IOOF  | Annual Report 2012 1. Introduction This Remuneration Report has been written in a different  format this year in order to simplify this important area for  shareholders and provide a clear and concise explanation of  the Group’s remuneration structure and the actual value of the  remuneration received by Key Management Personnel (KMP)  of the Group. The information in this report is in accordance with AASB 124  Related Party Disclosures and section 300A of the Corporations  Act 2001, and has been audited as required by Section 308(3C)  of the Corporations Act 2001 unless otherwise stated. The key principles of IOOF’s remuneration policy remains  unchanged from last year. These principles, as outlined in the  following section, are designed to achieve a performance  culture across the Group subject to the constraints embodied  in the Group’s risk appetite framework, by linking a large  component of executive’s remuneration to the creation of  value for our shareholders. The Board of Directors oversees the Group’s remuneration  policies on recommendations from the Remuneration and  Nominations Committee (the “Remuneration Committee”). The  Board and the Remuneration Committee review these policies  annually to ensure that they remain in line with the market and  regulatory environment and that the interests of employees  and shareholders are closely aligned, to maximise shareholder  value in the medium and longer term. During the past twelve months, IOOF has experienced  significant challenges arising from market movements,  competitive pressures, and regulatory changes within the  financial services industry in which it operates. Moreover, in  response to issues arising out of the global financial crisis,  regulators in Australia, in keeping with those in a number of  overseas jurisdictions, have introduced a number of legislative  measures which place increased focus on the remuneration  quantum and structures employed by public companies. The Board of IOOF Holdings Ltd, in conjunction with the  Remuneration Committee, has reviewed the Group’s  remuneration policies to determine whether any significant  changes or fine-tuning adjustments are needed in light of the  above. The Remuneration Committee has also engaged the  services of external consultant, Ernst & Young, to assist with this  review. The Board has determined that its over arching remuneration  policies remain appropriate and robust, when account is  taken of all the changes in the market, industry and regulatory  environment over the past year.  The Group aims to ensure that its remuneration policies are  consistent with best practice in terms of: The remuneration arrangements for KMP comprise three key  components: The values of LTI’s are disclosed in the Remuneration Report  as the amortised value of the grants of shares, options and or  performance rights. The benefits derived by KMP from LTI’s  vary in line with the movements in the Company’s share price. A principal objective of the Board is to achieve superior returns  for our shareholders within the financial services industry in  which it operates, while managing risk in a prudent manner.  To realise this objective, the Board has recognised that it is  fundamental to align the interests of employees with those of  the shareholders by attracting, motivating and retaining high  performing executives and other employees. The Board has adopted a policy that IOOF’s remuneration  policy will: page 31 •  Reinforce the short and long term objectives of the Group  as set out in the strategic business plans endorsed by the  Board; and •  Be competitive in the markets in which IOOF operates in  order to attract, motivate and retain high calibre employees; •  a long term incentive (LTI) which is intended to provide an  incentive to the KMP to remain with the Group to enhance  the sustainable performance of IOOF over the long term  and to provide sound and competitive rates of return for  our clients. •  a short term incentive amount (STI) which is related to  growth in shareholder value as measured by the returns  received by shareholders from dividends and the growth in  the share price; and •  a base package which is a fixed amount is generally  increased on an annual basis according to cost of living  increases (CPI), market movements or changes in the  scope of the position. The base amount will generally not  be reduced except in extreme circumstances (e.g. under  performance or significant adverse changes impacting on  IOOF); •  attracting and retaining high quality people; and •  aligning the rewards for performance by KMP with the  returns achieved by Shareholders. 2.  Remuneration Framework 2.1 Objectives