Directors’ Report
51
Directors’ Report
The Remuneration Committee engaged the 
services of the Godfrey Remuneration Group Pty 
Ltd during 2012 to review its remuneration prac-
tice revisions and to provide further validation in 
respect of both the executive short-term and 
long-term incentive plan design and standards. 
These recommendations covered the remunera-
tion treatment of the Group’s Non-Executive 
Directors and Key Management Personnel.
Under the terms of the engagement, the 
Godfrey Remuneration Group Pty Ltd provided 
remuneration recommendations as defined in 
section 9B of the Corporations Act 2001 and was 
paid $76,520 in financial year 2012 for these 
services. The Company did not pay Godfrey 
Remuneration Group Pty Ltd any further fees 
this financial year in relation to other services.
The Godfrey Remuneration Group Pty Ltd has 
confirmed that the above recommendations 
have been made free from undue influence by 
members of the Group’s Key Management 
Personnel.
The following arrangements were implemented 
by the Remuneration Committee to ensure that 
the remuneration recommendations were free 
from undue influence:
〉〉 The Godfrey Remuneration Group Pty Ltd was 
engaged by, and reported directly to, the Chair 
of the Remuneration Committee. The agree-
ment for the provision of remuneration 
consulting services was executed by the Chair 
of the Remuneration Committee under dele-
gated authority on behalf of the Board; and
〉〉 Any remuneration recommendations by the 
Godfrey Remuneration Group Pty Ltd were 
made directly to the Chair of the 
Remuneration Committee.
As a consequence, the Board is satisfied that the 
recommendations were made free from undue 
influence from any members of the Group’s Key 
Management Personnel.
Executive director and  
key management personnel  
remuneration
The executive pay and reward framework is 
comprised of three components:
〉〉 fixed remuneration including 
superannuation;
〉〉 short-term performance incentives; and
〉〉 long-term incentives through participation in 
the Executive Rights Plan.
Reward Mix
The above chart represents the remuneration 
reward mix for the various Key Management 
Personnel based on achievement of all stretch 
targets.
Fixed remuneration
Total fixed remuneration (“TFR”) is structured  
as a total employment cost package, including 
base pay and superannuation. Base pay may be 
delivered as a mix of cash, statutory and salary 
sacrificed superannuation, and prescribed 
non-financial benefits, at the executive’s 
discretion.
Executives are offered a competitive base pay. 
Base pay for senior executives is reviewed annu-
ally to ensure the executive’s pay is competitive 
with the market. An executive’s pay is also 
reviewed on promotion. 
In addition to using the AON Hewitt / McDonald 
Survey (resources industry) Remuneration 
Report as an annual benchmarking tool and the 
Egan and Associates ‘The KMP Report’; external 
remuneration consultants provide analysis and 
advice to ensure base pay is set to reflect the 
market for a comparable role. The 5th Edition of 
Egan and Associates ‘The KMP Report’ (August 
2013) shows overall Non-Executive Directors’ 
remuneration for Kingsgate to be below the 
average for ASX 101 – 200 peer group compa-
nies. Significantly, average Non-Executive 
Directors fee increases of 8.7% for the ASX 101 
– 200 and 6.5% for the ASX 201 – 300 groups 
over the period compares to no increase in fees 
for Kingsgate Non – Executive Directors.
The Board annually reviews and determines the 
fixed remuneration for the CEO / Managing 
Director. The CEO / Managing Director does the 
same for his direct reports. The Executive 
Management group reviews and recommends 
fixed remuneration for other senior manage-
ment, for the CEO / Managing Director’s 
approval.
There are no guaranteed increases to fixed 
remuneration incorporated into any senior 
executives’ agreements.
Total Fixed Remuneration (TFR)
Base salary and superannuation
MD/CEO