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TWE seeks shareholder approval to issue 764,216 shares to CEO

Treasury Wine Estates is requesting shareholder permission to issue 764,216 shares to CEO Michael Clarke at no cost providing that he improves that performance of the business.

The request was communicated to shareholders via the 2014 Notice of Annual General Meeting, and is being offered under the company’s Long-Term Incentive (LTI) plan as part of its executive remuneration strategy.

Under the LTI plan, eligible executives are offered performance rights to acquire shares in the Company subject to the satisfaction of certain performance conditions.

Half of the performance rights are subject to a relative Total Shareholder Return (TSR) performance condition. The Company’s TSR performance will be measured against a comparator group of companies in the S&P/ASX 200, excluding metals and mining, real estate and other financial companies.

The second half of the performance rights are subject to a performance condition based on the Company’s Earnings per Share (EPS).

“The Board considers that the Company’s FY15 EPS targets are realistic but challenging,” the notice reads. “In setting the Company’s EPS target range, the Board considered the high degree of volatility in the agricultural aspects of the Company’s operations, including the impact of prior events on future performance, such as weather affected vintages. The Board considers the achievement of 15 percent EPS growth to be an appropriate level of performance to justify full vesting of the portion of the LTI award subject to the EPS performance condition. The Board will review EPS hurdles annually.”

TWE say that the number of performance rights have been calculated on the basis of two times Clarke’s fixed remuneration, and a share price of $4.449 per share, being the volume weighted average of the Company’s share price over the ninety day period up to and including 30 June 2014.

Should the request be approved, the performance rights will be granted to Clarke shortly after the company’s annual general meeting.

Clarke took over the position of CEO in February this year following the departure of David Dearie in September last year.

Under Dearie's leadership, the company wrote-down a $160m hit to before tax earnings after ambitious sales forecasts led to an oversupply of wine in the US.

The move saw the company destroy old stock, and heavily reduced the price of selected wines to maintain quality and cope with a restructure of its distribution system into America.

 

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