DIRECTORS’ REPORT CONT. REMUNERATION REPORT (AUDITED) (CONTINUED) 5. Executive remuneration arrangements (continued)  Total fixed remuneration (continued) Variable remuneration - short term incentive (STI) 28 Australian Agricultural Company Limited The Board has contractually determined a LTI entitlement equal to 50% of current total fixed remuneration for the Managing Director/Chief  Executive Officer. Performance rights equal to this remuneration value are provided each year under the AACo Performance Rights Plan on terms  approved by shareholders each year.  Only the Managing Director/CEO is currently offered an LTI. Board approved Performance Right grants are also subject to shareholder approval, as  set out below. Variable remuneration - long term incentive (LTI) The Managing Director/Chief Executive Officer There was no STI bonus awarded to executives for the three months to 31 March 2013. The Managing Director/Chief Executive Officer assesses the performance of other senior executives against their targets and determines the actual  short term incentive payments with oversight by the Board through the Chairman and the Staff and Remuneration Committee. The Board assesses the performance of the Managing Director/Chief Executive Officer against his targets and determines his actual STI payment  based upon the recommendation of the Staff and Remuneration Committee. The Managing Director has a maximum annualised STI of $300,000  (including DEA, if any) in his existing contract. The senior executives have a maximum STI set as a percentage of their respective TFR. The Company has a Good Leaver and a Bad Leaver Policy. If the executive was a Bad Leaver, then any unvested Deferred Equity Awards will be  automatically forfeited. If the executive was a Good Leaver, then the Board will consider the circumstances of the cessation of employment and  may exercise its discretion to allow some or all of the unvested Deferred Equity Awards to vest (and be exercised). The Deferred Equity Award vests over the two years after the year the Short Term cash incentive is paid. The policy is that the Short Term cash  Incentive will be determined and 50% of the Short Term cash Incentive will be granted as a Deferred Equity Award for which half vests 12 months  after the payment of the Short Term cash incentive and the remaining half 24 months after the payment of the Short Term cash incentive. Vesting  of the DEA is subject to the executive still being employed by the Group. Under the arrangements approved by the Board the general principles that will apply are that the executive will receive a Short Term cash Incentive  and be granted a Deferred Equity Award that is generally set at 50%, subject to existing contractual conditions, of the Short Term cash Incentive  earned. The Short Term cash Incentive will be paid within three months of the financial year end on which the executive’s performance is being  measured.  These measures were chosen as they represent the key drivers for the short term success of the business and provide a framework for delivering  long-term value. Actual STI payments awarded to each executive depend on the extent to which specific targets prescribed in the performance agreement for a  financial year are met. The targets consist of a number of key performance indicators covering financial and non-financial, corporate and individual  measures of performance. Individual key result areas include contribution to earnings and net profit after tax, safety and risk management,  compliance, and business unit specific operational measures.  The total potential STI is set at a level so as to provide sufficient incentive to executives to achieve the operational targets and at a cost to the  Company that is reasonable in the circumstances. The aim of the STI is to link the achievement of the Company’s annual and/or immediate financial and broader operational targets with the  remuneration received by the executives and senior employees responsible for achieving those targets. The Company operates an annual STI program that is available to executives and employees and awards a cash bonus subject to the attainment of  Company, business unit and individual measures which are set at the commencement of the performance period. The fixed component of executives’ base fixed remuneration is detailed in the tables 1 and 2 (refer pages 33 and 34). Senior executives are given the opportunity to receive a portion of their fixed remuneration in forms other than cash, such as motor vehicles, under  a framework that ensures the Company does not incur additional cost.