Air New Zealand 2015 Annual Report Download - page 61

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Air New Zealand Annual Financial Results 2015 59
Employee Remuneration (continued)
There are two main elements to the LTIP:
Performance฀ Rights
LTIP participants are eligible to receive a grant of performance rights. Any grant of performance rights is at the discretion of the People
Remuneration and Diversity Committee (PRDC) of the Board of Directors but, in the normal course of events, is expected to equate to a value
of 55% of fixed remuneration for the CEO, and between 40% and 20% of fixed remuneration for executives depending on their seniority.
The number of performance rights to be allocated will be determined by an independent valuation of the performance rights carried out each
year at the time of issue.
In three years’ time, if the Air New Zealand share price has outperformed the performance hurdle, a proportion of the performance rights will
convert to shares. The performance hurdle will comprise an index made up in equal proportions of the NZSX All Gross Index and the Bloomberg
World Airline Total Return Index.
The proportion of performance rights that convert to shares will depend on to what extent the Air New Zealand share price has outperformed
the index. In particular:
Performance฀against฀index Percent฀of฀Rights฀Vesting
<100% nil
100% 50%
101% – 119% Addition 2.5% vesting per 1% increment, up to
120% 100% (maximum)
Unless Air New Zealand’s share price outperforms the index as outlined above, no value will accrue to the participating executive.
Mandatory฀ Shareholding
Participants are required to commit to investing a specified amount to purchase shares in the Company. The amount is set at a value of 55% of
fixed remuneration for the CEO, and between 40% and 20% of fixed remuneration for executives depending on their seniority.
Until participants have attained this target, any shares issued to them from vested performance rights must be retained as part of the mandatory
shareholding. This holding must be maintained while continuing to participate in the LTIP.
CEO฀remuneration฀
Fixed฀ Base฀ Salary
Over the course of the 2015 financial year, the CEO, Christopher Luxon, earned a base salary of $1,400,000 (2014 financial year: $1,325,000).
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 2015 financial year, the CEO earned a total STI payment to the value of $1,540,000 (2014 financial year: $1,457,000). This payment will
be made in the 2016 financial year.
Long฀ Term฀ Incentive
The CEO participated in the Air New Zealand Long Term Incentive Performance Rights Plan (LTIP).
The CEO was granted 749,027 performance rights under the LTIP in the 2015 financial year valued independently at $1.028 each, for a total
value of $770,000 (2014 financial year: 2,642,913 options with a total value of $536,511).
The CEO owns or has a beneficial interest in 522,440 shares (2014 financial year: 522,440 shares) held as part of the mandatory
shareholding, which equates to 37% of the CEO’s fixed base salary. The mandatory shareholding target of the LTIP for the CEO is 55% of
fixed base salary. Until the CEO has attained this target, any shares issued to him from vested performance rights must be retained as part
of his mandatory shareholding.
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 2015 financial year the
Company contribution was $114,280 (2014 financial year: $77,114).