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PRINCIPLE 9: REMUNERATE FAIRLY AND RESPONSIBLY

Board remuneration
Remuneration pool
The current annual remuneration pool for non-executive directors is $2,250,000. This fee pool was approved by shareholders at the annual general meeting held on 8 November 2004.

It is proposed that the remuneration pool limit be increased to $3 million per financial year (an increase of $750,000) with effect from 1 January 2008. In accordance with the company’s Constitution and the ASX Listing Rules, shareholders will be asked to consider and, if thought fit, pass a resolution approving the proposed increase at the annual general meeting to be held in November 2007. Further information about the proposed increase in the remuneration pool is provided in the notice of meeting.

Details of annual fee rates are set out in the Remuneration Report, which forms part of the Directors’ Report on pages 125 to 135 of the Financial statements.

Non-executive director share plan
A share plan for non-executive directors was approved by shareholders at the annual general meeting held on 1 November 2006. Directors can elect to participate in the share plan through a salary-sacrifice arrangement. Shares are held by the plan trustee and are subject to certain holding restrictions. Details of the share plan are set out in the Remuneration Report, which forms part of the Directors’ Report on pages 125 to 135 of the Financial statements. No shares were allocated to non-executive directors under the plan in the year ended 30 June 2007.

Remuneration of executive directors and senior executives
Details of remuneration for executive directors and senior executives are set out in the Remuneration Report, which forms part of the Directors’ Report on pages 125 to 135 of the Financial statements.

The Remuneration Report also sets out details of remuneration practices and policies of the Wesfarmers group.

Awards of shares made to executive directors under the company’s long-term incentive plan are acquired on-market during the ordinary course of trading on the ASX. Under ASX Listing Rule 10.14, there is no obligation on the company to obtain shareholder approval for the acquisition of shares on behalf of the executive directors. There is no dilution of shareholders’ interests as the shares are acquired on-market.

Remuneration committee
The specific responsibilities of the Remuneration Committee are set out in the committee’s Charter, which reflects the requirements of ASX Principle 9.

The Remuneration Committee’s responsibilities include:

  • reviewing and making recommendations to the Board on remuneration for the non-executive directors and fixed and variable remuneration of the Managing Director (including the level of participation in the long-term incentive plan);
  • reviewing and approving recommendations from the Managing Director on fixed and variable remuneration for senior executives (including the level and nature of participation in the long-term incentive plan); and
  • reviewing and approving human resources policies and practices for senior executives.

The Remuneration Committee was established as a separate Board committee from 1 January 2007. In the period from 1 July to 31 December 2006, the remuneration functions were carried out by the Nomination and Remuneration Committee.

The members of the Remuneration Committee at the date of this report are:

  • Mr Trevor Eastwood (Chairman)
  • Mr Colin Carter
  • Mrs Patricia Cross
  • Dr Robert Every (from 1 September 2007)

The members of the Nomination and Remuneration Committee were:

  • Mr Trevor Eastwood
  • Mr Colin Carter
  • Mrs Patricia Cross
  • Mr Trevor Flügge (until 3 July 2006)
  • Mr Lou Giglia (until 1 November 2006)

The composition, operation and responsibilities of the committee are consistent with ASX Principle 9.

The committee (as the Remuneration Committee or as part of the Nomination and Remuneration Committee) met once during the year ended 30 June 2007. Details of meeting attendance for committee members are set out in the Directors’ Report on page 121 of the Financial statements.

A summary of the committee’s role, rights, responsibilities and membership requirements is available from the corporate governance section of the company’s website.