Directors’ Report – Remuneration Report STIs Structure of STIs for the KMP Feature Description STI pool Based on target performance 50% of Managing Director’s fixed remuneration 40% of Chief Financial Officer’s fixed remuneration 20% of Company Secretary’s fixed remuneration 10% of the fixed remuneration of other participants in the plan The size of the pool is determined by the performance metrics below, in the event that the targets are exceeded (performance metrics exceed 100%) the pool will be increased as set out below. Determination of STI pool The pool determination metrics align with WHSP’s strategic goals to maximise shareholders’ returns. Objective Regular cash to the parent company net of regular expenses Weighting Threshold (80%) Target (100%) Outperformance 50% > 0% and < 4% higher than previous year 4% to < 5% higher than previous year 5% to < 6% = 110% 6% to < 7% = 120% 7% to < 8% = 130% 8% to < 9% = 140% 9% and higher = 150% As dividends are paid out of parent company cash, increasing net cash inflows enable the payment of increasing dividends. Adjusted net asset value (post tax) per share 50% (adjusted by adding back dividends paid by the parent company) > 0% and < 2% higher than ASX200 Accumulation Index 2% to < 3% higher than ASX200 Accumulation Index 3% to <4% = 110% 4% to < 5% = 120% 5% to < 6% = 130% 6% to < 7% = 140% 7% and higher = 150% Increases in net asset value per share drive increases in the WHSP share price. Entitlement to the STI pool Once the STI Pool is established by the financial measures described above, the Remuneration Committee determines each participating Executive’s entitlement to an STI based on individual performance. Individual Executive STIs are determined having regard to achievements throughout the year against a number of Key Performance Indicators (KPIs). The KPIs encompass a range of financial and non-financial objectives relevant to each Executive’s role. The total of all STIs determined by the Remuneration Committee cannot exceed the STI pool. Delivery of STI 100% of the STI awarded is paid in cash following release of the year end results. Board Discretion The Board retains discretion to increase or decrease, including to nil, the STI pool, if it forms the view that not doing so would present a risk of a “strike” against the Company’s Remuneration Report issued pursuant to Section 300A of the Corporations Act. In exercising this discretion the Board shall take into account, amongst other factors it considers relevant, Company performance from the perspective of Shareholders over the relevant year. The STI plan is designed to motivate and reward senior executives to generate increasing net cash flow (to facilitate increasing dividends) and to grow the value of the investment portfolio (measured by net asset value) for the benefit of shareholders. 40 Washington H. Soul Pattinson and Company Limited Annual Report 2019