REMUNERATION REPORT (AUDITED) (CONTINUED) 5. Executive remuneration arrangements (continued)  Variable remuneration - long term incentive (LTI) (continued) Under the LTI there are both internal (EPS) and external (TSR) performance benchmarks which are required to be achieved over a three year service  vesting period for the Managing Director/Chief Executive Officer to receive any benefit. The Managing Director was not awarded any performance  rights during the three months to 31 March 2013. The performance conditions were as follows: 50% of the Performance Rights are subject to an external Performance Condition  namely  AACo’s Total Shareholder Return (TSR) performance  relative to the S&P/ASX Small Ordinaries Accumulation Index (ASX Code: XSOAI) measured over a three year Vesting Period.  Vesting of the Performance Rights subject to the TSR outperformance condition will be calculated based on the following percentile results in the  table below: The Company’s TSR will be measured by an independent third party over the Vesting Period. The testing of the TSR outperformance condition will  occur at the end of the Vesting Period. The Board in its absolute discretion may vary this formula from year to year to reflect the changing nature of the Group’s operations and its  operating environment. Vesting of the Performance Rights subject to the EPS condition will be calculated based on the following compound % growth rates over the three  financial years following the base year the Performance Rights are established.  Termination and change in control provisions Under the terms of the LTI if the Managing Director/Chief Executive Officer ceases employment with the Company and holds Performance Rights   the ability of the Managing Director/Chief Executive Officer to retain his Performance Rights will depend on the circumstances in which the  employment ceases. The Plan Rules define Bad Leavers and Good Leavers.  If the executive was a Bad Leaver  then the Performance Rights will be automatically forfeited. If the executive was a Good Leaver  then the Board  will consider the circumstances of the cessation of employment and may exercise its discretion to allow some or all of the Performance Rights to  vest (and be exercised). Annual Report 2013 29 EPS Compound Growth Rate % of Performance Rights to vest Compound growth rate of less than 7.5% p.a. 0% vest Compound growth rate of at least 7.5% p.a. 50% vest Compound growth rate between 7.5% p.a. and 10% p.a. 2% vesting on a straight line interpolation for each 0.1% increment in EPS Compound growth rate of 10% p.a. or more 100% vest AACo TSR Ranking versus S&P/ASX Small Ords Accumulation  Index (XSOAI) % of Performance Rights to vest Below the 50th percentile 0% vest At the 50th percentile 50% vest Between the 50th and 75th percentile 2% vesting on a straight line interpolation for each percentile ranking At or above the 75th percentile 100% vest 1. External Performance Condition (TSR outperformance) 2.Internal Performance Condition (EPS) 50% of the Performance Rights are subject to an internal Performance Condition based on the Company’s earnings per share (EPS). EPS is defined as Adjusted Net after Tax Profit per Ordinary Share  where Adjusted Net after Tax Profit is calculated as follows:  Annual reported Net Profit after Tax   Less: Valuation adjustments.  Less: Any adjustment deemed fair and appropriate by the Board  in the Board’s absolute discretion.