Good morning, ladies and gentlemen. My name is Richard Freudenstein. It is my pleasure as Chair of Appen Limited, to welcome everyone joining us today for our annual general meeting. I'd like to begin by acknowledging the traditional custodians on the land on which we gather, the Gadigal people of the Eora Nation. I also acknowledge the traditional custodians of the various lands on which you are joining us from, and the First Nations people participating in our meeting. I pay my respects to their elders, past, present, and emerging. I wish to advise that today's AGM is being recorded and will be made available on our website after the meeting. It is now just past 10:00 A.M., the nominated time for the meeting, and I've been informed that a quorum is present. I note the meeting has been validly constituted. I'm pleased to declare the meeting open.
I would like to begin by introducing my fellow Directors that are present with us today. Robin Low, Non-Executive Director and Chair of the Audit and Risk Committee. Stuart Davis, Non-Executive Director. Our President, Chief Executive Officer, and Managing Director, Armughan Ahmad. Our four other non-executive directors are attending by phone, as they are based in the U.S. Steve Hasker, who is also Chair of our People and Culture Committee, Vanessa Liu, Lynn Mickleburgh, and Mini Peiris. We also have various Appen executives present, representatives from the company's auditors, KPMG, and representatives from the company's share register, Link Market Services. There are four components to today's meeting. First, I will provide you with an update on Appen's business. This will be followed by a more detailed overview from our President and CEO, Armughan. We will open the meeting for questions on general business after my address and Armughan's presentation.
Following the general business questions, we will then move to formal business of the meeting, where the items set out in the notice of meeting will be put to shareholders. We will also allocate time for questions on each of the items of business when they are considered. Thank you to those shareholders who have submitted questions prior to the meeting. We have endeavored to address those questions during the upcoming presentations. I want to start this morning by reflecting on Appen's performance and the recent actions of the board and management to put Appen on a new path. In recent times, Appen's business has not performed to its full potential. Our 2022 financial results were far from satisfactory and reflect the broader tech slowdown that we are seeing in the U.S. At the same time, 2022 was a breakthrough year for AI, with the emergence of generative AI.
The evolution of large language models such as ChatGPT have created significant excitement around the future of AI. While we're energized by the potential of AI and generative AI and what this could mean potentially for Appen, our immediate task is to reset the business. As part of this reset, earlier this month, we announced a substantial cost reduction program to ensure Appen's cost base is aligned to our revenue expectations and market conditions. We also undertook a fully underwritten equity capital raising of AUD 60 million to support the company's strategy refresh and return to profitability. The equity raising is comprised of two parts: a pro-rata accelerated, non-renounceable entitlement offer of AUD 38 million and a AUD 21 million institutional placement. Due to legal restrictions, we cannot discuss any further details relating to the capital raising other than the basic terms I've referred to here.
We anticipate making further announcements in accordance with our ASX continuous reporting obligations in due course. Following the equity raising, we will need to refresh Appen's placement capacity. This requires shareholder approval, and we will therefore hold an extraordinary general meeting in the not-too-distant future, seeking your support. To tell you more about our year and reset, I will cover five topics before handing over to Armughan for his first AGM presentation as CEO and President of Appen. I'll cover new leadership, board renewal and governance, Appen's remuneration framework and CEO remuneration, FY 2022 financial performance, and AI for good. Starting with leadership. Most of Appen's employees and businesses are overseas, with 90% of our revenue derived from the U.S. In taking the company forward, the board felt it was important that we appoint a North America-based CEO.
Armughan is a successful and respected executive in the North America technology industry. He commenced as our CEO and President on 9th January 2023. Armughan has deep technology expertise in international markets and experience in driving growth, operational excellence, and delivering best-in-class innovation. These attributes are critically important for Appen. His proven track record gives me confidence that he will get the entire Appen team engaged and invested in the journey to delivering the full performance potential of the company. As part of this mandate to reshape our strategy and improve returns to shareholders, he has already made great progress in instilling a high level of operational rigor across the business. On the 1st of May, we also announced that Helen Johnson joined as our Chief Financial Officer. Helen brings nearly 30 years of finance experience, primarily with publicly traded and global businesses.
With a background in corporate finance, including leading global teams in turnaround and growth scenarios, she is a tremendous asset. Helen will be based in North America and will partner with the board and Armughan in the next phase of Appen's transformation. Armughan and Helen succeeded Mark Brayan and Kevin Levine, respectively. Both Mark and Kevin served as Appen CEO and CFO for more than seven years. On behalf of the board, I would like to thank Mark and Kevin for their considerable contributions to Appen. Kevin will remain with the business until one September to support Helen in her role and ensure a smooth handover. We maintained a strong focus on governance at board level as we guide Appen through its next phase.
