The highly capital intensive nature

3.5 Variable remuneration – Short Term Incentive (STI) Plan
The highly capital intensive nature of NEXTDC requires infrastructure to be built prior to generating income derived from
customer utilisation. With NEXTDC operating in a high-growth industry, the Company needs to continually expand its
infrastructure to meet customer demand. It is on this basis that the Board and Committee places emphasis on committed sales,
facilities expansion, margin, and EBITDA growth in incentivising Senior Executives.
The purpose of the STI Plan is to provide an incentive for Senior Executives to achieve against the Company’s strategic
objectives by delivering or exceeding annual business plan requirements for sustainable superior returns for shareholders.
Key terms of the FY20 STI Plan are detailed below.
Feature Description
Opportunity Threshold award of 25% of Base Salary Package and a stretch (maximum) award of 75%
of Base Salary Package.
Measurement period The Company’s financial year i.e. from 1 July 2019 to 30 June 2020.
Performance metrics The below Company Key Performance Indicators (KPIs) were selected as being the most
relevant drivers for improving financial performance and growth in shareholder value and
are also common measures amongst NEXTDC’s global competitors.
Metric Weighting Reason for selection
Group EBITDA 1/3 Indicates the Company’s underlying
profitability best suited to its stage of
New retail NMRR*
1/3 New NMRR committed is connected to the
level of incremental new business signed
with NEXTDC’s two key customer
segments – retail and wholesale New wholesale NMRR
No STI can be paid if the EBITDA gateway is not achieved. The FY20 EBITDA gateway was
set at 95% of budget. In addition, no STI will be awarded to any individual in breach of the
Company’s code of conduct.
Delivery of STI Payments will be in cash unless otherwise determined by the Board and will normally be
paid in September following the Measurement Period subject to the deferral of 50% of the
final STI payment, which may be delivered in cash or by grant of rights to acquire fully paid
ordinary shares.
Deferring 50% of the awarded STI for a period of 12 months is intended to promote
sustainability of annual performance over the medium term, acts as a retention mechanism
and facilitates the exercise of clawback provisions should the Board determine to exercise
its discretion.
Board discretion If the Company’s overall performance during the Measurement Period is substantially lower
than expectations and has resulted in a significant loss to shareho

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