Home' Japara Healthcare Annual Report : Japara Healthcare Annual Report 2017 Contents Letter from the Chairman of the Remuneration and Nomination Committee
On behalf of the Board, I am pleased to present the Japara Healthcare Limited audited Remuneration Report for the year ended 30 June 2017.
As the Directors' Report outlines, the Group delivered a post-tax profit of $29.7 million, reflecting a 2.3% decrease on the prior year. Underlying
profit (before interest, tax, depreciation and amortisation) grew by 7.3% but was more than offset by an increase in growth-related depreciation
and financing costs and a one-off tax benefit received in the prior year.
The Group continued to provide outstanding care and services to residents across its portfolio of homes. It also made excellent progress
on its development program with four extensive brownfield projects completed and a further five projects in the construction phase. With
additional land and licences secured during the year, the Group is on track to deliver over 1,100 new places by the end of FY2020. Pleasingly,
the Group maintained its strong balance sheet and has an experienced and agile senior management team. The business is well placed
to respond to the current challenging environment.
In September 2016, the Group undertook an internal management reorganisation, including the reallocation of certain responsibilities, in order
to strengthen its operations and help position the business for future growth initiatives. This resulted in a change to key management personnel
(KMP) for remuneration reporting purposes whereby the CEO/Managing Director and the Chief Financial Officer remained as the only executive
KMP members (Executives).
FY2017 remuneration performance outcomes
• The Group's profit result was not sufficient for a short term incentive (STI) pool to form, so an STI was not awarded to executives.
The maximum STI forgone totalled $758,000.
• The earnings gateway for the long term incentive (LTI) granted to executives in FY2017 was not met, resulting in the LTI being forfeited.
The maximum LTI forgone totalled $1,515,000.
• Performance conditions for prior period LTIs were re-tested and continue to be met, with no LTI vesting during FY2017.
• In light of the strong underlying performance of the business, particularly in the context of ongoing regulatory change, together with
the individual executive performance, the Board considered and awarded a once only ex-gratia payment to the CEO/Managing Director
of $100,000, and to the CFO of $50,000, in recognition of their excellent individual performances through FY2017.
FY2018 remuneration settings
The Board is committed to ensuring that Group employees are compensated fairly and competitively for their contributions and performance-
based remuneration arrangements are directly linked to the results and objectives of the business.
The Board recently reviewed the remuneration framework for executives having regard to its suitability for the business, a benchmarked
comparator group comprising ASX 200 companies with similar characteristics to Japara Healthcare, historical remuneration outcomes
and emerging market trends in performance-based incentive arrangements.
As a result, commencing in FY2018, the Board has enhanced the performance-based incentive framework as follows:
• the existing STI and LTI arrangements have been folded into a single incentive plan;
• target and stretch performance measures will be measured over a 12-month performance period;
• part payment in cash and part in equity;
• equity component has deferral and vesting periods; and
• unvested equity subject to forfeiture for termination of employment.
The revised remuneration framework provides a more focused and structured incentive arrangement, which is more appropriate
to the business and the executives, as well as enhancing alignment with the key objectives of the business.
Japara Healthcare Limited
PO Box 16082, Collins Street West VIC 8007
Q1 Building Level 4, 1 Southbank Boulevard, Southbank VIC 3006
Telephone 03 9649 2100 Facsimile 03 9649 2129
www.japarahealthcare.com.au ABN 54 168 631 052
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