In line with the board's renewal plan outlined before the 2021 AGM, we welcomed three new independent directors, Stuart Davis, Lynn Mickleburgh, and Mini Peiris. Last year, you would have heard me speak about Stuart's appointment as he joined the board on 29 March 2022 and stood for election at last year's meeting. Lynn joined the board on 29 July 2022, and Mini joined the board on 4 November 2022. Both Lynn and Mini are very experienced Silicon Valley executives and are standing for election today, and will address shareholders on their candidacy later in the meeting. The Appen board comprises eight directors, including the managing director. The appointments of Stuart, Lynn, and Mini complete our process of board renewal. Collectively, their experience, skills, and detailed knowledge greatly benefit the board. Appen now has three non-executive directors based in Australia and four non-executive directors based in the U.S.
I consider the board to have the right balance of corporate governance, deep financial experience, and industry perspectives on the U.S. market, as well as diversity of thought and background. Steve Hasker, Chair of the board's People and Culture Committee, a long-standing and experienced director, offers himself for re-election today and will also address shareholders later in the meeting. Turning to remuneration. I will now cover the second item on today's agenda, the remuneration report, item six on the agenda, the grant of long-term incentive performance rights to the CEO and President, and item seven on the agenda, the sign-on bonus to the CEO and President. Steve Hasker will speak to the remuneration report in more detail shortly. I will therefore keep my comments brief with respect to the 2022 remuneration outcomes. At last year's AGM, I spoke about the reset of our remuneration strategy in line with shareholder expectations.
Our executive remuneration framework remains heavily weighted towards performance and at-risk equity-based pay, and the Board continues to set challenging short and long-term targets. For FY 2022, the short-term incentive or STI scorecard include a combination of financial and non-financial metrics to reflect our focus on customer, crowd, and employee satisfaction. This year, we saw solid improvements in customer NPS and employee engagement. Our crowd NPS score was disappointing, and we are working hard to improve the crowd experience and lift crowd satisfaction. In recognition of the improvements in our customer NPS and employee engagement, a partial STI was paid. As I will outline in a moment, our financial performance was disappointing and consequently, there was no STI payable for our financial performance. Turning to the CEO's remuneration arrangements and item six on the agenda.
In designing a remuneration framework for Armughan, we felt it was very important to have good alignment between executive pay and shareholder value creation. At the same time, Armughan's remuneration package needed to reflect elements of the North American technology industry practice where Armughan operates. Sorry, where Appen operates and where Armughan lives. His package is very heavily weighted to at-risk pay, with targets that require a significant improvement in Appen's share price. His package includes a base salary of $600,000. His STI is equivalent to 100% of base at target and up to 150% at maximum. This, of course, is subject to the same mix of financial and non-financial metrics as other KMP, with 25% of any STI awarded to be deferred into equity for 12 months.
The LTI component of Armughan's remuneration is valued at $5 million and vests after a three-year performance period. It is subject to Appen's absolute shareholder return over a three-year period, being equal to or greater than 190%, which is the minimum vesting requirement, up to 320% to trigger full vesting. This means that the share price must be significantly higher than where it is today for vesting to occur. This performance measure was chosen to align Armughan's interests with shareholders from commencement. He will only be rewarded for delivering significant shareholder value. Armughan will not be eligible for another LTI grant until after December 31, 2025. Turning to item seven on the agenda, there is also a sign-on bonus equivalent to $2 million.
This is payable through monthly vesting of equity over two years and reflects U.S. technology industry practice. The sign-on bonus replaces a portion of what Armughan would have otherwise received at his previous employer. We consider his package to be fully aligned to shareholders. We also feel fortunate to have a CEO of the caliber of Armughan to take the company forward. Turning to Appen's financial performance. For the 2022 financial year, we reported a statutory loss of AUD 239.1 million. This reflects an impairment of AUD 204 million attributed to the investment in the new markets business. Total revenue declined 13.1% to AUD 388.1 million due to the broader tech slowdown that I mentioned earlier.
Pleasingly, revenue from new markets, excluding global product, increased 15.4% to AUD 70.2 million. underpinned by strong growth in China. Revenue from our second-largest customer increased by 20%. Underlying EBITDA before foreign exchange declined from AUD 78.8 million to AUD 13.6 million. This reflects lower revenue, lower gross margin, increased costs to support growth in new markets, investment in people across product technology and transformation. As a reflection of the company's financial performance, we did not pay an interim or final dividend. I will now turn to our non-financial performance metrics and how we are embedding AI for good across the company. AI for good is something we are passionate about. It reflects the positive impact of our work on society.
In positioning Appen to capture its full growth potential, we are also focused on delivering good outcomes and doing the right thing by all stakeholders. We recognize the value of our 1 million+ crowd and the value our crowd provides to our customers. We pride ourselves on the high ethical treatment of our crowd, as defined in our Crowd Code of Ethics, our Global Ethical Sourcing and Modern Slavery Policy. We're also diligent when it comes to keeping data safe. At Appen, every day, we are trusted with the data of our customers, crowd and employees, and you, our shareholders. Our systems and processes are based on international standards, and every quarter, the board meets with management to assess our capability. Our in-house experts remain at the forefront of data security to protect stakeholder data and meet privacy obligations.
