Long Term Incentive (LTI) What does the LTI mean? The LTI governs the equity component of at-risk remuneration, with the amount of remuneration ultimately received by a participant in respect of an award determined by reference to long term performance criteria of the Company. How often are LTI awards determined and made? The LTI contains two segments, each operating on a three year cycle. Each segment commences on 1 July (or any other appropriate date as determined by the Board) and is followed by a 3 year performance period, with testing occurring as at the final day of the performance period. The two LTI segments comprise the following: – Performance Rights: Upon each triennium anniversary, the grant of performance rights comprising 3 year performance criteria and hurdles for achievement during the triennium period; and – Share Options: Annually, the grant of share options with a life of 3 years, with appropriate market based performance hurdles. Why are LTIs required? Provision of LTIs provide the Company with the opportunity to attract executives with the appropriate skills, and provide an incentive and reward aligned with the interests of the Company’s shareholders. The objective of the LTI is to: – align the interest of Senior Executives more closely with the interests of Shareholders by providing an opportunity to earn shares in the Company; – provide Senior Executives with the opportunity to share in any future growth in value of the Company; and – provide greater incentive for Senior Executives to focus on the Company’s longer-term goals. What types of equity may be granted under the LTIP? Performance rights and Share Options are granted as LTIs. Performance rights are a right to be allocated one share in Sheffield, subject to satisfying any specified thresholds, standards and performance criteria. A participant is not entitled to participate in or receive any dividends or other shareholder benefits until the performance right has vested and been exercised and a share has been allocated to the participant. Share Options are an option to be allocated one share in Sheffield, subject to satisfying any specified thresholds, standards and performance criteria. A participant is not entitled to participate in or receive any dividends or other shareholder benefits until the performance right has vested and been exercised and a share has been allocated to the participant. How much value is ascribed to the LTI opportunity? The Executive Chair is awarded performance rights worth 100% of FAR. Other Senior Executives are awarded performance rights worth 80% of their TFR. LTI performance criteria are designed to target 50% vesting of awarded performance rights over time. Award opportunities and targeted vesting outcome are based on industry benchmarks to achieve the remuneration policy intent of positioning FAR at the 50th market percentile. What are the LTI performance criteria for the year ending 30 June 2023? The LTI program comprises the Performance Rights and Share Option segments, with long term targets and performance hurdles aligned with the Company’s strategy. Each segment contains performance hurdles that need to be achieved prior to award. During the prior year ended 30 June 2022, the first LTI segment comprised performance rights aligned with the Company’s strategy of achieving initial production from Thunderbird, whilst also considering superior growth in the Company’s share price compared to a nominated sector per group. For the triennium cycle commencing on 1 July 2021 and ending 30 June 2024, the Board determined that the following performance hurdles to apply: – Achievement of first commercial shipment of zircon or ilmenite product from the Thunderbird Mineral Sands Project on or before 31 March 2024; – Construction of the Thunderbird Mineral Sands Project is completed on or before 30 June 2024 and in accordance with the total funding requirement for the Thunderbird Mineral Sands Project as disclosed by the Company to ASX on or before 30 June 2022; – Achievement of a minimum of 90% of throughput production capacity at the Thunderbird Mineral Sands Project, measured over a consecutive 10-day period on or before 30 June 2024. Remuneration Report (audited) continued 24 Sheffield Resources Limited Annual Report 2023
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