Air New Zealand 2013 Annual Report Download - page 72

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

The current CEO took office on 1 January 2013. For the six months to 30 June 2013 the CEO earned a base salary of $625,000.

The annual value of the STI scheme for the CEO is set at 55% of base salary if all performance targets are achieved. If a performance
rating below 90 is achieved, no STI is payable. Up to 110% of base salary is payable for outstanding performance.
For the six months ended 30 June 2013, the CEO earned a total STI payment to the value of $602,841. This payment will be made in the 2014
financial year.

The CEO has access to the Air New Zealand Long Term Incentive Plan (LTIP).
The mandatory shareholding commitment for the CEO is 66% of the CEO’s fixed base salary. This holding must be maintained to enable
the CEO to exercise any options. The CEO owns or has a beneficial interest in 137,980 shares held as part of the mandatory shareholding.

The CEO is a member of Air New Zealand’s group superannuation scheme, KoruSaver. As a member of the scheme the CEO is eligible to
contribute and receive a matching Company contribution up to 4% of gross taxable earnings (including STI). For the six months ended 30
June 2013 the Company contribution was $25,000.


For the six months until leaving on 31 December 2012, the former CEO earned a base salary of $715,500 (year ended June 2012: $1,431,000) paid in cash.

The annual value of the STI scheme for the former CEO was set at 55% of base salary if all performance targets were achieved. If a
performance rating below 90 was achieved, no STI was payable. Up to 110% of base salary was payable for outstanding performance.
For the six months until leaving on 31 December 2012, the former CEO earned a total STI payment to the value of $713,264 (year ended June
2012: $338,809). The portion relating to individual performance ($157,879) was paid during the financial year. The portion relating to the
Company’s performance ($555,385) will be made in the 2014 financial year.

The former CEO had access to two long term incentives schemes:
• theAirNewZealandLongTermIncentivePlan(LTIP);and
• theCEOLongTermIncentivePlan(CLTIP).

The former CEO earned 4,555,476 options under the LTIP for the 2012 financial year valued independently at $0.184 each, for a total value
of $838,208 (which were issued in September 2012).
The former CEO also earned 1,419,777 options under the LTIP for the six months until leaving on 31 December 2012, valued independently at
$0.278 each, for a total value of $394,698 (which were issued in December 2012).

The CLTIP for the former CEO was established as an incentive to retain the services of the former CEO over an extended period. There is no
equivalent incentive plan in place for the current CEO.
The CLTIP provided that annual grants based on 80% of the CEO’s fixed cash remuneration could, at the discretion of the Board, be made
from the 2008 financial year until and including the 2012 financial year.
The exercise price and valuation methodology of the options under the CLTIP mirror the LTIP scheme. If Air New Zealand’s share price does
not outperform the index, no effective value will accrue to the former CEO.
Under the CLTIP, the former CEO received a grant of 8,607,519 options for the 2012 financial year valued at $0.133 each, for a total value of
$1,144,800 (which were issued in September 2012).
Options issued under this scheme did not vest unless the former CEO remained employed by Air New Zealand through to September 2012.
In September 2012 the former CEO achieved this qualifying period. The options have therefore now been earned and accordingly all five
tranches (financial years 2008 to 2012) have been brought to account in this year’s $100k disclosure report (page 68). The value assigned
to the options is the independent valuation at each grant date (80% of the former CEO’s fixed base salary) for a total cumulative value of
$5,104,800. All options must be exercised within two years of the September 2012 vesting date, otherwise the options then lapse.

The former CEO was a member of Air New Zealand’s group superannuation scheme, KoruSaver. As a member of the scheme the CEO
was eligible to contribute and receive a matching Company contribution up to 4% of gross taxable earnings (including STI). For the 2013
financial year the Company contribution was $51,640 (2012 financial year $71,229).

The former CEO le the Company on 31 December 2012. He received no termination payment on leaving Air New Zealand.
Employee Remuneration (Continued)
Air New Zealand Annual Financial Results 
70