In 2022, we recorded no material privacy breaches. Promoting a diverse and inclusive culture across all aspects of Appen's business is also a key focus. In 2022, female representation among the senior leadership team increased from 38% to 43%. We also maintained female representation of 50% among non-executive directors. At Appen, we recognize that diversity is more far-reaching than gender. We understand that for AI to perform correctly, it requires diverse databases, data sets that are representative of the real world. To deliver on our commitment to responsible AI, we ensure the crowd is sufficiently diverse. We are also focused on increasing the value and trust in AI, and through our partnership with the World Economic Forum, we're able to help shape responsible AI standards.
You may recall that last year I spoke about our commitment to support initiatives to transition to Net Zero emissions. This year, we made good progress and have published our Net Zero roadmap, designed to achieve our Net Zero emissions target. In 2022, we also became a signatory to the United Nations Global Compact and have committed to take action to embed the 10 principles within our business practices. On behalf of the board, I would like to thank you, Appen shareholders, for your ongoing support. I understand that 2022 was a disappointing year. I do look forward to the year ahead and working with the board and new management to position Appen to capture the opportunities in the AI space. Despite the uncertainty of the operating environment, the board and management are confident we can position Appen to capture opportunities presented by generative AI.
I now welcome Armughan Ahmad to give his first AGM address as CEO and President. Armughan?
Well, good morning, everybody, and then people who are joining from the webcast, good afternoon, good evening. I appreciate your time. This is my first AGM address to all of you as the new Chief Executive of Appen, and I, on behalf of my leadership team and us, we welcome you. We have a plan. We would love to share that plan with you. We believe that artificial intelligence is changing at the speed of light these days. Technologies like ChatGPT are considered generative AI technologies, but they have one key differentiation: It requires human-in-the-loop. For the last 28 years, we have had that exact work that we've been doing for deep learning AI, which is now very relevant. That is why I joined Appen.
That is why majority of the leadership team who is staying here and the ones that have just joined Appen is for that reason. I'm going to start by telling you just a quick story when I say: What is generative AI? I don't know, by show of hands, how many of you just in the room have used ChatGPT? Okay. If you take a look at just this prompt, where if I was to ask it to say, "Today, I'm meeting with valued shareholders and our investors, write a note," that's the kind of note it would write for you. If I then asked a different prompt, as you can see, it's a very dear valued investors, we are immensely grateful. If I asked it with human-in-the-loop to correct that and provide a new instructive prompt, it...
Asked it to write a more friendly one for you know, it's a, it's a tongue-in-cheek comment, but it's very important because we have 1 million people on our crowd that do that work for some of the largest large language models and generative AI companies. You're seeing the Google Bards of the worlds right now that are now launching, and Appen's been powering that solution for many years. It just is now coming out, so you're starting to see solutions like those. Our view is that it's just not for some basic language-based prompts.
Our engineering team, Saty Bahadur, and along with Mike Davey and Sujatha Sagiraju, who are here, our Chief Product Officer, they've now been using these types of large language models for us to provide our product development and coding for that purpose. I can actually ask it to write code now, and almost 50% of our code is written using large language model solutions. Think about the cost efficiency that comes with it. I don't know how many of you have taken a picture at a family off-site, where someone's eyes were closed. Now you can actually fix all of this real-time with large language models, where your favorite pet or your child or a family member was closing their eyes, and you can now look to fix that.
This, again, is an image annotation-based business that we've had for many years, that led to data collection work, that has now led to our human relevance work. Julie Vonwiller, who is here in the audience, is our founder, professor of linguistics, from Macquarie University, and then served at The University of Sydney, and then founded this company, and it was a speech-to-text company. That was our language-based speech-to-text. generative AI's real name is large language model. I keep reminding this to people, that language is very important. We then, in 2000, did that same type of work for some intelligence agencies to catch some bad people in the mountains of Afghanistan, which I still can't tell you about. In 2010, that same technology gave birth to Amazon Alexa and voice assistants, again, powered by Appen.
That led to, in 2010s, Appen powering the relevance piece. I just want to debunk one huge myth, that somehow people think that we're just a labeling company or data annotation company. 70+% of our revenue that comes from the biggest hyperscalers actually comes from the relevance work we do, which is when you type in search in Google, "Find me a black suit," it actually shows you a black suit and not ethnic people wearing black suits. That's called relevance work, and that same relevance work is now applicable to generative AI. You shouldn't take our word for it as a management team and the board. We have many top customers in the world, Fortune 500 customers, who been relying on us. Again, you shouldn't take our word for it that they are.
Some of them have been with us for many years. We have a short video with some of the largest companies in the world and some of the most advanced technologies who are now coming out. We'd like to play that video for you.
Hi, everyone. I'm Hemant Tuli, Global Head of NVIDIA AI Software at NVIDIA. Since 2020, NVIDIA has worked very closely with Appen as one of our key partners to develop speech and language models using Appen datasets. Appen's experience for data across AI lifecycle will be a critical step forward for helping enterprises accelerate building, deploying, and adoption of customizable AI, bringing AI to each and every industry.
