Following the appointment of Ian Johnston on 26 September 2008, Foster's Group Limited (Foster's) has today confirmed agreed terms of employment and remuneration structure.
Total fixed remuneration: $1,800,000 per annum, reviewed annually. This amount is inclusive of superannuation contributions, non-monetary benefits and Fringe Benefits Tax as applicable.
Short term incentives: As previously announced, Foster's is currently undertaking a comprehensive review of its wine business and, accordingly, the Board believes it is important that the performance hurdles applicable to the CEO are strongly aligned with the strategic outcomes of that review and the broader Foster's Strategic Agenda.
For the 2009 financial year, Mr Johnston will be eligible for a target annual bonus of 75% of total fixed remuneration (pro-rated for the 2009 financial year). The applicable performance criteria will include:
• achieving key financial hurdles applicable to Foster's;
• delivering upon the Foster's Strategic Agenda (which will be announced to the market following the conclusion of the review of the Foster's Group wine business); and
• identifying and implementing appropriate succession planning for the senior leadership team (including the role of CEO) and transforming Foster's culture.
Up to an additional 75% of total fixed remuneration will be made available to Mr Johnston if the performance criteria described above are satisfied beyond the Board's expectations at the time of review.
Mr Johnston will receive one third of any bonus in the form of Foster's shares restricted for a period of 3 years. The remainder of the bonus may be taken in cash, deferred shares or superannuation contributions.
Long term incentives: Subject to shareholder approval at Foster's 2009 annual general meeting, Mr Johnston will be invited to participate in the Foster's Long Term Incentive Plan (LTIP) on essentially the same basis as the members of the Foster's Leadership Team. Mr Johnston will be offered a maximum of 343,000 Foster's shares (approximately equivalent in value to one year's Total Remuneration). As for other LTIP participants, share allocations will be determined progressively based on Foster's performance relative to two peer groups during three separate performance periods.
Mr Johnston will only be entitled to the maximum number of shares if the Company's TSR ranking is at the 85th percentile or above, for both peer groups and across the three performance periods. If the Company achieves a median (50th percentile) ranking against both peer groups and across all three performance periods Mr Johnston will be entitled to 171,500 shares. No shares will be allocated where performance does not reach the median ranking.
Each performance period commences on 1 September 2008 and ends, as to 20% of the total allocation on 31 August 2009, as to a further 20% of the total allocation on 31 August 2010 and, as to the remaining 60% of the total allocation on 31 August 2011. Shares allocated in relation to each of the first two tranches remain 'at risk' and in certain circumstances may be forfeited where Mr Johnston ceases employment prior to 31 August 2011.
Further details of the operation of Foster's LTIP are contained in the Foster's 2008 Remuneration Report.
Termination of employment: Mr Johnston's services may be terminated on 13 weeks' notice from Foster's. Foster's may terminate without notice in the event of serious misconduct. Mr Johnston must provide 13 weeks' notice should he wish to terminate the agreement.
On termination, subject to performance being on-track to meet the applicable performance conditions, Mr Johnston will be entitled to:
• a pro rated amount of the annual incentive payment for the expired part of the current financial year, where Foster's has terminated employment without cause; and
• a cash amount in respect of the value of his unvested LTIP.
Further information:
Media Investors
Troy Hey Chris Knorr
Tel: +61 3 9633 2085 Tel: +61 3 9633 2685
Mob: +61 409 709 126 Mob: +61 417 033 623
