to have occurred when more than 30% of  ordinary issued shares are acquired by, or their voting is controlled by, a person or group of related persons.  Executive Director 2009 Transition Long Term Incentive Plan (TLTI)  Cardno Limited and its Controlled Entities for the year ended 30 June 2010  Directors’ Report  Page 13 of 80  Grant Date  Exercise  Date  Expiry Date  Performance  Hurdle  Fair  Value at  Grant  Date  $  Number of  Rights at  Beginning  of Year  Rights  Granted  Rights  Lapsed  Rights  Vested  Not  Exercised  Number of  Rights as  at 30 June  2010  22 October  2009  22 October  2012  22 October  2013  EPS Growth  3.96  -  67,500  -  -  67,500  TSR 3.19 - 67,500 - - 67,500 2 December  2009  2 December  2012  2 December  2013  EPS Growth  3.20  -  112,000  -  -  112,000  TSR 2.30 - 112,000 - - 112,000 Total expense recognised $95,899 (2009: NIL)  TSRs of Companies in  Comparator Group  Over 3 Years  % of Rights to Vest  (Tranche 1 50%)  EPS Growth Over 3 Years  % of Rights to Vest  (Tranche 2 50%)  <50$^{th}$ percentile  0%  <12.5% (<4% pa)  0%  50$^{th}$ percentile  50%  12.5% (4% pa)  30%  >50$^{th}$ & <75$^{th}$ percentiles  Pro rata  >12.5% (4% pa) & <26% (8% pa)  Pro rata  75$^{th}$ percentile and above  100%  26% (8% pa)  70%  >26% (8% pa) & <40% (12% pa)  Pro rata  ≥ 40% (12% pa)  100% 