I'm Dani Yogatama, Co-founder and CEO of Reka. We have been very impressed with Appen's deep expertise in AI training data, and deep knowledge of model evaluation, monitoring, and benchmarking. We are building API integrations with Appen platform that enable real-time model feedback and tuning. We are incredibly excited to work with Appen to safely and responsibly bring generative AI to businesses.
At Salesforce, trust is our number one value. We take great pride in delivering AI-driven solutions that meet the needs of all of our customers and users, regardless of their linguistic, dialectal, or cultural background. Our customer success is our success, and helping them build experiences with equality in mind is why we partner with Appen for our AI data services. Appen is a reliable and experienced partner in the space, offering high-quality datasets, custom data collections, and access to global data sources. Their deep language expertise and long history of supporting the development of trusted AI data models is precisely why they're my go-to partner for all things conversational AI and data. With Appen, we can confidently deliver solutions that meet our customers' and users' interactional, social, and behavioral needs. We trust Appen.
We have some of the largest organizations trusting us. We believe you just saw NVIDIA, that's a AUD 700 billion market cap company partnering with us. The founders of Google Brain is now at Reka, who are partnering with us. They see something in Appen. They see the large language model and the language and the human-in-the-loop. We really believe that generative AI has a new language, programming language, it's called Human. The prime ministers and the presidents of the G7 just met last week in Hiroshima for an AI accord to talk about how to make AI for good, and in order to do that, they really believe that human alignment with AI will be critical, and we believe that we're right in the middle of that.
I just want to tell you that, as we're moving forward and moving into more and more enterprises, generative AI is helping us move much faster into enterprise, Fortune 500 enterprise. We've been doing this work with hyperscalers for a long time. CEOs have two big issues right now. I talked to a lot of CEOs along with my leadership team. Number one, they would like 77% of them want to make this a board agenda as well as their CEO agenda. They have made it. 90% of them are really worried about the risk of artificial intelligence. That is why Appen has fine-tuning services and assurance services now that we're providing to many of those customers that were in the video just now. I would just tell you that we're super excited about the technology stack.
I wanted to show you, as our valued shareholders, what that stack looks like. You just saw our partnerships. In NVIDIA, we now have partnerships with the AWS, Google, and Microsoft. We're now leveraging that to build large language model. A lot of people don't know, other than ChatGPT, that these large language models are what enterprises are using, and then they like to put in their data on it to train it. In order for that to be then trained, you need Appen to fine-tune it with Appen services, and then you need Appen to assure it in order to create the search bar on top of everything that we all just see these days. We believe that in the future, and we're already selling this in front of our clients, many, many of our clients, is contact centers, knowledge management, discovery, and e-commerce.
That becomes relevant to most enterprises. I just want to tell you that we believe in the old days, software was eating the world. We now believe AI is going to eat software. That essentially means that it's a trillions of dollars of industry that's getting disrupted. This is not just our point of view. IDC, which is one of the most reliable industry analysts in the world, have now set this to be a close to a AUD 308 billion target. Our Appen Crowd and our Appen ADAP that came through our acquisition of Figure Eight, continues to be very relevant in this new space. I just want to close by telling you, I joined here four months ago.
When I was last here for our earnings release, for the year end, I told our shareholders and valued investors that we were going to deliver operational rigor, take cost out, deliver new products, develop a world-class go-to-market, sign new partnerships, globally with ecosystems, and then deliver AI for good. This is my report card to you. There are things that we have checked. There are some things that we still have to build, such as go-to-market and industry verticals. That is our next set of priorities, and these are our next set of priorities that we're highlighting. I'm a huge believer, as Richard said, of operational rigor. That is my 27-year history, along with Helen and our entire leadership team.
I just want to tell you that no one gets to this podium as a chief executive or a board chair by themselves. As the board and me as the chief executive, are really valued supporters of our leadership team, and our leadership team is the one that backs us for us to do this work every day. They're in the front row here, and some are virtual. I just want to thank them for their hard work that they have done over the last four months on taking Appen to the next level. I would like to end with this: purpose, perspective, prosperity. Culture code is very important to us. Richard talked about AI for good. Be good, do good, lead good. We believe that that's the order we need to work in.
Purpose first, perspective second, that would lead us to prosperity. I just want to thank you for your time. I'd like to turn it back over to Richard. Thank you, Richard.
Thanks, Armughan. That was great. It is great to have the, almost all the, Appen leadership team, most of whom are based in North America, here with us today, which is fantastic. I would now like to open the meeting to general questions. You'll have opportunity to ask questions pertaining to each resolution when we get to the formal business of the meeting. Before we begin, just as a reminder, this is a shareholder meeting, and therefore, only shareholders, proxy holders, body corporate representatives, or attorneys are able to ask a question at this meeting. Visitors have been issued a red card. If shareholders holding a blue or yellow card wish to make comment or ask a question, you should raise your admission card.
