Short-Term Incentives (STI) - Performance Conditions Specific information relating to the actual annual performance awards is set out in the table on page 66 What is the annual The STI plan provides eligible employees with a reward for annual performance against measured targets set at incentive and the beginning of the performance period. Eligible employees include the Executive Directors, Senior Executives who is eligible to and other nominated employees participate? Executive Director Chief Executive Officer Senior Executives What is the amount the eligible employee can earn? Year-on-year NPAT/Net Sales Growth & Stock Cover Moore % of FAR Threshold Sliding scale Sliding scale 100 Sliding scale 100 Maximum Measures Executive Director Chief Executive Office Senior Executives What were the performance conditions for FY19? Financial measures: Group NPAT achievement of growth over prior year Group Net Sales achievement over prior year China Net Sales achievement over prior year Stock cover measure Personal multiplier of 0 -1.25 applied to the outcome of financial measures Personal multiplier of 0-1.25 applied to the outcome of financial measures Individual objectives: Financial(.e. revenue, new product launches and other specific objectives) Non financial measures (le safety, employee engagement and other agreed objectives) Why were these performance measures chosen? NPAT performance over prior year is a well-recognised measure of financial performance and a key driver of shareholder returns. It is the primary measure considered by Directors in determining the level of dividend payments to shareholders. In FY 19, the Directors included strategic measures of Group Net Sales and China Net Sales growth over prior year along with a stock cover measure to support customer service levels. Using these measures of NPAT, Net Sales and stock cover as incentive performance measures ensures that incentive payments are aligned with Blackmores' business strategy and objectives The incentive targets are set by the Board at levels designed to reward superior performance. A requirement of NPAT and Net Sales growth over prior year along with a stock cover measure aligns remuneration outcomes with shareholders expectations Individual performance was selected as a secondary performance condition to ensure that Senior Executives have clear objectives and performance Indicators that are linked to Blackmores performance. In FY 19, a Culture Gateway was introduced related to value-driven behaviours. Should an Executive be considered to have not displayed appropriate behaviour, this could potentially cause the Executive to be removed from the STI program for that year. Blackmores policy is that STis will only be awarded when Blackmores meets agreed performance hurdles In addition, Senior Executives are not awarded any STI in the instance of the lowest personal performance assessment Discuss benefits and drawbacks of including non-financial performance criterial in executive's compensation package. Your discussions should be supported by academic research and relevant theory. Short-Term Incentives (STI) - Performance Conditions Specific information relating to the actual annual performance awards is set out in the table on page 66 What is the annual The STI plan provides eligible employees with a reward for annual performance against measured targets set at incentive and the beginning of the performance period. Eligible employees include the Executive Directors, Senior Executives who is eligible to and other nominated employees participate? Executive Director Chief Executive Officer Senior Executives What is the amount the eligible employee can earn? Year-on-year NPAT/Net Sales Growth & Stock Cover Moore % of FAR Threshold Sliding scale Sliding scale 100 Sliding scale 100 Maximum Measures Executive Director Chief Executive Office Senior Executives What were the performance conditions for FY19? Financial measures: Group NPAT achievement of growth over prior year Group Net Sales achievement over prior year China Net Sales achievement over prior year Stock cover measure Personal multiplier of 0 -1.25 applied to the outcome of financial measures Personal multiplier of 0-1.25 applied to the outcome of financial measures Individual objectives: Financial(.e. revenue, new product launches and other specific objectives) Non financial measures (le safety, employee engagement and other agreed objectives) Why were these performance measures chosen? NPAT performance over prior year is a well-recognised measure of financial performance and a key driver of shareholder returns. It is the primary measure considered by Directors in determining the level of dividend payments to shareholders. In FY 19, the Directors included strategic measures of Group Net Sales and China Net Sales growth over prior year along with a stock cover measure to support customer service levels. Using these measures of NPAT, Net Sales and stock cover as incentive performance measures ensures that incentive payments are aligned with Blackmores' business strategy and objectives The incentive targets are set by the Board at levels designed to reward superior performance. A requirement of NPAT and Net Sales growth over prior year along with a stock cover measure aligns remuneration outcomes with shareholders expectations Individual performance was selected as a secondary performance condition to ensure that Senior Executives have clear objectives and performance Indicators that are linked to Blackmores performance. In FY 19, a Culture Gateway was introduced related to value-driven behaviours. Should an Executive be considered to have not displayed appropriate behaviour, this could potentially cause the Executive to be removed from the STI program for that year. Blackmores policy is that STis will only be awarded when Blackmores meets agreed performance hurdles In addition, Senior Executives are not awarded any STI in the instance of the lowest personal performance assessment Discuss benefits and drawbacks of including non-financial performance criterial in executive's compensation package. Your discussions should be supported by academic research and relevant theory