Directors’ Report  Cardno Limited and its Controlled Entities for the year ended 30 June 2010  Remuneration Committee  The Remuneration Committee reviews and makes recommendations to the Board on remuneration issues  and policies applicable to all staff for the consolidated entity. It is also responsible for reviewing share option  schemes, incentive performance packages, superannuation entitlements, retirement and termination  entitlements and fringe benefits policies.  The members of the Remuneration Committee during the year were John Massey (Chairman), Ian Johnston  and Tony Barnes, all independent Non-Executive Directors.  The Remuneration Committee is required to meet at least twice a year. The Remuneration Committee met  four times during the year.  Compensation levels are reviewed annually by the Remuneration Committee through a process that  considers individual, segment and overall performance of the consolidated entity. In addition, external  consultants provide analysis and advice to ensure the Directors’ and Senior Executive’s compensations are  competitive in the market place where required.  Fixed compensation consists of base compensation (which is calculated on a total cost basis) and includes  any FBT charges related to employee benefits (including motor vehicles), as well as employer contributions  to superannuation funds.  Fixed compensation is generally reviewed on an annual basis. Fixed Compensation  Performance-linked Compensation Short-Term Incentive Bonus  Page 10 of 80  Performance-linked compensation includes both short-term and long-term incentives and is designed to  reward key management personnel for meeting or exceeding their financial, divisional and personal  objectives. In 2009 the Cardno Board had an independent review undertaken of the long term incentive plan  for Senior Executives. Changes recommended by the consultants were approved by shareholders at the  2009 AGM and have been adopted.  The short-term incentive is an ‘at risk’ bonus provided in the form of cash. The long-term incentive consists  of the issue of Performance Options or Rights which are subject to certain vesting conditions related to the  Company’s Earnings Per Share Growth and, in the case of Rights, also Total Shareholder Return over  3 years. The Executive Directors did not participate in the 2008 PEP and so the Company implemented an  alternative cash based transitional long-term incentive plan linked to the performance of the Company over  3 years commencing in the 2009 financial year.  Each year the Remuneration Committee reviews the key performance indicators (KPIs) for the key  management personnel. The KPIs generally include measures relating to the consolidated entity, the  relevant segment, the individual and include financial, people, customers, strategy and risk measures. The  principal financial performance objectives are compared to budgeted amounts. The non-financial objectives  vary with position and responsibility.  At the end of the financial year the Remuneration Committee assesses the actual performance of the  consolidated entity, the relevant segment and individual against the KPI’s set at the beginning of the financial  year. The Remuneration Committee approves the discretionary bonus to be paid to individuals on the  delegated authority of the board. The method of assessment was chosen as it provides the committee with  an objective assessment of the individual performance. Half of the bonus is paid in the year the bonus is  granted while the balance is paid 12 months later, subject to continuing employment.