Please, when called upon, please state your name, or if you're acting as a proxy, identifying who you appointed and represent prior to making a comment or asking a question. In the interest of all shareholders, I'd also ask that you be concise in your question and comment, and we will endeavor to respond in the same way. I will now take general business questions. There's a microphone coming around to Peter.
Thank you, Richard, and great to meet you, Armughan. Welcome. Peter Gregory is my name. I'm representing the Australian Shareholders' Association and also a shareholder myself. I have proxies for 29 shareholders, totaling over 104,000 shares. I'd comment that ASA members are generally long-term shareholders who are very loyal to the companies that they choose to invest in. The result for 2013 shows a reduction in revenue of 13%, and if I do some maths and take the China growth out of that, the actual reduction in the rest of the business is more like -16%. Very disappointing when you consider the rate of growth in the marketplace itself, which suggests a far greater rate of loss of penetration. Armughan, we've heard your comments.
We've seen the leadership team we've appointed. You've appointed. We're looking forward in very short succession to seeing you walk the talk. A question. China has grown from 5.5% of Appen's revenue in 2021 to 8.6% in 2022. I understand that much of this revenue is from autonomous vehicles. I also understand that in the U.S., autonomous vehicle manufacturers jealously guard their AV, AI, and do very little work in engage with companies like Appen.
In terms of the business position in China, do you have a concern that they will fairly quickly learn how to do it, will exit the business, and will possibly do so taking some Appen people with them? Now, while that's a general question about China, it also has a general applicability to your business generally, in particular, with regard to the headhunting of Appen people. Could you comment?
Yeah. Thanks, Peter. Good to see you again, and we do thank the ASA for their ongoing support. There's probably a few questions in there. In terms of the China one in particular, I think as Armughan sort of outlined, the sort of services we provide around training models, testing models, relevant testing, things like that, we don't actually build the AI software. The sort of companies that produce autonomous vehicles or other large language models will use our services. You're right, they keep their IP around the AI model probably very closely to themselves, but they will use our services to test those models, train those models, and we see that continuing into the future, both in China, where we're expanding our customer base, every single day, it seems.
I sat next to Rock at dinner on Wednesday night, it's a very positive story, I believe, coming out of China. I think we've done some work with autonomous vehicles in the U.S. as well. I think the sort of services we provide, we will continue to be providing in this new world. Sorry, on the sort of issue around staff, despite the tech turndown in the U.S., it is still a very competitive market for highly skilled people. That is absolutely true. We've now got a new management team in place. There's a lot of work being done around the culture within the company, and we're very optimistic about the future for our staff.
If I can ask about the write-down of AUD 200 million. From reading the annual report, I understand that relates to loss of customers with Figure Eight. We did hear in the discussion, Armughan's presentation about the growth of Figure Eight. Sorry, the growth of the use of Figure Eight products. Can you elaborate a little more on what the write-down is actually about?
Thanks, Peter. The write-down was in our new markets division, which, some of which is quite a lot of which is related to Figure Eight. We continue to assess future revenues against all our acquisitions, 'cause when you take the acquisition, there's a lot of goodwill there. Given our revenue slowdown over the past 12 months and looking at future revenues, the amount we had to write down the goodwill from that business. It doesn't. I think Armughan's talked about how the business is being reset, where there's future growth opportunities. In relation to the specific acquisition, we had to write down that goodwill.
A final question about environmental matters. On page 47 of the annual report, there's reference to purchasing assets as part of the strategy to getting to Net Zero by 2030. It states there'll be an increase of 20% per year, I'm not clear if that's due to increasing cost or increasing emissions needing to be offset. A 20% increase equates to 3x the current cost by 2030, which is, we're all aware, is only seven years away. Can you comment on other mitigation strategies that Appen has in place to reduce the dependence on offsets, particularly considering, I think a large part of the offsets are due to, excuse me, the Scope 3 emissions because of the crowd around the world?
Yeah. Thanks, Peter. Look, we have obviously announced that a Net Zero target in the future. We are fortunate that we're not a mining company or a big energy company, so overall, our emissions are relatively small. We still think it's important to reduce those. There's a significant program of work on our Scope 1 and Scope 2 emissions, which are mainly around our offices and things like that. You're right, most of Scope 3 relates to our Crowd, and we will continue to work with our Crowd about how to reduce their emissions, and it's their emissions while they're working with us. It's not all their emissions, remember. It's their emissions when they're working with us.
What we've realized as part of this plan is that we won't be able to get the crowd to zero on their own, so we will have to buy some offsets going forward. In the overall scheme of things, that's a relatively small amount of money.
Yep. Thank you.
Any other questions on general business? Okay, thank you for those questions. We'll now progress to the formal business of the meeting. The notice of meeting was made available to all registered shareholders within the notice period required. With your consent, I'll take that document as read. During the course of the meeting, I will present various resolutions to the meeting. We will strive to ensure that all shareholders who wish to speak have a reasonable opportunity to do so. I've been advised that all proxies received for the meeting have been checked, and I declare them valid for voting. I will disclose proxy votes on your screen prior to the vote being taken for each item. These figures include the results as recorded at the closing time for receipt of proxies, which was 10:00 A.M. on Wednesday, 24 May 2023.
