Air New Zealand 2014 Annual Report Download - page 72

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The exercise price of the options is set three years from issue date, and is calculated by multiplying the share price of the Company’s
shares at the date of issue by the movement in an index over the three years to exercise date, decreased by any distributions made by
Air New Zealand over the same period.
The index comprises the Total Shareholder Return (TSR) for the NZSX All Gross Index and the TSR for the Bloomberg World Airline Total
Return Index (adjusted for dividends) in equal proportions.
The share price at the date of issue is measured as the average daily closing price of ordinary shares over the ten business days starting
on the third business day following the announcement of the Company’s annual results.
Options may be exercised at any time after the third anniversary and before the fifth anniversary of the date of issue assuming any
conditions outlined and any additional conditions set by the PRDC have been met.
Unless Air New Zealand’s share price outperforms the index as outlined above, no value will accrue to the participating executive.
CEO฀REMUNERATION
Fixed฀ Base฀ Salary
Over the course of the 2014 financial year, the CEO, Christopher Luxon, earned a base salary of $1,325,000 (the current CEO took office
on 1 January 2013 and for the six months to 30 June 2013 earned a base salary of $625,000).
Annual฀ Performance฀ Incentive
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฀ of฀ unsatisfactory฀ is฀ achieved,฀ no฀ STI฀ is฀ payable.฀ Up฀ to฀ 110%฀ of฀ base฀ salary฀ is฀ payable฀ for฀ outstanding฀ performance.
For the 2014 financial year, the CEO earned a total STI payment to the value of $1,457,500 (six months ended June 2013: $602,841).
This payment will be made in the 2015 financial year.
Long฀Term฀Incentive
The CEO participated in the Air New Zealand Long Term Incentive Plan (LTIP).
The CEO earned 2,642,913 options under the LTIP for the 2013 financial year valued independently at $0.203 each, for a total value of
$536,511 (which were issued in September 2013).
The฀ mandatory฀ shareholding฀ commitment฀ of฀ the฀ LTIP฀ for฀ the฀ CEO฀ is฀ 66%฀ of฀ the฀ CEO’s฀ xed฀ base฀ salary.฀ This฀ holding฀ must฀ be฀ maintained฀
to enable the CEO to exercise any options. The CEO owns or has a beneficial interest in 522,440 shares held as part of the mandatory
shareholding (2013 financial year: 137,980 shares)
Superannuation
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฀ 2014฀ nancial฀ year฀
the Company contribution was $77,114 (six months ended 30 June 2013: $25,000).
EMPLOYEE REMUNERATION (CONTINUED)
AIR NEW ZEALAND ANNUAL FINANCIAL REVIEW 201470