Qantas 2003 Annual Report Download - page 33

page 31
Spirit of Australia
ATTACHMENT 1 continued
THE PERFORMANCE PLAN
The alignment of executive remuneration with the performance of
both Qantas and the individual is a key part of the Qantas People Plan.
Relevant performance hurdles, agreed in advance of the allocation
of incentives, are a key element in an appropriately structured
Performance Plan. Vesting should be over a period that is consistent
with the realisation of the short, medium and long term strategic
objectives approved by the Board.
PERFORMANCE CASH PLAN
The Performance Cash Plan is designed to reward executives when key
performance measures are achieved over the 12 month business cycle.
The target reward is a percentage of FAR dependent on each
individual’s level of responsibility. The actual incentive earned is based
on a combination of Qantas results and individual performance.
Performance against target results on a company wide basis,
determines the amount (if any) of the pool of money available
for payment. Assessment of the performance of individuals against
their specific annual goals and a further assessment of the relative
contribution of executives, results in a differentiated distribution
of the bonus pool.
PERFORMANCE EQUITY PLAN
The Performance Equity Plan comprises the (medium-term)
Performance Share Plan, and the (long-term) Performance Rights
Plan. Both elements are designed to strengthen the alignment
of the interests of the executives with shareholders.
PERFORMANCE SHARE PLAN
The medium term incentive component is delivered via deferred shares
under the Performance Share Plan, subject to satisfactory results on a
balanced scorecard basis. Shares issued under this plan are purchased
on market, half have a one year trading lock and half have a two year
trading lock, after which they may be transferred to the relevant
executive.
PERFORMANCE RIGHTS PLAN:
The aim of the Performance Rights Plan is to:
align the interests of eligible executives and Shareholders;
provide targeted but competitive remuneration;
provide a long-term incentive for the retention of key executives;
and
support a culture of employee share ownership.
As a retention tool, the program is specifically targeted to senior
managers and others identified as high potential developing
executives.
CONCESSIONARY TRAVEL BENEFITS, SERVICE
PAYMENTS AND RETENTION ARRANGEMENTS
Concessionary travel benefits are available to executives within
Qantas. This travel is on a sub-load (standby) basis. There is also
a post retirement element of this benefit for staff who qualify
through retirement or redundancy. These travel benefits are
consistent with practice in the airline industry.
In addition to this, a small number of Senior Executives are entitled
to a number of free trips, for personal purposes. These benefits
extend into retirement, in some cases only for a limited period.
The value of these benefits is accrued over the expected service
of the individual. Eligibility for new participants is now restricted
to members of the Qantas Executive Committee.
The primary elements of retention within Qantas are the provision
of appropriate development opportunities for high performing
executives and the recognition of performance on an ongoing
basis through the remuneration programs detailed above.
For executives appointed to Senior Executive roles, fixed term
contracts of up to five years are agreed on appointment as a
further element of retention. A limited number of these are
eligible for a payment on termination provided they have
completed five years service.
For a small number of the most Senior Executives, there are
negotiated contractual conditions to ensure retention of key
Senior Executives.
CONTINUOUS IMPROVEMENT
Qantas continually reviews all elements of its Executive Remuneration
Philosophy and Objectives to ensure that they are appropriate from
the perspectives of governance, disclosure and reward.