There are a number of voting exclusions that apply to the resolutions being presented at today's meeting. These are outlined in the notice of meeting. Voting on all resolutions will be decided via a poll, which I now declare open. The poll will be taken at the end of the meeting, and the results announced to the ASX shortly after the close of the meeting. As chair of the meeting, and as detailed in the notice of meeting, I will vote, where authorized, all undirected proxies in favor of each resolution. The first item of notified business is to receive and consider the financial report, the directors' report, and the auditors' report for the year ended 31 December 2022.
There is no formal resolution required for this item, but I invite shareholders to ask questions or make a comment on the financial report or the reported directors or auditors, ask questions or make a comment on the management of the company, or ask any questions of the auditor relevant to the conduct of the audit, the preparation of the content of the auditor's report, the accounting policies adopted in relation to the preparation of the financial statements, or the independence of the auditor in relation to the conduct of the audit. I will now take questions on the company's financial statements, the performance of the company over the year, and the directors' report and auditors' report. Any questions on that topic? Okay, thank you. I'll now move on to the next item of notified business, the remuneration report.
Before we move to questions and a vote on the remuneration report, I would like to hand over to Steve Hasker, Chair of the People and Culture Committee, for his report. Steve?
Thank you, Mr. Chairman. Good morning, everyone. My name is Steve Hasker, and I'm Chair of the Board's People and Culture Committee. On behalf of the committee, it's my pleasure to provide an overview of the 2022 Remuneration Report, which is item two on the agenda today. This year's Remuneration Report represents the first year of implementation of our new executive remuneration framework. To tell you more about Appen's 2022 Remuneration Report, I will cover four agenda items, being first, a recap of Appen's remuneration framework, second, key remuneration outcomes for 2022, third, changes to KMP and remuneration arrangements, and fourth, fees payable to non-executive directors and our minimal shareholding policy. 2022 marked the first year for Appen in its new remuneration framework, where we made a number of substandard changes to better align shareholder interests to creating long-term value.
These changes included introduction of non-financial measures versus prior year structure of 100% financial, no payout of STI until 90% of performance was achieved versus prior 80%, STI deferral for the CEO introduced, LTI moves to three-year performance hurdle versus prior year annual testing, malice and clawback policies adopted, and shareholder ownership guidelines adopted. Our STI framework, starting in 2022, now includes financial and non-financial performance and better aligns to remuneration outcomes with long-term shareholder returns, in addition to ensuring engaged employees and a differentiated customer and crowd experience. Changes in 2022 reflect design changes as provided by the Board Remuneration Advisor. Appen will always regard its financial outcomes as paramount and has allocated a 70% short-term incentive, or STI, weighting to financial metrics and a 30% STI weighting to non-financial metrics.
This was in contrast to 2021, where financial outcomes were weighted at 100% and no non-financial metrics were included. As a board, we continue to set challenging targets. In relation to the STI, financial targets for revenue were set 24% higher and revenue diversification set 66% higher, and the underlying EBITDA set 17% higher. Our non-financial targets for customer NPS were set 300% higher, Crowd NPS set 13% higher, and employee engagement set at 82% versus an industry benchmark of 80% and an FY 2021 actual of 76%. Shareholders may recall that Appen has two equity-based long-term incentive or LTI plans. The U.S. plan has a combination of time-based and performance-based components. 50% is time-based and vests over a three-year period, vesting in three equal tranches annually.
50% is performance-based and vests at the end of year three, subject to meeting the performance metrics of revenue CAGR of 15%, underlying basic earnings per share CAGR of 7.5%, and three years of continuous employment. The U.S. plan allows Appen to compete for talent in the highly competitive North American technology sector. The Australian LTI scheme is 100% performance and service hurdle-based, with all LTI vesting at the end of year three, subject to meeting the performance metrics of revenue CAGR of 15%, underlying basic earnings per share CAGR of 7.5%, and three years of continuous employment. In terms of STI awards, all KMP received an annual STI with respect to exceeding the challenging threshold targets set for some of the non-financial metrics, being customer NPS and employee engagement.
These two metrics comprise up to 20% of STI. No STI was paid to any KMP with respect to the crowd NPS non-financial metrics, worth 10% of STI, and no STI was paid to any KMP with respect to the financial metric, worth 70% of STI, as Appen's FY 2022 financial performance was not in line with the target set. In terms of LTI. The 2019 executive LTI award, tranches one and two, were tested following the end of FY 2021 and vested in full in FY 2022 for Australian executive KMP, following fulfillment of necessary performance and service conditions. Tranche three of the 2019 executive LTI award did not vest and has expired unexercised, as the challenging underlying basic earnings per share target of 20% growth was not met.
With respect to the 2020 executive award, tranches 1, 2, and 3, the relevant performance condition of 20% underlying basic earnings per share annual, that is year-on-year growth, has not been met in FY 2020, FY 2021 or FY 2022. As such, the rights have been forfeited. With respect to the 2021 annual executive award, tranches 1 and 2, the relevant performance condition of 20% underlying basic earnings per share growth has not been met in FY 2021 and FY 2022. For these tranches to vest on release of Appen's FY 2023 results, a significantly more challenging underlying basic earnings per share growth target will need to be met, being growth of 73% over three years.
The 2022 Australian executive KMP LTI award and the performance component of the U.S. executive KMP LTI award will not vest until 2024, given the three-year performance condition. There is no annual testing during the vesting period. Note, these grants have a three-year hurdle tested at the end of three-years versus prior years, where annual testing was done. Turning now to changes in KMP and remuneration arrangements. The Chair has already addressed the meeting on matters relating to remuneration arrangements and our new CEO and President. Therefore, I restrict my comments on remuneration arrangements for the previous CEO, Mark Brayan. As announced on the 15th of December, 2022, Mr. Brayan ceased in his role as CEO. In 2022, Mr. Brayan did not receive the fixed remuneration increase and remained on AUD 750,000.
After careful consideration by the board, given the challenging threshold targets for the customer NPS and employee engagement metrics were met, the board determined an STI outcome equal to 11.68% of maximum be awarded to Mr. Brayan. The board exercised its discretion to reduce Mr. Brayan's STI from 15% of maximum. In line with the changes in the remuneration framework announced last year, 25% of Mr. Brayan's award will be deferred and paid in shares in 12 months' time. He remained with Appen on the same fixed remuneration as an advisor to the chair until the 28th of February, 2023, to ensure a smooth transition. On termination of his role as CEO, all performance rights granted to Mr. Brayan under the LTI plans lapsed. Mr.
Brayan is subject to competitor restraints and non-socialization clauses for 10 months from the date of cessation of his employment with Appen. In addition to his contractual entitlement to payment in lieu of notice, which is six months, the board determined another four months fixed remuneration to be paid to enforce the restraints in place. In total, this represents AUD 625,000, or 10 twelfths of his fixed remuneration, payable on July 2023. Mr. Brayan will not receive any other termination or severance benefits other than his statutory, annual, and long-service leave entitlements. Turning to non-executive director fees and Appen's minimum shareholding policy. In 2022, non-executive director fees of AUD 856,278 remained unchanged from 2021. No change to non-executive director fees is proposed for FY 2023.
The board has adopted a minimum shareholding policy to assist in aligning the interests of all directors with shareholders' interests. This policy requires non-executive directors to hold Appen shares to the value of at least 100% of the annual non-executive director pre-tax base fee within three-years of their appointment, using the base fee at the time of the appointment, and it excludes any committee fees. Currently, all non-executive directors that have served on the board for at least three-years are compliant with the minimum shareholding policy. In closing, I'd like to reiterate that the board is committed to good governance and remuneration practices that consider the expectations of all stakeholders. The board recommends that shareholders vote in favor of this resolution. Thank you, and I will now hand back to the chair.
Thanks, Steve. I will now put the resolution to the meeting as displayed on the screen. Details of votes received for this item are on the screen. I now open this item for discussion. Are there any questions? Okay, thank you. I will now turn to the next item. The next item of notified business concerns the election of Ms. Lynn Mickleburgh as a Non-executive Director. I put the resolution to the meeting as displayed on the screen. Before opening the item for discussion.
Thank you, Richard, and good morning, everyone.
Lynn's ready to go.
Let me start by saying that it is an honor to be nominated as an independent non-executive director of Appen. I joined the Appen board July of last year, and it has been a privilege to be afforded the opportunity to serve the company and shareholders alongside my fellow directors to support Appen in achieving its strategic goals. As an independent non-executive director, I bring over 30 years of experience in high tech, with leadership positions spanning finance, transformation, and operations. For the last five years, I have been a non-executive director at Altium, an ASX 100 company. Prior to this, I spent my career working at several Fortune 500 high-growth companies in Silicon Valley in the U.S., including Apple Computer, Adobe Systems, Citrix, and Atlassian.
As a transformational leader in these companies, I developed a track record of driving cost-effective growth, leveraging emerging technologies, and adapting quickly to changing market conditions to remain relevant in highly competitive environments. If elected to the board, I would bring my skills and experience to bear in helping guide the direction of Appen. I would work diligently and collaboratively with my fellow board members and the executive team to embrace growth opportunities while managing risk and ensuring that the company is operating in a way that is consistent with its values and commitments. I am excited about Appen's future, supporting its vision to harness the power of generative AI and being part of a company that believes in ethical and trusted AI. In closing, I would like to thank you for considering my nomination.
With your support, I look forward to the opportunity to continue to serve on the Appen board and working hard in the interest of Appen shareholders. I will now hand you back to the Chair. Thank you.
Thank you, Lynn. Details of votes received for this item are on the screen. I now open this item for discussion. Are there any questions on Lynn's election? Okay, thank you. The next item of notified business concerns the election of Mini Peiris as a non-executive director. I put the resolution to the meeting as displayed on the screen. Before opening this item for discussion, Mini will say a few words about her election.
Thank you, Richard. Good morning, shareholders, and ladies and gentlemen. It is a pleasure to be here today, and it is truly an honor to be nominated as an independent non-executive director. I joined the Appen board in November 2022, and it has been a privilege to have the opportunity to serve the company and shareholders alongside my fellow directors, to help Appen continue to move forward and evolve as a business in reaching its full potential. As an independent non-executive director, I bring over 25 years of international experience in executive management within the technology sector, particularly across go-to-market strategy, customer acquisition, product strategy, and value creation. I currently serve as an advisor to high-growth software as a service companies within the portfolio of Scale Venture Partners in the United States.
I am also the Chief Marketing Officer of Doma, a publicly traded real estate technology company listed on the New York Stock Exchange, which leverages machine intelligence to remove friction from the process of purchasing a home. Earlier in my career, while at NetSuite, I drove product strategy prior to NetSuite's initial public offering and helped establish it as a leader in cloud ERP. I went on to lead marketing for NetSuite worldwide, which included driving international growth across Australia, Japan, the Philippines, and the United Kingdom. If elected today, I will continue to apply my experience and skills to make positive contributions to the board and help Appen increase its market share. My understanding of the dynamic technology sector complements the expertise of the current directors and expands the diversity of thought across the Appen board. I am excited about the future of Appen.
The AI market is at a crucial point of evolution with the rise of generative AI. Appen can help shape the future of generative AI by powering the human feedback data required by large language models. I will use my experience at global product-led businesses on the Appen board to help improve returns and drive long-term value for shareholders. Thank you for considering my nomination. With your support, I look forward to working hard in the interest of Appen shareholders. I will now hand you back to the Chair. Thank you.
Thank you, Mini. Details of votes received for this item are on the screen. I now open this item for discussion. Are there any questions? Thank you. The next item of notified business concerns the re-election of Steve Hasker as a non-executive director. I put the resolution to the meeting as displayed on the screen. Before opening this item for discussion, Steve will say a few words about his re-election.
Thank you, Richard. Good morning, everyone. It has been a privilege to serve as the Non-executive Director of Appen since April 2016. If elected today, it will be a further privilege to serve for another term. I believe I've made positive contributions to the board through my role as Chair of the People and Culture Committee, and in particular, setting the foundations for Appen's new executive remuneration structure, which seeks to better align remuneration outcomes with long-term shareholder returns. Based in the United States, I've served as a CEO, a Chief Operating Officer, and an advisor. Since March 2020, I've been President and CEO of Thomson Reuters.
Prior to this, I was a senior advisor at private equity firm TPG Capital, 2019-2020, and CEO of CAA Global, a TPG Capital portfolio company from 2018-2019. At Nielsen Holdings plc, I served as Global President and Chief Operating Officer from 2015-2017, and then President of Global Products from 2009-2014. Before that, I was a partner at McKinsey & Company from 1998-2009. While 2022 represented a challenging time for Appen, I'm excited by the opportunity to work alongside my fellow directors and our refreshed management team to position the business to help capture the growth represented by generative AI. It is a fast and very dynamic space.
Thank you for consideration of my nomination. Please be assured that I have both the commitment and the time to devote myself to Appen and to work hard for your best interests. Thank you, ladies and gentlemen. I will now hand back to the Chair.
Thanks, Steve. Details of votes received for this item are on the screen. I now open this item for discussion. Are there any questions on Steve Hasker's re-election? Okay, thank you. The next item of business is in relation to the grant of rights to our CEO and President, Mr. Armughan Ahmad. I put the resolution to the meeting as shown on the screen. Details of votes received for this item are on the screen. I now open this item for discussion. Are there any questions? Okay, thank you for that. The next item of business concerns a sign-on bonus to our CEO and President, Mr. Armughan Ahmad. I put the resolution to the meeting as shown on the screen. Details of votes received for this item are on the screen. I now open this item for discussion. Are there any questions? Thank you very much, everyone.
Ladies and gentlemen, this concludes the formalities of the meeting. I now ask shareholders to complete their voting cards. To cast your vote for, against, or abstain, place a mark in the corresponding box for each item on your voting card. If you place a mark in more than one box in relation to a resolution, your vote for that resolution will be invalid. Link will collect your voting card. I now declare the poll closed. As I mentioned earlier, the results of this meeting will be announced to the ASX as soon as they have been counted and verified. I now declare the meeting closed. I would like to take this chance to thank my fellow directors and Armughan and his management team, and their diligence commitment to the business. I would also like to thank you, your shareholders, for your support and participation today.
I look forward to having a cup of coffee with you afterwards, and then meeting you again at next year's annual general meeting. Thank you.